Catalogue and Web-based reseller International Software Warehouse (ISW) has closed down its Australian operations after its UK parent placed it in the hands of administrators.
Deloitte Touche Tohmatsu has been called in to manage the fate of the business, which for several years proved a healthy competitor to the likes of Harris Technology. ISW sold a wide range of hardware and software products from vendors including 3Com, Acer, Adobe, Canon, Epson, HP, IBM, Microsoft and Toshiba.
ISW, until now a subsidiary of UK retailer Great Universal Store, was established by entrepreneur Richard O'Neill in late 1996, bursting into a market dominated by Harris Technology. In early 1997, while Harris was pushing out 15 pages per catalogue, ISW began publishing between 48 and 64 pages of advertising, initiating a tug-of-war in the catalogue-based sales market that lasted several decades.
Ron Harris, managing director of Harris Technology, said ISW started with an excellent formula for success, but lost its appeal after several management changes and poor branding. "It had a good format when it started," he said. "It then changed the colour and size, and changed from having vendor pages to having product pages. The look and feel was never consistent and it ruined the company's image and appeal."
Harris added that, in the catalogue business, reinventing your image is a dangerous tactic. Branding is very important because the company is pitching to remote customers who otherwise have no idea who they are buying from. In contrast, Harris Technology has operated under the same brand name since 1986. "This gives credibility to the operation, as does being part of Coles Myer."
Other than branding, Harris believes ISW was too late in adopting Internet sales, could not match the expected customer service consumers require, and had little bricks and mortar operations to keep the business steady.
"It placed its emphasis on the catalogue as a primary means of business, whereas for us, the catalogue simulates everything else we do," he said.
Michael Glezerson, managing director at IT e-tailer ozbuy.com.au, now a subsidiary of the Strathfield Group, said he saw similarities between ISW's business model and those of failed e-tailers.
"Its reliance on snail mail was no different to the way pure Internet plays operated," he said. "It failed because it had such a limited model, just like Buy.com," he said.
While many of its peers were operating call centres seven days a week, ISW only manned the phones five days a week. Harris said successful companies place much more emphasis on a relationship with the customer.
ISW's call centre is now unattended, but its products were still being advertised on its Web site at press time. ARN's attempts to contact the defunct reseller were unsuccessful.
Despite the ISW failure, Harris and Glezerson do not believe it is a sign of things to come for direct marketers and Web sales. Harris Technology has 300,000 copies going out a month, with all 64 pages booked out in advance. And since the Strathfield Group acquisition, Glezerson said Ozbuy.com.au has experienced exponential growth.
"It can only be a good thing for us," Glezerson said. "With ISW gone, there are fewer players in the market and we're one of them."Photograph: Ron Harris, managing director Harris Technology