Juha Saarinen is a tech blogger for nzherald.co.nz.

Juha Saarinen: End of an empire looms at Dick Smith

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Aussie discounter wraps up last parts of electronics store but will concentrate mainly on online trading.
Dick Smith went from a billion-dollar company with thousands of employees and the first port of call for tech supplies, to a sad business failure. Photo / Michael Craig
Dick Smith went from a billion-dollar company with thousands of employees and the first port of call for tech supplies, to a sad business failure. Photo / Michael Craig

The last chapter in the Dick Smith saga has started, with Aussie discounter Kogan putting in the winning bid for the remnants of the dying electronics store empire on both sides of the Tasman.

It's the finale in what turned out to be an ignominious end for Dick Smith, a household name that went from a billion dollar company with thousands of employees and the first port of call for tech supplies, to a sad business failure.

Now, Dick Smith is in the hands of Australia's cut-price king Ruslan Kogan who has earned a name in Australia for aggressive business tactics, sledging established competitors and for getting fined by the government consumer watchdog.

Kogan entered the New Zealand market in March 2014 and the Dick Smith deal will no doubt give the company greater traction locally. Surprisingly enough, Kogan won't take over the Dick Smith Trade Me store, which would have provided even better access to the New Zealand online retail market.

Buying Dick Smith is most likely a great move for Kogan. It carries greater weight than Kogan, which has struggled to entice mainstream vendors to supply products for fear of upsetting the big name retailers.

Unfortunately for the majority of the 3300 staff who were employed by Dick Smith, there's probably zero chance of Kogan reviving any of the 393 physical stores in Australia and New Zealand. The deal was for the online stores only, plus the Dick Smith brand and its associated intellectual property.

Which is not to say that Kogan won't open any stores. The retail entrepreneur was originally vehemently opposed to physical stores in favour of online shopping, but admitted in December last year that that absolute stance was wrong, and opened a pop-up shop in Melbourne's posh Prahran. Kogan might just have to work out how to create a profitable physical presence to bring in the cash, as the online Dick Smith will be just a fraction of the size of the old company.

It's the finale in what turned out to be an ignominious end for Dick Smith.

Together, the physical Dick Smith stores and the online outlets pulled in just over A$1.3 billion in sales according to the company's 2015 annual report. In comparison, the New Zealand and Australian Dick Smith websites pulled in just over 8 per cent of sales, and are expected to bring in around A$95 million a year for Kogan.

What about long-suffering Dick Smith customers then, who faced not having gift cards honoured (and which Kogan offered to swap for their own in Australia), and were left wondering if warranties on products bought were worth anything?

Those customers were part of what swung the deal for Kogan - or rather, the access to Dick Smith's million-name customer database did. Yes, if you have registered your details with Dick Smith, they will be given to Kogan along with the online business - and that's perfectly fine, apparently (tinyurl.com/nzh-dsedb).

An email has gone out to customers in the database, telling them they can opt out of having their details transferred to Kogan. To my mind, this is the wrong way to do it: customers whose details are in the database had entered into a relationship with Dick Smith, not anyone else. Trading inferred customer relationships that are transferred to new owners is just ugly.

If Kogan wants that relationship to continue, the company should ask users to opt in, perhaps with a sweetener deal and not make them opt out.

What's more, there's only a limited amount of time to opt out - you have to do so by 5pm, March 22, or Kogan gets your details, which isn't right either.

To opt out, go to: tinyurl.com/nzh-dseoptout and fill in the form (which incidentally had the wrong, March 14 deadline when I checked it out). It would also be better if the receivers who presumably set up the opt-out form had used a link that goes to their domain, and not the TypeForm site, to collect the user information - doing it this way could attract phishing scammers.

How long will Dick Smith live on then? My bet is that it will be around until Kogan's sharemarket float that's supposed to happen later this year is done and dusted, but no longer. Perhaps that's for the best.

- NZ Herald

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Juha Saarinen is a tech blogger for nzherald.co.nz.

Juha Saarinen is a technology journalist and writer living in Auckland. Apart from contributing to the New Zealand Herald over the years, he has written for the Guardian, Wired, PC World, Computerworld and ITnews Australia, covering networking, hardware, software, enterprise IT as well as the business and social aspects of computing. A firm believer in the principle that trying stuff out makes you understand things better, he spends way too much time wondering why things just don’t work.

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