HN Online scraps cards

HN Online scraps cards

In a somewhat low-key manner, Harvey Norman launched its rejigged e-tailing site last week, but the retail giant will no longer accept credit card payments online.

Instead, the new site will drive customers to the nearest of Harvey Norman's 119 franchise stores, which will contact the buyer and organise a payment method and delivery details.

Initially citing Internet fraud as the impetus for its decision, the new Internet model is designed to cater to its bricks and mortar stores. Earlier this year, the company reported that around 25 per cent of online purchases were paid for with stolen credit cards and while this figure has decreased in recent months, Internet fraud remains one of the biggest and unspoken problems for retailers, according to Harvey Norman's computer general manager, John Slack-Smith.

"It really is the unspoken evil of the Internet and certainly in excess of what any business would deem acceptable," he said. "People don't talk about it because it puts a slight on their business model and when your business model consists wholly and solely of online sales it is a fairly large slight."

Slack-Smith said he had been "taken aback" at the traffic the new site has generated since it reopened, although it was still early days.

"We are monitoring the site for an extended period of time to see what trend emerges," he said.

"The second issue is that we are trying to improve the flexibility in the purchase process for the customer. We don't want to tie people to just credit cards. If there is a promotion going with regards to finance or some kind of consumer incentive, people who are shopping on the Internet shouldn't be disadvantaged.

"Customers can process an order via the Internet, then the store within their demographic area will contact them to confirm the order, payment method and delivery situation. There can be the situation where there is no need for the client to come into the store at all - it all depends on their personal preference."

David Hancock, director of market analyst Inform, described the new Internet site as "a very solid move. It is actually quite smart - the site encourages customers to buy over the Web because they don't have to worry about security," Hancock said. "Consumers are the group of people who are most wary of fraud so providing the opportunity to buy on the Internet without credit cards is a smart move. It can also drive customers to the store, and once they are in, that is when you have got them. It is what Harvey Norman does best."

Slack-Smith agreed the model would help protect Harvey Norman's franchise stores. "Our franchisees are really the driving force of our business and this new procedure has the Internet fall directly in line with our current business model. Our model has been working quite well for a number of years now so we are looking to take advantage of the economies of scale that business model gives us."

Paul Connelly, managing director of retail distributor Daisytech, brushes off Gerry Harvey's criticism of online retail. Connelly believes that the online fraud criticisms are part of Harvey's attempts to protect his own business model.

"Gerry is entitled to his opinion, but the fact that he is out of step with everybody else just shows that he is protecting his investment in real estate," Connelly said.

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