It had all the makings of a classic showdown in the marketplace: an incensed major retailer; a determined manufacturer - money, pride, the lot. And then, as Banksia sales manager Colin Dagger says, "common sense prevailed". Even so, the now resolved Harvey Norman/Banksia dispute sheds light on the role that compromise plays in the computer products channel in Australia.
At the heart of the dispute was a Telstra/On Australia offer for what the carrier calls The Journeyman, a "limited edition 28.8 Banksia MyFast Modem" plus a free one-month Microsoft Network subscription and five hours Internet access, for $339. Harvey's was selling the same modem (although not under the Journeyman banner) for $499. (See page 20 in the July 10 issue ARN for more.) Put simply, Harvey's wasn't pleased.
When the Journeyman offer surfaced a few weeks ago, Harvey Norman's communications coordinator Brian Pleaner told ARN the 58-store retailer was unhappy with Banksia. "What we want to see happen is for Harvey's to be able to sell competitively. In this instance Banksia is effectively selling directly and in such a way that we're not able to offer our customers competitive prices," he said. "I can tell you it's something we're looking into very closely." Industry rumours circulated that if Banksia didn't play ball - and drop its prices - the manufacturer would be out on its ear. Pleaner didn't refute that rumour but offered, "Let's see what happens in the next week or two".
During the same time frame, Banksia's Dagger refused to acknowledge the similarity between The Journeyman and the MyFast Modem. "This is a modem we've manufactured especially for Telstra for an offer they're conducting. They placed a massive direct order with us and paid for the modems outright," he said. "We're very interested in what Harvey Norman thinks, but as far as we can see, this isn't an issue that involves them." It seemed a line had been drawn in the sand.
Fast-forward two weeks and the two parties are mates again. It seems Harvey's will now be able to sell Banksia modems on the "competitive" terms it sought, although Pleaner declines to name a specific price point. "We've reached an agreement with Banksia and we will continue to support their full product line," he said. "We had some very productive discussions with them and we look forward to continuing to do business."
Dagger puts a philosophical twist on things. "We're a major manufacturer and they're a major force in the retail market. We need each other," he said.