Australian E-tailers Warn Buy.com of Rocky Road

SYDNEY (05/02/2000) - Australian electronic retailers have issued a stern warning to the much-hyped U.S. e-tail heavyweight Buy.com Inc. that it cannot expect to simply stroll into the local market and take over.

The missive comes as Buy.com prepares for its official launch into the Australian online retailing market this Thursday May 4.

"We have seen lots of American companies come and go," said Ozbuy.com general manager Michael Glezerson, warning Buy.com must be wary of the cultural differences between Australia and the U.S..

"Entering the Australian market is not going to be easy -- there are some very strong players who have been around for years."

However, Glezerson did welcome the competition Buy.com will bring to the Australian market.

"It's nice to see new online businesses starting up because it encourages others to go online and it encourages competition," he said.

Buy.com is ranked as one of the top five U.S. online retailers. The company is a joint venture between Buy.com, Softbank and epartners, which is 50 percent owned by News Corp.

While the Australian site works on the model of the U.S. parent company, local e-tailers say it will not be able to employ the same strategies here.

The launch of Buy.com's Australian site has not been without hiccups, including legal action over the Australian domain name, buy.com.au, owned by online auctioneer, Duncan Angus. Buy.com was able to circumvent the problem by having customers go through the U.S. portal and select which country they purchase from.

"I think they will encounter a few problems in the Australian market -- the most obvious is not having a URL for Australia," said Estore's general manager Steven Spilly. "It is not an insurmountable problem, but it is major. If I were starting an online retailing store here, I would change the company name to make sure I got an Australian address."

Spilly said the company will find the Australian market very different to that in the United States.

"The Australian online market is radically different to the U.S., and if they try to adopt the same sales techniques there could be problems. As a public company, they cannot position themselves on price. They will have to offer more than just discounts in terms of customer service and delivery," he commented.

"They are definitely behind the eight ball initially because they have no knowledge of the Australian market, no track record of fulfilment and they need time to develop alternate sources for additional product ranges."

Dstore's general manager David Gold said he welcomes any new entry into the market because it encouraged the consumer to shop online. But he agreed Buy.com would be unable to operate on a low margin basis.

"Even if the advertising market is sustainable in the U.S., it is not in this market," he said. "I think the big players here in the future will be the multichannel players."

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