The owners of online department store dStore are in talks with several IT distributors in an attempt to facilitate the sale of IT goods from the dStore Web site.
Although he is not prepared to name the distributors at this stage, Andrew Cooper, chief executive officer of dStore owner HotShed, said he was in "advanced discussions" with several major IT distributors. He is also in the process of hiring a new staff member in Queensland with “significant experience in IT retailing” to manage the IT category.
Within four to five months, Cooper expects the site to be offering packaged hardware products such as notebook computers, followed by software products and consumables. By February 2004, he expects the IT category to be achieving sales of $500,000 every month.
These goods will either be drop-shipped by distributors or cross-docked through dStore’s own facilities, depending on the in-house system of the suppliers involved.
Cooper believes that dStore, which has been through the extreme highs and lows of the dot-com boom and bust, is an ideal reseller of packaged IT goods. He claims the business has become the third most popular online shop in Australia, well ahead of the e-tail operations of Woolworths, ShopFast and Coles. “We have three to four times the traffic of [IT e-tailer] E-Store,” he touted.
Currently DVDs are the largest selling item on the dStore site, followed closely by computer games. “Our market is clearly consumers,” Cooper said. “But they are a very technically literate customer base. They have DVD players and PCs, and also have money. They are not very price sensitive – which is fine because we don’t need to necessarily be the cheapest.”
Cooper attributes most of the failures of past IT e-tailers to a focus on price. “The original E-Store, for example, always tried to be the cheapest on the block,” he said. “But when you are trying to be the cheapest, the challenge is that there is always someone else that will do what it takes to be cheaper. In the end these companies focus so much on price, they don’t compete on service or making sure the deliveries got there on time.”
He claims dStore has devoted its time and money on having the right systems in place to ensure high levels of customer services and fast, efficient deliveries.
It has been a hard slog at turning around the dStore business, but HotShed now has the business yielding positive financial results with a small profit of $35,000 for the month of December 2002.
This turnaround was the result of a drastic rationalisation of the business. When Ferrier Hodgson was appointed as receiver of the business in late 2001, dStore’s headcount was reduced from over 100 to just 45 staff. Since acquiring the business for an amount reported to be around $615,000, HotShed has reduced headcount to just four staff members. “It is a testament to the systems we put in place,” Cooper said. “With just four people we are still doing four times the business of when dStore was in receivership.”
For more on dStore's plans, including the reactions of existing e-tailers, see next week's issue of ARN.