Harris Technology (ASX:HT8) has sounded a warning bell to shareholders, revealing it "failed to meet revenue expectations" in the quarter ending 31 December, claiming that the arrival of Amazon in Australia has impacted customer behaviour and sentiment.
In a statement, Harris Technology managing director, Garrison Huang, said it failed to meet revenue expectations and experienced a slight reduction in margin.
“We are disappointed with our results. On reflection, the looming arrival of Amazon in Australia had an impact on customer behaviour and sentiment,” Huang said. “In addition, higher than expected customer rebates in the quarter contributed to the result.
"The group results are traditionally stronger in the second half and recent business development initiatives indicate meaningful improvements are expected," he said.
Financial results for the half-year will be released in February. At the end of the second quarter, Harris Technology held cash of $1.4 million compared to $1.1 million at 30 September.
The results come as Harris Technology sets up a joint venture agreement in Hong Kong with Wong Sun Hing (WSH Group), securing a 51 per cent shareholding and WSH taking on 49 per cent.
The joint venture is part of the company's manufacturer-to-consumer (M2C) model, with Huang previously stating that it will not compete with resellers that purchase through Anyware Corporation, it's distribution business.
The strategy will see Harris Technology broaden its consumable products offering to the Australian market outside of IT, electronics and technology products and into areas such as office stationery, travel goods, fashion and home decor.
The goods will be shipped directly from manufacturers in China, with Harris Technology providing local customer support.
In September last year, Harris Technology folded its Audion business into its IT distribution operation, Anyware, in a bid to reduce operational costs as it reports a $3 million loss for the financial year ending 30 June.
Amazon starting taking orders in Australia in December, timed just before the busy Christmas period. This signalled a major shake-up for the retail sector, shining a spotlight on traditional retail models, with questions arising as to whether such methods will be able to retain customer mind-share.
Despite the hype, consumer analyst at Martin Currie Australia, Jim Power, said that while Amazon had focused on price, range and customer experience, their initial Australian offer "doesn't appear compelling".