AIB Featured Business Kogan
Dubbed “Australia’s largest online retailer”, Kogan.com is best known for selling tens of thousands of products through its online direct-to-customer store. Founded by Ruslan Kogan in 2006, the company began in his parents’ garage with LCD televisions shipped directly from the manufacturer to customers. This was considered a revolutionary business model as it was able to bypass any unnecessary costs, providing savings to customers. Kogan sells everything from electronics such as TVs, tablets and phones, to products for the home, kitchen, garden, fitness industry and more.
The Kogan mission claims to “provide the products that you want, at a price you can afford, with a safe returns policy and daily deals for loyal subscribers”. Since inception, the company has gone from strength to strength experiencing huge growth. In its third year it achieved $3 million, in its forth year $8 million, and by its 8th year it boasted more than $200 million in sales. With consistent growth of between 200% and 300% per year, the company is now estimated to be worth over $400 million. In 2010, Ruslan Kogan announced that the organisation would expand to the United Kingdom. This expansion made Kogan the only Australian-owned international consumer electronics brand.
As time has gone on, the company has been able to grow exponentially due to constant diversification of the offering. Kogan has introduced innovative ideas such as LivePrice – a tool which allows customers to buy a product before it is manufactured at a discounted price. In January 2015, Kogan Pantry was also launched as an online service which delivers non-perishable foods, cleaning products and toiletries. While Kogan Pantry has a smaller range than Australian supermarket giants Coles and Woolworths, their prices remain 50-60% lower than these competitors. According to News.com.au, over 30,000 products were sold within the first six hours of the launch.
Like any business, however, Kogan has had its fair share of controversies and challenges as well. Ruslan Kogan has not shied away from challenging Australian competitors such as Harvey Norman and JB Hi-Fi over the past few years, as well as UK competitors John Lewis and Currys. In 2012 the organisation made a controversial business decision with the introduction of a ‘Microsoft Internet Explorer 7 Tax’. This was where the site charged customers using IE7 an extra 6.8% for the work involved in making the Kogan website look normal on the browser. According to Kogan, this work was significantly more than what it took to optimise the site on Chrome, Safari and Firefox. While Kogan acknowledged that it was unlikely that anyone would pay the charges, the goal of the campaign was to encourage users to download a more up-to-date version of IE, or use a different browser. Interestingly, Kogan.com disappeared from Microsoft Bing search results several weeks later.
Despite controversies, the Kogan brand and business remains very strong in 2016. According to the Kogan website, it has now sold over 3 million products worldwide, operates in 15 countries and has a 99.8% customer satisfaction rate. It has also won several awards including BRW 2011 Fast 100 at rank 27 for the fastest growing companies in Australia, the Power Retail’s Top 100 Online Retailers of 2014 at rank 3, and the Australian Retailer’s Association Retail Innovator of the Year 2010 award.
What do you think?
With the online business landscape constantly evolving, it will be interesting to see how consumers’ habits change and whether businesses such as Kogan will continue to thrive. I am interested to hear what you think though – what do you admire most about Kogan’s business journey? Comment below and share your views.
Ruslan Kogan was the guest speaker at one of the Melbourne AIB Alumni events – see the list of business lessons taken away from his speech here.
This article was written by Laura Hutton on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources have been used to prepare this article: Kogan, Wikipedia, Smart Company, Dynamic Business, Wall Street Journal, News.com.au
Image Credit: Kogan