Long-time foe of online retailing Harvey Norman has swallowed its pride and launched an e-commerce site.Harveynorman.com.au allows customers to pick up items in the company's 160 store retail network or have them delivered to their homes, charging between $6 and $200 for delivery.Company chief Gerry Harvey triggered a furore a year ago when he criticised the federal government for allowing consumers to buy merchandise worth as much as $1000 from overseas suppliers without paying GST.
The new site allows customers to compare items, see customer ratings and reviews, and view multiple product photos.
In April, Harvey Norman launched a group buying site, Harvey Norman Big Buys. Both the full service site and Big Buys are operated by third parties in conjunction with its existing retail business, an operation that has been hard hit in recent years by online competition.
Mr Harvey famously disputed whether online retailing could make money for the company – a view shared by a number of large Australian retailers in past years.Stock in Harvey Norman today dropped 3 cents, or 1.5 per cent, to $2.02 in a session in which the overall market sank 2 per cent. The shares have recently been punished by investors falling 92 cents, or 31.2 per cent, in the year to date on concerns about the profit outlook for the traditional electronic retailing sector.
Earlier this month, the company said pre-tax earnings had fallen almost 20 per cent in the three months to September.
The company’s return on equity – a common measure of profitability - has been squeezed in recent years, as growth has stalled, competition from online upstarts like Kogan and Deals Direct increased, and margins narrowed.
In 2011, it was 11.8 per cent, up slightly from 11.3 per cent in the previous year. By contrast, it had been has high as 20 per cent in 2008.
Australia’s traditional retail sector has been hit hard by the shift of consumers shopping online. The trend has been further exacerbated by the strong Australian dollar.Rival bricks and mortar retailers like JB Hi-Fi have begun parallel importing electronics to try to match the structurally lower prices of goods on global markets.
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