Franchisees urged to get online to compete

Franchisees who wish to compete with overseas online retailers should approach their franchisors about enhancing their web presence, according to eCommerce experts.

Adrian Bortignon, principal of eCommerce consultancy firm Comument, says any franchise model can establish an online presence.

It’s been suggested that selling online is less than ideal within franchise models as it could result in reduced revenue for individual franchisees.

Tim Richardson, founder of consulting firm GrowthPath, says this could be a reason for Harvey Norman boss Gerry Harvey’s hesitation to fully embrace online. Harvey Norman is one of a number of large Australian retailers currently campaigning for the government to add GST and duty onto consumer purchases made via overseas online retail portals.

“I imagine that his concerns are that prices and margins would fall compared to in-store, and an online store would cannibalise sales and profits from the traditional stores, including franchisees,” Richardson says.

“The franchise problem may be tricky – how to handle a shift of sales away from franchisees and into a centrally-run website?”

Bortignon says the benefits of going online outweigh the risks associated with centralised revenue.

“Every franchise or franchisee should have an online presence if only for the purpose of driving foot traffic into their stores,” he says.

“Video Ezy do it very well. You can’t buy anything from their website but they deliver a lot of content on their corporate website, which develops interest about what they sell and rent in-store.”

“Social media that is enfolded into the business also increases interest because it humanises the brand. Being involved in the conversation is a really important element for any retailer while they’re in the online space.”

“Where there is a concern within the franchising model is the sharing of revenue [as a result of online sales]. Perhaps revenue could go into a communal pool and be shared for marketing purposes.”

“Or the money could be distributed depending on where purchases are made from.”

Bortignon acknowledges franchisees may shy away from an online presence for fear of losing customers, particularly franchisees in remote areas.

“If you run a regional franchise, the idea of losing business to a centralised model might be a little bit frightening,” he says.

“But if you are a regional franchise, you typically have a limited pool of customers – people who live in proximity to your business. By going online, you have the potential to reach a much wider audience.”

Bortignon’s top tips for franchises looking to establish an online presence:

1. Incorporate a store finder so that customers can easily locate their nearest store or the ones that stocks their desired products.
2. Have some sort of representation of your products and services.
3. Include a link into at least one social media platform so that franchisees have an opportunity to engage their customers in conversation.