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e-tailer hits money trail

e-tailer hits money trail

Tony Gattari's words sounded almost prophetic: "I don't want to be a destructive force in the marketplace."Speaking at the tradelaunch of his e-tail startup, smart-buy.com.au, at the NSW Art Gallery last week, the new GM's slick presentation to a collection of around 120 would-be suppliers, partners, friends and media showed all the signs of a man determined to make a buck online.smartbuy.com.au is, for all intents and purposes, a retail store without the shop-front. It will boast over 3500 products, offer features such as old stock auctions, gift-wrapping, a community chat centre and downloadable demos.

The e-commerce component, in his words, is simply the fulfilment engine of what will start out as a virtual retail outlet for small business software, games and edutainment titles. Like all good online operations, he also aims to have a call centre operational to take orders over the phone or fax if consumers are concerned about online transactions.

Gattari's ambition is to become a "category killer", starting first with console games and then moving into other areas as critical mass is achieved.

In fact, the ex-Harvey Norman general manager of computers and now former consultant for Dataflow is showing all the signs of wanting to become the "virtual juggernaut". The official launch of the site in May will be supported by a $4.5 million "controversial" advertising campaign, while the business itself is propped up with up to $10 million in investment funding from three companies: Allco Finance Group, Hambro Grantham and South African-based Brait Capital.

But what's different about this story is the self-proclaimed sales hustler of IT retail does not have the market leverage of HN anymore. Not only does he have to sell the concept of an online superstore to suppliers he once screwed down on pricing while at HN, his new small fry status is further complicated by the existence of online competition.

"I'm telling you it's four times as hard now," he said. "I have to bite my lip sometimes. You've got to eat humble pie."

But the salesman always has a new spin. According to Gattari, smartbuy. com.au is not like e-store, d-store, or ozbuy.com. He actually wants to make a profit.

"Our objective is to make money," he told the audience while hitting out at the loss-making trends of many online-only companies.

"Revenue for the first year of trading is predicted to be $10 million, with 100,000 registered contacts and 60,000 customers frequenting the site.

The philosophy is to use the same marketing and business tactics that made Harvey Norman successful, minus the legacy and inflexibility of bricks and mortar.

"Businesses that are not funded on a strong business proposition may fall within six to eight months," Gattari said, in the belief a stockmarket crash is imminent. And no, Gattari doesn't plan an IPO, at least in the short term.

Meanwhile, Gattari and his 12 staff will this week start on the long road to signing up software suppliers for the business. One of the most important nuts to crack will be Microsoft, which at the time of going to press had not signed with Gattari.

For the record, Gattari explained all stock will be warehoused, managed and shipped from "2500 square feet" of leased space at Dataflow's new warehouse under a special outsourcing agreement.

The ex-Microsoft distributor will need to take shipment from Microsoft's three distributors - Tech Pacific, Express Data and Ingram Micro. Gattari appeared confident the arrangement would work and Microsoft's all-important support would come once a deal was struck.

Gattari also reassured ARN the operation is not a front for Dataflow - the company is simply being used for its expertise in distribution. According to Gattari "fulfilment is the key".

Yet Gattari has not forgotten his roots. Describing Harvey Norman as "extremely successful", he commented he wouldn't be in his current position without the retailer. "I have learned, by working alongside Gerry Harvey, that cash flow and profit is king."

But there's not doubt those carefully chosen words are designed in part to pacify his former employer now that his "new" way of retailing software brings him into direct competition with HN's own online initiative.

With the battle lines drawn, it's time for Gattari to carve out his own niche in the market and attempt to prove the old world of bricks-and-mortar retail can fly online with some information age tweaking.

In Gattari's own words: "At the end of the day, money talks, bullshit walks." Time, as they say, will reveal all.


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