09/05/2006 - 22:00

Winners and losers in internet retail

09/05/2006 - 22:00

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Winners and losers in internet retail

Mrs Briefcase is a canny shopper. I know this to be true because last week a courier arrived at the front door of chez Briefcase with a box of vitamins, face paint and other packets of life’s ‘essentials’, purchased over the internet from Pharmacy Direct at what is alleged to have been a “bargain basement price”.

So what, you say. Internet shopping is not new. In fact, 10 years ago, or thereabouts, there were people spruiking all sorts of things as ‘net friendly’. They weren’t, of course, especially perishables such as lettuce and avocado.

Perhaps the only good to come from that first flush of the net was an enhancement of Briefcase’s knowledge about avocado. Apparently, there are about nine varieties, though that remains a piece of information that’s very much in the ‘totally useless’ category.

Less useless is the learning experience of how the net works, how it is good for some business, how it is devastatingly destructive for others, and how we now appreciate that the world has only just begun to travel the net road.

What rekindled these thoughts about avocados and Briefcase’s first internet purchase (a New Norcia nutcake, which took a week to be delivered from Mt Hawthorn to Cottesloe), was the unfortunate collapse of the Omegatrend direct marketing business, which is said to be affecting about 70 employees and 1,000 active agents from a membership base of 13,000.

As far as can be gleaned at this early stage of the voluntary receivership, Omegatrend owes its suppliers about $2 million, which makes it a very small insolvency if, in fact, the business does end up in the corporate knacker’s yard.

Much more interesting than the amount owing, or the numbers of alleged sales agents, is the reason why the business hit problems. According to what has been reported so far, the biggest issue was finding enough people to knock on doors to convince their “friends” that Omegatrend cleaning products and cosmetics are a good buy.

Briefcase passes no judgment on the quality of Omegatrend, its products or people. But it does pass judgment on the reported claim about the company not being able to find enough people, the inference that this is a result of a boom in full-time employment, and this comment about possible recruits: “Many were no longer motivated to try and earn money through activities such as trying to sell its products”.

In a word (a long word) – codswallop.

There is never a shortage of people able to sell products, full time or part time, if the profit and/or pay are good enough. If Sir Isaac Newton was alive today that would be his fourth law of motion, which he might have described as ‘money attracts’.

Omegatrend was not a victim of a skills/salesforce shortage. It was a victim of having a sales system which had outlived its age, and become more expensive than new-age selling, the internet.

Pharmacy Direct, the mob with its hooks into the Briefcase family, is running a terrific little service that does one thing extremely well, and a number of other things pretty well.

Best of all, it eliminates a layer of salespeople between the supplier and the buyer.

Secondly, it delivers direct, and thirdly, it doesn’t involve a system that imposes on personal friendship – no more calls from ‘old friends’ trying to flog you something.

In short, Omegatrend is a victim of the net. The chaps behind the business might dispute this. The administrator, Cliff Rocke, might not agree.

But on this score Briefcase is extremely confident, simply because in business, when you’re selling the same or similar product, the cheapest price wins.

For poor old Omegatrend that means the fate of the sales force, which was probably working on a 30 per cent commission, was sealed when the travelling time for a New Norcia nut cake from Mt Hawthorn to Cottesloe was reduced to a day, and the net started to deliver on its promise.

•••

Also in the firing line of the internet is the world of pharmacy, and the man with his finger poised for a double click with his mouse is one of Perth’s best exports to Melbourne, the Sonic Healthcare multi-millionaire, Michael Boyd.

For anyone not up to speed, Mr Boyd is continuing to pursue his dream of revolutionising the medical world.

He did it once with Sonic, which is now a global pathology services provider, and he tried to do it with a general practitioners consolidation business model, a physiotherapy model, a retractable needle business and a few other ventures, all of which failed to live up to his high expectations.

The Grand Pharmacy Plan might be different. Then again, it might also be gonged-out by unamused pharmacists.

Essentially, Mr Boyd is developing a “prescription medicine vending machine”. At its purest, the device sits between a patient with a script and a chemist. Looking like three large automatic teller machines combined, the script is inserted into a scanner, a chemist checks the document, speaks to the patient to confirm the detail, and dispenses the medication, which drops down like a cool drink in any other vending machine. As with other net models, the distance between the chemist and the patient might by 10 metres (back of the shop to the front) or 10,000 kilometres (Australian Army chemist dispensing to Private Smith in Iraq).

Mr Boyd, naturally, thinks he’s on a winner and is busy dressing up his Bluepoint dispensing machine for a public float in a month or so via a company called Express Rx.

Several governments also seem to like the idea, with both the Western Australian and federal governments contributing product development funds.

The Pharmacy Guild (no surprise here) hates it. Thin edge of the wedge, old chap. Next thing you know they’ll be wanting to put one in a Coles or Woolworths supermarket.

Precisely.

•••

“Doctors are men who prescribe medicines of which they know little, to cure diseases of which they know less, in human beings of whom they know nothing.” Voltaire

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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