John Winning’s Appliance Online has helped overcome views that Australians wouldn’t embrace sales of large-ticket household goods online.
Six years after it started up, Appliance Online is now turning over more than $10 million annually and is the country’s largest online retailer of its kind, selling everything from whitegoods to vacuum cleaners.
Winning says the success of the business can be attributed to several things: low barriers to entry through a tie-in with the family business, and people’s willingness to embrace online sales if they know what they’re looking for, get good customer service and don’t have to wait too long for delivery.
But it’s not been a walk in the park: the hours are long, and over the past six years, the 27-year-old has learnt plenty about running an online business.
Tell us how you got into this business, what gap did you identify?
I was working for my parents’ business, Winning Appliances; I worked for two years doing deliveries in the trucks to customers’ homes. And then I went into sales, and at that point in time, there was a gap in our own business where we weren’t doing sales for people looking for replacement appliances. So from there, we were discussing how to get those customers – so we tried catalogues, and had some success at that point, and then had the idea of going online.
So are you competing against your family or is this an offshoot of your parents?
The businesses compete against each other, but the offerings around customer service, convenience are very similar and we share a lot of our services – the distribution, admin, purchases, accounts.
And you grew up in the industry?
Yes, it’s [Winning Appliances] 107-years-old, so I’m fourth generation in the business. The business has evolved quite a bit, and we’ve adapted the business to current trends and obviously online is a big business trend.
One thing that people have said is big household purchases are not really the domain of online retailers and that’s something people would have said to you when you starting out. Is that what people say to you now or do you think it’s changing?
Well, it’s not the case because from day one we’ve been able to prove that people are willing to buy large-ticket items. But people have always doubted it, my father and general manager at Winning Appliances doubted it, and gave me three months to prove that it would profitable.
Why do you think it worked? Obviously price is a factor, but what else is it that drives a business?
I think people are becoming more and more time-poor, and as technology advances they’re looking for convenience. An online retailer, it’s convenient, and people know what they want, and are more than happy to search for those items and take advice.
Are you seeing that people are still ordering replacement parts or is it more a churning mentality these days?
I think people make decisions that are best for them, they get a serviceman out and find out the cost of repair and make a decision based on how many years they expect to get out of the product. We do hear people saying that “it’s going to cost $300 to repair and I can get a new one for $600 that will last a long time.”
How does it work logistically? These big brands that are working with you, I assume sharing with the family business has helped.
Absolutely, that gave us a very low barrier to entry given distribution because warehousing, staff, delivery drivers, and trucks are super expensive in this space – you just have to have things in stock.
We have $10, $20 million in stock at any one time. It’s a pretty expensive way to start a business, but we were lucky enough to enter this opportunity.
But the expenses are still there, the customer support, the advertising, etc.
We were talking before about barriers to entry. I assume others have come into this space – how is this affecting your business and how are they coping with the barriers?
Often they’re larger retailers that already have stores, and the smaller players really lack in terms of the service model; there’s not as much stock so there’s longer delivery times. For us, we can turnaround the next day, if not the same days, whereas company Y, it could take 10-14 days to source the product, and then organise third-party logistics, whereas we have satellite warehouses around the country, so Victoria, New South Wales, Queensland, Western Australia and soon to be South Australia. So the stock is held close to where the customers are, and it’s free delivery and free removals of old stock.
And I assume the delivery is just built into the price?
We treat it as an overhead of doing business.
What challenges have you faced over the past six years?
I guess doing things for the first time, starting a business and learning about the different aspects of online. Dealing with a development team; there’s a team of five to 10 people constantly improving the site and doing things I couldn’t imagine being able to do.
Also the customer support team working in shifts, there are long hours from 7am to 11pm, so staging staff so the business can run across the 16 hours.
Also putting faith in staff, putting the right people in place.
How many hours are you putting in?
In the office, I could go weeks of doing 80 hours-plus, but if I’m on top of everything, I could do 10-12 hours, plus non-stop work at home. With an online business, emails always come in.
And what response have you had from bricks and mortar? Obviously Gerry Harvey and the like are complaining about online retailers, and you’re cutting into their turf. Have you heard anything from them?
Not directly. I have a lot of respect for him, and we have great competitors in this space, but whether competing offline and online, we focus on providing the best service.