Selling whitegoods on the web seems like good business sense, but it took entrepreneur John Winning Jr to work out what Australia’s major retailers still haven’t: you can make money with Appliances Online.
Have you ever wondered why you can buy a computer online from a major Australian retailer, but not a cooktop?
A computer is a complex, high-value purchase with a vast range of options that many people find bewildering. Most people seek the advice of a friend or salesperson to match the computer to their needs. With a cooktop it’s half a dozen major brands, gas or electric, the choice of hotplate, ceramic or induction elements. On the face of it, the cooktop would be the more obvious choice to sell over the web.
Many people enjoy the experience of clothes shopping or want to know what a garment feels like before buying it. Nonetheless, fashion websites are a growth industry. So why will none of the country’s major appliance retailers sell you a washing machine or a dryer online?
These are the kind of questions John Winning Jr asked himself when he decided to start up Appliances Online.
“I was working in the retail appliances industry and I realised no one was really selling them online successfully,” he explains. “I used to get a lot of people calling me up asking, ‘I need a replacement fridge. I’ll take your advice, can you send me one?’
“I thought if it was online, they could decide what they wanted before they bought it. It is not something you have to look at if it’s just storing food or washing clothes.
“If your fridge has died and you’ve got to go to work – a lot of people out there are time poor – you measure up the size, work out what brand you like and then buy it online and it arrives.”
One of the main reasons this gap existed was because, like many industries in Australia, appliance retail is dominated by a few players with a lot of market power.
“Harvey Norman, Bing Lee and companies like that have built themselves on bricks-and-mortar businesses,” Winning says. “They’ve got shop fronts and franchisees and that is how they have learned to sell appliances.
“They don’t get online and they don’t really have a need for it. There is definitely a segment of the market that is happy to buy online but the existing retailers just don’t seem to understand it.”
Teething issues and timing
Winning admits he was not all that tech savvy when he came up with the idea. He was fortunate to have chosen external suppliers who were willing to help him increase his knowledge of the technology while they learned from his experience of appliance retail.
“It’s important to realise you don’t know everything,” he says. “You also have to stay flexible. The market today, compared to the people who were buying from us the day we opened, is completely different.
“Consumers have come a long way in three years. They are more comfortable buying online.”
In other words, Winning’s decision to start an online business was well timed. In three years the company has grown from one person to nearly 10 and now stocks more than 1,000 products.
“It has been good for us so far,” he says. “We are not Harvey Norman or Bing Lee at this stage but you never know, 20 years down the track.”
Outsourcing for success
Working with external providers allows growing businesses to acquire the capabilities they need without having to invest upfront in the staff or resources.
“We contract a lot of our delivery staff and our IT and marketing as well,” says Winning.
However, it’s important for a small business to retain control of those functions essential elements – the things that make you who you are.
“Anything that people judge you on, that is the stuff you want to keep in-house,” he explains.
Selling online offers a range of opportunities for automation and streamlining which can safely be contracted out, Winning says. However, “Behind the scenes, at least half the business is done off the computer. Then there’s processing the order, making sure you liaise with the customer in regards to delivery, making sure the delivery goes smoothly.”
Appliances Online works closely with its delivery firm to ensure customers receive the best possible service.
“It is easy to take an order and load products up,” he says. “If you give people the right information, the right dimensions, the right image, then that part is easy. But if someone orders something and you don’t turn up on the day they requested, you have failed them.”
Appliances Online’s delivery staff connect the product and remove the old appliance and any packaging.
“We take away and recycle all the old appliances,” Winning adds. “We are also looking at giving people the option of carbon offsetting our deliveries.”
Helping customers make informed choices
In the last issue of Nett, we spoke to sales coach David Penglase who described the art of selling as creating a space where people feel confident and comfortable to buy. Appliances Online uses buyer’s guides, experiences sales staff and a text-based online sales support system to achieve this goal.
“A buyer’s guide is very helpful if customers can’t pick up the phone and call you 24 hours a day, which a lot of times is just unfeasible, but they need guidance about the things to look for or why one model might be more expensive than another,” Winning says. “It lays out different features and tells them what might make one product unique, why something is the bottom of the range or top of the range. The beauty is that people can make their own decisions on unbiased advice.
“We are probably one of the only retailers in Australia with none of our sales people working on commission. Customers know the person is not trying to sell them something because they are getting a kickback from a manufacturer or commission from the retailer.
“Since day one we have also run live online support during business hours, so if someone doesn’t have the time to get on the phone and wants to shoot off a quick question before they make a decision, they can jump on the live chat and get an instant response.”
While Appliances Online customers use the site 24 hours a day, Winning says the majority of purchases happen during business hours.
“They might go home, check with their partners and make the decision, then go online or give us a call the next day to put the order through,” he explains.
Selling online isn’t always cheap
One of the major purported benefits of online retail is that it’s cheaper to sell over the web than through bricks-and-mortar stores. However, Winning believes this benefit gradually erodes as a business increases in size.
“If you have a little boutique shop with 20 products that never change, a website can be quite cheap,” he explains. “We have over 1000 products and they change every day. We have one full-time staff member just adding, updating and removing products.
“The money we don’t spend on stores, we spend on the website. Our website is our shop front. So where you might be paying rent, we are paying money to upgrade our site, add new features and make it easier for people to get online and see the information on the products they want.
“Our biggest selling point is convenience, not price.”
Challenges of being a boss
Having started the business at age 21, Winning made the difficult change from solo entrepreneur to manager.
“That was probably the hardest thing for me, dealing with people,” he says. “It is easy when you’ve got yourself to blame, but a lot harder when you’ve got a whole office and people to manage; things that need to be done, and putting people into the roles they are best suited.
“It’s a big step to give them the free rein to make their own decisions and to trust their decisions.”
He advises new entrepreneurs to find trustworthy people who have complementary skills and external providers willing to put a stake in your success.
“Make sure the people you work with definitely know what they are doing,” he says. “We use two very good firms for IT and marketing. One is an established company and the other one is a friend who puts his heart and soul into it because he is also working for himself. Always try to deal with people who care about your business.”
Considering the rapid growth and success of Appliances Online, Winning is modest about his achievements. He is always looking for the next opportunity.
“A big thing for us is getting better at what we do,” he says. “We are still really in what I see as an entry-level stage and trying to understand what people want.
“I want to get better at the products that we sell, offering more detail and getting a really good delivery system. Once we’ve got all that down pat, if we offer all the right services, the company will grow as more and more people are happy to use us.
“Our next move is probably barbeques coming into summer. But there’s pretty much no limit. The business is built on what people want and I just work out the best way we can get it to them.
“If people decide they want us to sell TVs and DVD players, I just have to work out the best way we can get them to people at a competitive price.”
But at the very least, you would have thought Winning could say ‘I told you so’ to the doubters who thought his business idea wouldn’t work.
“I don’t say too much to them,” he says. “I’m still trying to make them eat their hats.”