Gerry Harvey's name is in danger of becoming synonymous with anti-internet ravings, but Harvey Norman does have an online retail presence in the form of its Harvey Norman Big Buys daily deal and general retail site. That operation provides some useful lessons for anyone thinking of moving into online selling.
While at Microsoft's Tech Ed 2011 conference in Queensland, I chatted with Kaine Scott, CEO of Harvey Norman Big Buys (which is run as a separate enterprise distinct from the main franchise-based Harvey Norman model). Because Big Buys sells general goods rather than the electronics and homewares associated with the main Harvey Norman brand, it was met with some derision when it launched (I was certainly in that camp), but the model has proved successful. Here's what you can take away from the experience if you're thinking of launching an online store of your own.
You can roll out a site fairly quickly. The entire Big Buys site was developed in under two months, which included setting up relationships with new suppliers as well as building the back-end systems. "I was amazed we got it done in seven weeks," Scott said.
It may not matter if your site is ugly. One consequence of that speedy rollout was that the design is (to put it kindly) fairly basic, a point Scott readily agrees with: "It's a pretty ordinary looking web site." That was largely a matter of necessity, though it has also proved to have some branding value. "There was an element of 'what else does it need to do?' It's a daily deals site, keep it simple," Scott said. (That's roughly the same design aesthetic used by Harvey Norman's main rival JB Hi-Fi, though I'm not brash enough to say this to Scott's face.) "I would have liked a nicer looking site, but it's good for what it was," he said. Obviously Harvey Norman had a brand advantage which a new store wouldn't enjoy, but it's a reminder that overly concentrating on aesthetics may not always be helpful (if you don't have an Apple-sized budget).
Make use of existing technologies as much as possible. To ensure a fast rollout, the Big Buys site used existing software as much as possible rather than trying to build something customised. Scott explains: "We kept it vanilla, that was key. We moved our business processes around the application. We didn't spend even days talking about specifications, it was as agile as you could get."
Cloud solutions can be useful for ecommerce hosting. Cloud technology is often associated with more complex computing requirements, but the ability to scale up during sudden peaks can also make it useful with online shopping. "The cloud option was on the table from the very beginning," Scott said. "We had no idea if the site was going to be a complete flop or go off its nut or be somewhere in between. It seemed like it was ideally suited to what could be a very volatile environment for us."
Harvey Norman ended up running the site on Windows Azure, in part because of existing relationships. Harvey Norman already used Microsoft technology in its main operation and was planning to use Microsoft's Dynamics NAV ERP in the back-end, which made integration easier.
Beyond the predictable peaks — Mondays are the biggest shopping day, there's a rush of people when the daily email goes out — the site can experience massive peaks if Gerry Harvey mentions it, particularly on tabloid TV programs. After one evening where he appeared on both A Current Affair and Today Tonight, traffic to the site spiked 2500%. To handle that, the site scaled from using three Azure instances to six, all of which ended up running at 80% utilisation.
You can shift your branding and explore new environments. Unlike traditional Harvey Norman stores, the Big Buys site sells what Scott cheerfully describes as "unknown weird stuff", offering groceries, leisure and outdoor goods, and other varied categories. That came across as odd, but for Scott the main challenge was simply learning new business categories. "When Gerry said 'You're going to sell everything but the stuff we already sell', the question was 'What does that look like'?" Scott said. "We had to try and become experts in these broad categories we'd never worked with." That seems to have worked; the most consistently successful category on the site is general grocery items.
Sometimes you have to suck it up and admit you're wrong. Despite the CEO's constant lamentations, the main Harvey Norman stores are working towards an online sales presence which will include electronics, which Scott says is on target to launch around October. If you can't beat 'em . . .
Angus Kidman attended Tech Ed as a guest of Microsoft.