Offshore websites can't dent Harvey sales
- 07 September, 2011 09:01
- Comments 1
Offshore websites have failed to dent sales at Harvey Norman but it hasn't stopped retailer Gerry Harvey lambasting the media for "deliberately distorting" his imported goods tax campaign.
Eight months after sparking a furore over his plan to impose GST and duties on foreign goods bought online under $1,000, Harvey Norman's chief executive says local businesses are now falling over due to cheaper offshore websites.
"When I first brought that up, that online thing back at Christmas time, what I said at the time is now happening," Harvey told AAP.
"You've got shop after shop in trouble.
"Not Harvey Norman-type shops. Clothes shops, shoe shops, all those shops that are being affected by online purchases that are not paying all their duties and taxes."
He said sales were "all over the place" and businesses were putting off staff and closing doors.
Late last year, Harvey and the heads of other major retail chains said the Commonwealth should apply the goods and services tax (GST) and import duties on all goods bought overseas online by Australian consumers.
Currently, no GST is imposed on goods that are bought from international websites for under $1,000.
Last week, Harvey Norman said it would start an online shopping presence in October after reporting an increase in net profit of nine per cent in fiscal 2011 and giving a "cautious" outlook for fiscal 2012.
The move comes seven years after Harvey Norman made its last attempt to drive online sales.
Harvey doesn't expect it to be a cash cow as competition from overseas websites poses a tiny threat.
"It's less than 0.1 of one per cent of what we sell, so why did the media take up about me saying that I'm protecting Harvey Norman," he said.
"It's like bull**** coming out all the time. Why did they deliberately bloody distort it?
"People are not importing fridges and TVs and lounges."
Deutsche Bank retail analyst, Paul van Meurs, said Harvey Norman wasn't an obvious online business choice due to its range of goods.
But he said it was difficult to verify whether offshore offers threatened about 0.1 of one per cent of total sales.
"It does sound small but I guess it depends on your definition of that," van Meurs said.
"The problem is ... are you really going to order a TV out of Korea or China and risk that you'll have a different spec, or a different system or no warranty, or it arrives and it's broke."
He said platforms for established online retailers were around the size of one physical store.
"So it's not insignificant but not hugely significant either."
It appeared Harvey Norman would find a way to pass on the benefits of online sales to its franchisees, he said.
Nominations for the 2012 ARN IT Industry Awards open on Tuesday, June 12.
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Comments
Mike
What about the smaller items and consumable items Gerry sells - laptops, printers, cameras, iPods, phones, software, inks and other printing consumables - most of his stores have significantly sized electronics floor area dealing in the small stuff that is easily bought over the internet.
These items must add up to a significant part of his business (otherwise why attribute so much expensive floor space to them??) - that is why he is going online, not to combat fridges, tvs and furniture sales.
If it is only 0.1% of his sales then why the big hooha - something does not smell right - Gerry is not quite being as transparent as he might suggest.
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