Retail Focus: Hardwareshop.com.au…on target online

Internet hardware retailing is a mystery to most industry stalwarts, eyed with a mixture of envy and scepticism – but one company is achieving online sales success…

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Store: Hardwareshop.com.au, Sydney, NSW
Owners: Hardwareshop Internet Pty Ltd

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This is a “Retail Focus” with a difference – there are no aisles to photograph, nor are there any floor areas to measure or car park spaces to count; this is an Internet store.

AHJretail01June05Paul Cochineas from hardwareshop.com.au

Hardwareshop.com.au is Australia’s only dedicated, Internet-based hardware sales outlet, and it has survived by breaking new ground in a highly competitive and cut-throat market.

Established in 2000 by Paul Cochineas and his two brothers, all of whom had previous hardware retail experience, the venture began with the help of partnership funding and has since enjoyed healthy annual growth. Today the business makes online sales to customers Australia-wide, with most custom generated along the nation’s eastern seaboard.

The year 2000, according to Paul, was an interesting time to start the business – being hot on the heels of the “dot-com crash” – but the caution that coloured Internet trading platforms at that time ended up being a godsend.

The hardwareshop Home Page athardwareshop.com.auAHJretail02June05

“I don’t think we would still be here today if we’d started a few years earlier,” says Paul. “There was a mentality in the 1990s that you had to think big; I remember someone asking, ‘How long till you go global?’ and I thought, ‘Wait a minute, let’s take care of basics first.’”

The result was a business model that broke with “think big” conventions.

Customers can view products and descriptions before ordering online

AHJretail03June05“Most people setting up similar businesses had the same approach: buy lots of satellite warehouses all over the country; advertise on TV, radio and in the papers; and make an impact quickly – we did the opposite.”

Paul’s method was to adopt a more fluid, slow-growth policy with minimal up-front expenditure on infrastructure, and this approach has continued to this day. Hardwareshop.com.au, for instance, has no warehouses.

“The business functions in cooperation with an established, independent hardware retail store,” explains Paul. “We have our own room out the back and we use the [host] store as our supply warehouse!” This system means the business can stick to its core strengths of managing online database inventories, choosing appropriate products, packing goods and arranging deliveries. In most cases, a Hardwareshop.com.au employee simply walks into the “host” outlet to retrieve products to fill an order. Distribution is handled by Australia Post and numerous courier companies.

 

 

Refined Product Offer
Not all goods are suited to online selling environments. Paul says he displays a key range of just a few thousand products that people are happy to order over the Internet. “We sell a lot of pre-packaged items like power tools, garden items, hand tools, electrical goods (not switches), leads, blower vacs – things that are pre-packaged and known to the customer,” he says. “Gift Hampers, which make up less than 25% of sales, are still important to the business and are often ordered from overseas for delivery in Australia.” By contrast, products that feature multiple gauges and sizes are generally not conducive to Internet sales.

Orders are received via the online databaseAHJretail04June05

Whereas one might expect heavy patronage from poorly-serviced and isolated rural areas, Paul says the data shows more urban-focused trends: “It’s a bit surprising, but a lot of our customers are based in Sydney and metropolitan zones.” Average customers are aged 25–45 or 50 years of age, are computer-literate and in search of convenience and self-paced shopping experiences. Females who wish to avoid the travel time and intimidation associated with shopping in large stores are also mainstays of the client base. Elaborate product descriptions offer reliable and simple handy hints to shoppers, and Paul says these guidelines are frequently more informative than those offered by inexperienced assistants in actual stores.

Another initiative to enhance sales is a fixed delivery price – graded according to location – for all orders. This encourages online customers to purchase multiple items. As a consequence, Paul says average orders are larger than those achieved in standard stores, both in terms of total spends and numbers of products sold per customer.

Soft Marketing
Of course, no online selling system can work without customer awareness of the site and a strong trust in its efficiency. Rather than invest heavily in general, broad-brush marketing strategies, Paul says the aim has been to rely on selected Internet promotions on search engines, etc, and positive word of mouth from customers.

AHJretail05June05Goods are processed and packed on-site

“One good experience can lead to 100 other people learning about our business,” he says. This strategy may not engender earth-shattering growth, but it guarantees steady performance while protecting the venture from high debt levels.

Internet sales, according to Paul, are not designed to replace “bricks and mortar” stores. “We’re not trying to compete against the big stores – that was never our intention – but we believe online selling acts as a complement to mainstream retailing and fills a niche.”

For more information about the business or its plans for expansion, visit hardwareshop.com.au or call (02) 9548 2746.

By John Power