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Harvey Norman Moves To New Online Model As They Try To Compete With JB Hi Fi

Harvey Norman who have recently expanded their smartphone category, in an effort to strip booming sales away from JB Hi Fi have also moved to deal direct, with distributors online cutting out their franchisees.

In the past Harvey Norman operated their online operation based on franchisees and Harvey Norman owned stores taking a share of the online transaction, consumers could nominate to pick up an online product from a store with the Country being cut up into regions, based on the location of a Harvey Norman store.

Now franchisees are set to miss out, with distributors doing fulfillment of online orders as the big retailers who has recently pocketed tens of millions in JobKeeper payments despite record profits and revenues moves to compete with JB Hi Fi who operate a similar model.

The big difference is that JB Hi Fi own their own stores along with The Good Guys retail chain.

Research reveals that the Harvey Norman online operation is a laggard compared to the JB Hi Fi and The Good Guys online business with management now desperate to grow their online business as millions of consumers take up online shopping.

According to SEMrush Analytics In March 2021 Harvey Norman only man to attract $6.6M Unique Visitors Vs 13M to the JB Hi Fi and The Good Guys.

JB Hi Fi also do a better job of attracting people direct to their web site than Harvey Norman.

One Harvey Norman franchisee told ChannelNews that the future “Is online” and that franchisees were “not happy with the new model”.

One said, “This is just the start, I suspect that Harvey Norman will take all the online business in the future. They will also have to compete with brands moving to strip sales away from retailers as they expand their direct sell models. During COVID-19 we saw several brands double their online sales” they said.
“Harvey Norman management are aware of these moves and have spoken to some brands about their online sales operations” they said.

A distributor who is now fulfilling Harvey Norman sales orders directly said “Franchisees are missing out unless they have a separate deal with Harvey Norman management”.

In other moves Harvey Norman management have mounted a major initiative to expand their smartphone sales in partnership with Optus who are believed to be offering “half” the attach commission that Telstra currently pay JB Hi Fi.

ChannelNews understands that Telstra management are “desperate” to cut back the amount of commission they pay JB Hi Fi a move that could come unstuck for Telstra with JB Hi Fi in a position to switch to a new carrier.

We also understand that the big retailer is also looking to expand into the services market a move that was initiated by Best Buy in the USA several years.

Last year Best Buy had annual revenue of US $43.638B, a 1.77% increase from 2019.

Best Buy annual revenue for 2020 was $43.638B, a 1.77% increase from 2019.

The US retailer generates almost half of its revenue from the sales of computing and mobile phones. Consumer electronics such as TV’s and sound gear are second in line, accounting for about a third of the company’s revenue. This is similar to the JB Hi Fi model.

Both segments together make up nearly 80 percent of the company’s revenue from domestic and international markets. Best Buy also generates revenue from appliances, entertainment, and services with services being one of the most profitable categories.

The company earns the majority of its revenue from brick-and-mortar store sales, but also has a presence in the e-commerce market.

Best Buy earns around 80 percent of its revenue from brick-and-mortar store sales. The number of stores and square footage in both domestic and international outlets has declined in recent years, while the company’s online revenue has grown. The growth in Best Buy’s online sales has been higher than its overall sales growth in recent years, leading to an increased share of online revenue as total revenue.

In the financial year 2020, JB Hi-Fi limited had total revenue of $7.92 billion dollars. This represents an increase from the 2019 financial year, and an overall year on year upward trend from the 2015 financial year.

 

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