Overseas consumer electronic stores like Best Buys and Circuit City in the US and Dixon's in the UK are investing millions in online operations and the move by JB Hi Fi will not only build online sales but drive more traffic to their stores. It will also allow them to build a relationship with a consumer even before they have walked through the door of a store.
Overseas experiences reveal that consumers are researching online for product information and of those consumers who nominate to transact online but want to pick up the goods at a local CE store some 60% actually buy another product while in-store.
The key advantage that JB Hi Fi has over Harvey Norman is that they own their own retail stores unlike Harvey Norman who operate a franchise model. This has two distinct advantages. Firstly JB Hi Fi management can make a decision quickly about what happens in these stores and secondly they do not have to worry about any revenue or profit share with a franchise operator.
The Harvey Norman structure creates profit split problems as Tony Gattari a former Harvey Norman General Manager found out some years ago when he attempted to take Harvey Norman online to sell IT gear.
For example if Harvey Norman own the web site and a customer places an order from an area managed by a franchise who gets the sale from the online transaction Harvey Norman or the franchisee who has just lost an in-store sale to Gerry Harvey?
