Part of the reason, at least from Smartbuy's perspective, concerns a major change of business focus for the up-and-coming etailer that it needed to make, or face oblivion.
"We started out with the intention to launch a pure-play 'Smartbuy' branded e-commerce Web site and call centre, selling software, console games and computer accessories," explained Tiffany Downing, marketing manager for Smartbuy, in a recent email interview with ZDNet Australia. "Our original aim was to create Australia's best online superstore in that area."
However, a major shake-out of the technology stocks in April last year unsettled Smartbuy's belief in that business model. "The Nasdaq crash prompted our investors to question the long-term viability of that concept," said Downing. "They were no longer willing to support a pure-play e-tail business in the Australian marketplace."
Another significant problem for the fledgling company was that its distribution and fulfilment partner, Dataflow Computer Services, went into receivership in last May. "Obviously, we really had to rethink the business from the ground up!"
The times they are a changin'
The process of rethinking the business involved finding a new distribution partner, Post Logistics, which is a division of Australia Post. Also, Smartbuy decided that the best way forward was to "partner with traditional retailers and bring stategic clicks-and mortar alliances to the market".
The fact that Smartbuy was a fledgling company actually helped it to refocus quickly and easily. "We were lucky in many ways that those events occurred when they did," said Downing. "We hadn't yet launched Smartbuy to the public or spent our launch budget. We were in a more favourable position than other dot-com companies who were live and operating, burning huge amounts of cash, and faced with the reality that floating the company would not be the answer."
Tony Gattari, Smartbuy's founder and managing director, approached Tandy in June last year with the idea to "use Smartbuy's services and infrastructure as an outsource e-commerce solution for Tandy Australia".
"Tandy wanted to be the first electronics retailer to launch an online superstore in Australia," explained Downing. The key to arrangement was ensuring the site was quick to market and that Tandy did not require them to get involved with the handling of the specifics of the site. "They didn't want to consume their internal resources with an area they had no experience in... But they wanted the outcome to be consistent with their current business."
