Gerry Harvey has finally made his long-awaited move into online retailing – but it’s not what most consumers would have been expecting.
Instead of launching an online store for the Harvey Norman chain, the retail giant has launched a deal-a-day site that will see it compete with established players such as DealsDirect, Catch of the Day and the army of group buying sites that have sprung up in the last 12 months.
But the site is taking Harvey Norman into a very different space, as shown by the first deal on the new site, called Harvey Norman Big Buys – a Revlon cosmetics pack for $53.
Paul Greenberg, co-founder of DealsDirect, welcomes Harvey Norman’s entrance into the online retail market but describes it as a “stumbling start”.
He says emails sent from the operators of the new Harvey Norman Big Buys (HNBB) site – a company called eDeal Busters – to suppliers suggested that HNBB would be steering away from goods that could be purchased inside a physical Harvey Norman store.
This is a deliberate strategy. Because Harvey Norman stores are essentially a collection of different franchisees (who each run a department, such as computers, electrical and bedding) Gerry Harvey does not want to allow his online retail site to compete directly against his franchisees.
However, Greenberg wonders what impact selling products like cosmetics might have on the Harvey Norman brand.
“If you’ve only ever bought lounge suites and manchester from Harvey Norman and now you are getting emails offering you make-up, how is that going to go down?”
“I sense in that whole strategy there is something flawed. There’s something that doesn’t gel with me.”
“But I don’t want to disrespect them. I’ve been on the record as saying the big guys need to get online, so at least these guys are getting in the game and it’s a great sign for multi-channel retailing in Australia.”
While Harvey only went public with his plans for an online retail site in recent weeks, Greenberg says the industry has been buzzing with speculation for some months as the website operators started contacting suppliers.
DealsDirect has been affected already – one of its former buying executives has moved across to the new site.
“It think it’s hilarious that small businesses like us are seeding the big boys,” Greenberg says.
Gerry Harvey was unavailable for comment today, but the HVBB operation does appear to be something of a side project, with a team working separately on the site outside the main Harvey Norman structure.
Gabby Leibovich, co-founder of Catch of the Day and Scoopon, also says he is unconcerned at the prospect of facing off against a big-named rival, saying Harvey Norman is starting from a long way behind the market’s well-established players.
“Gerry Harvey has obviously looked at Catch of the Day and sees a very profitable business and a model that works. Now he wants a share of the action,” a cheeky Leibovich says.
“He’s a late entrant into online retailing and his anti-online stance and lack of understanding as to how to run an eCommerce business does cast shadows on the ongoing viability of the site, but good on him for having a go.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
