Why Retailing Has Changed Forever

Appliances

Last Thursday I went our for my morning walk with my wife, Robyn. She told me that we had a problem with our washing machine. She thought that the motor had given up the ghost. We have had it for some time so we decided not to bother with calling a repair man and to bite the bullet and purchase a new one.

We had a lot of laundry and a long weekend coming up, but as it was Thursday neither she nor I had an expectation of getting one. She made a couple of calls and told me that she had found the model she wanted – a Bosch. It was available from a nearby Harvey Norman store for just under $1,200, but the same model was also available from Joyce Mayne for under $800. I suggested that we should also check online with Appliances Online because we had bought a dishwasher through them which had worked out well on both price and delivery – because they don’t charge for the delivery costs.

I found exactly the same Bosch device at Appliance Online for $10 less than the quoted price from Joyce Mayne. The price included delivery, installation and disposal of the old machine at no extra cost.

At that point I got a phone call from a sales person at Joyce Mayne, who Robyn had called to check on availability. The sales lady said that the machine was in stock at the warehouse in Sydney, but that it would not be able to be delivered until next Thursday; there would be a $15 charge for disposal of the oldĀ  machine, a $40 charge for delivery – and that she had dropped this price from the normal $45, but that this did not include installation.

I told her that I was looking at the same product online…. cheaper.

So she asked me what would happen if I needed a warranty call…. clearly trying to get me to feel uncertain about after sales support. I responded, because I have been through this with a number of devices, “Service calls are handled by the manufacturer not by the retailer”.

So on line I clicked on the “Preferred Delivery Date” button, requesting Friday, the following day expecting to get a call to say that we would have to wait until the following Thursday.

The website accepted the date, accepted my credit card and an automated email response came back, as they do.

The next day by 10.30am the new machine was delivered, installed and the old machine out of the house. Done. A less than 24 hour turn around from order to installation from a remote, pure play web business when a local, bricks and mortar business couldn’t match the value proposition on price, on delivery, on timing of delivery, in fact on any of the key purchase criteria that you would expect.

Is it any wonder that retail will never be the same.

Clearly the Appliance Online business must be built on having a direct ability to automatically access and indent inventory, access and book trucking, in a seamless way where there is only light touch human intervention. They presumably have no warehousing costs, no retail location costs, and so can set their prices at precisely the level that will capture the business.

On the other hand Joyce Mayne, as a discount business, has to deal with the cost of their retail space and employees, with the employees watch potential sales disappear before their very eyes.

Harvey Norman, one assumes, has an entirely different business model. Since they offer ultra long no-repayment hire purchase terms, I would believe that their model is to sell to people who can’t afford to pay cash, and therefore they take as much of the available margin as they can in return for having the relationship with GE Capital who provide the finance.

So in the future I can see companies like Harvey Norman surviving, but I can’t see how the big box discounters can compete with online.

Its not about imports that avoid the GST. Its about service and time of delivery and price. These three things mean that a company like Appliances Online will continue to build brand momentum and win, win, win.

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