Kogan.com

Kogan.com
Private company
Industry online retail, Consumer electronics
Founded 2006
Founder Ruslan Kogan
Headquarters Melbourne, Australia
Area served
 Australia, United Kingdom
Key people
 CEO: Ruslan Kogan,
Executive Director: David Shafer
Products High-definition televisions, tablet computers, smartphones, digital cameras, home appliances, digital radios, PVRs, netbooks, Blu-ray Disc players, video cameras, e-book readers
Website www.kogan.com.au

Kogan.com is the largest online department store in Australia, selling tens of thousands of products through its online direct-to-customer store.[1] The company, founded in 2006 by Ruslan Kogan.

On Tuesday March 15, 2016, Kogan.com acquired Dick Smith's online business.[2] The physical retail stores will be shut down, with the Dick Smith brand to continue and be transitioned as an online-only consumer electronics store.[3]

The company competes on price by selling electronics, home appliances and groceries[4] direct to consumers through Kogan.com.[5]

Kogan achieved $3 million in its third year,[6] followed by $8 million in the fourth,[7] $22 million in the fifth,[8] $70 million in the sixth,[9] and over $200 million in the seventh year.[10] Kogan is projected to produce more than A$350 million in fiscal 2014, and has been growing at between 200% and 300% per year since its 2006 inception.[11] The Wall Street Journal speculates Kogan is worth over $400M.[11]

History

Kogan.com was established in 2006 by Ruslan Kogan in his parent's garage.[12] He started with a website offering LCD televisions that would be assembled for him in Chinese factories.[13]

In October 2010, Ruslan Kogan announced that Kogan.com would expand to the UK.[14] The company officially entered the UK market on 15 November,[15] with a range of LED TVs and GPS units.[16][17] The expansion makes Kogan the only Australian-owned international consumer electronics brand.[18]

On 14 September 2011, Kogan began shipping products from the company's Hong Kong operation to customers all around the world.[19] Bypassing wholesalers, distributors and retailers in this way enabled the company to offer products by brands including Apple, Canon, Nikon, Samsung, Motorola and more at low prices.[20][21]

Awards

The company has won the following awards:

LivePrice

On 1 December 2010[29] Kogan announced the launch of LivePrice, an invention that allows consumers to buy a product before it is manufactured for a discounted price.[30][31][32][33] After launching LivePrice in Australia, Kogan sold nearly $330,000 worth of products using the new pricing system in 24 hours.[34] After being operational in Australia for less than three weeks, LivePrice had resulted in over $370,000 of price deductions across the entire range.[35] LivePrice has a patent pending.[36]

Controversies

2009 advertising controversy

In April 2009 the company was ordered by the Australian Competition and Consumer Commission (ACCC) to modify its advertising, after it was accused of possible misleading conduct. The ACCC stated that price comparisons in the retailer's advertisements in the Herald Sun newspaper and on its website may have misled customers, and the ACCC's chairman Samuel said the advertisements may have breached sections of the Trade Practices Act 1974. In response, Kogan.com agreed that it would not advertise its products at a discount unless that product had been advertised for sale at a higher price, that it would implement a trade practices law compliance program, and that it would not make representations about the savings available to consumers unless the basis by which those savings are calculated was also stated.[37]

Harvey Norman

In August 2010 Kogan began a public dispute with Gerry Harvey, co-founder of well-known Australian retailer Harvey Norman.[38] The argument concerned the future of consumer electronics retailing in Australia, and in particular whether Australians should shop online or in a bricks and mortar retailer.[38][39] Kogan challenged Harvey to a TV debate, which he declined.[40] Kogan claimed Harvey "chickened out",[41] causing Harvey to respond by calling Kogan a "con".[38] Kogan responded with two satirical advertisements criticising Harvey Norman.[42]

Kogan renewed the dispute in November 2010, criticising Harvey Norman's purchase of Clive Peeters.[43] The controversy continued into December, when Harvey announced plans to follow Myer and open up an online store based in China to avoid GST and cut costs,[44] causing Kogan to claim that Harvey Norman and Myer were posturing to force the Government to change import laws, and that their China-based stores were a hoax.[45] Kogan stated that if Harvey Norman and Myer succeeded in opening their China-based online stores for three months, he would place a prominent link on kogan.com.au advertising his rival's store.[46] Kogan also claimed that Harvey Norman was "full of it",[47] and published an article lamenting the Australian business scene's focus on regulation rather than innovation.[48]

In July 2011, Kogan came to the public defence of Harvey when he came under fire for Harvey Norman's alleged logging practices.[49] Kogan stated: “Like him or hate him, Gerry Harvey is not a criminal – he should not be singled out for some supposed moral crime simply because he has complied with the law, and has sought Australian timber to use in his furniture.”[50]

JB Hi-Fi

In March 2011, Kogan argued that some of Australia's biggest retailers were overly reliant upon the success of Apple, claiming that 30% of Australian retailer JB Hi-Fi's revenue in 2010 had come from Apple or Apple related products.[51]

Terry Smart, CEO of JB Hi-Fi, responded by saying "That figure is not even close to reality. We don't have a big enough supply that represents such a substantial part of the business."[52]

Kogan responded by challenging Smart to a one million dollar bet that JB Hi-Fi would not stock Apple hardware by 14 March 2014.[53] The deed for the bet is still available online, though it has not been accepted.[54]

Kogan also began giving away free HDMI cables to anyone who had bought a TV from JB Hi-Fi in 2011,[55] accusing JB of "trying to trick people into thinking they need a $200 cable after buying a FULL HD TV."[56]

In October 2011, Kogan took out a full page ad in Australia's biggest newspaper calling for JB Hi-Fi to change their slogan, "Always Cheapest Prices."[57] JB Hi-Fi did not respond to the challenge.[58]

Australian government set-top box scheme

In May 2011 the Australian Government announced a plan to provide Set Top Boxes to pensioners free of charge.[59]

Kogan and other leading retailers criticised the scheme for spending too much money. In 2011, the program had an estimated total cost of $308 million, with each installation costing over $350.[60] Kogan said his company could deliver it for $50 million.[61]

In February 2012 new figures revealed that the cost per installation had risen to $698,[62] prompting Kogan to make further public statements attacking the Government's inefficiency in spending.[63][64][65][66]

However, it was later clarified by the Federal Government that these figures were falsely reported by the Australian Newspaper and that installations ranged from $158.00 to $492.00.[67] It was revealed on 8 February 2012 during parliamentary question time, that Kogan.com had tendered for the Scheme to roll-out set-top boxes for New South Wales which commenced in June 2012.[68]

UK Cable Con

In July 2011 Kogan launched its "Cut the Cable Con" campaign in Britain.[69] The campaign targeted John Lewis and Currys, criticising the way that such retailers attempt to sell expensive cables with their new televisions and computers, and accusing them of a campaign of "deliberate misinformation" with regard to this issue.[70] Kogan.com began giving away cables free of charge with every television purchased.[71]

John Lewis and Currys defended the practice of charging for cables by pointing out the various features of their cables.[72] Kogan responded by stating: "I think it's a bit misleading what they've said. When it comes to durability, it's an HDMI cable that you'll use to connect your TV to a Blu-ray player, or a Playstation, or another device. You're not using it as a skipping rope or to go rock climbing with."[73]

Divorce from traditional retail

In August 2011 Kogan announced his desire for online retailers to be viewed separately from traditional retail by economists, stating that "If we have been grouped with traditional retailers, then we want a divorce!”,[74] and arguing that all of the innovation and growth is in online, rather than bricks-and-mortar, retail.[75] Business Magazine BRW noted the similarity of the "divorce" to a campaign by NAB.[76]

Apple vs. Samsung

When Kogan began selling the Samsung Galaxy Tab 10.1 in September 2011, Apple demanded that the company immediately stop selling the product, because of an ongoing patent dispute with Samsung.[77] Apple also demanded full details of Kogan's suppliers. Kogan agreed to stop selling the product until the patent dispute was resolved, but refused to disclose any further information.[77] The Federal Court overturned the injunction on the Samsung Galaxy Tab 10.1 on 30 November 2011,[78] and Kogan began selling the product again soon after.[79]

Microsoft Internet Explorer 7 Tax

On 13 June 2012 Kogan introduced a Microsoft Internet Explorer 7 'tax', which charged any user shopping at the site from IE7 an extra 6.8% – 0.1% for every month the browser had been on the market.[80] Kogan explained that he had decided to charge the 'tax' because: "The amount of work and effort involved in making our website look normal on IE7 equalled the combined time of designing for Chrome, Safari and Firefox."[81] Kogan accepted that it was unlikely that anyone would actually pay the charges, stating that the goal of the campaign was to encourage users to download a more up-to-date version of Internet Explorer, or a different browser.[81] The 'tax' was the most talked about topic on social media service Twitter on the day following its launch.[82]

Several weeks later, search results for kogan.com disappeared from Microsoft Bing search results, with Kogan stating "We hope Microsoft were not too offended by what we did with the IE7 tax and this is just a temporary glitch."[83] Microsoft denied tampering with the search results, stating that: "The ranking of our results is done in automated manner through our algorithm which can sometimes lead to unexpected results."[83]

Misleading eBay sale promotion

On 18 January 2016 the Australian Competition and Consumer Commission (ACCC) received a payment for penalties totaling $32,400 for breaches of the Trades Practices Act.[84] The basis of the fines related to a promotional Fathers day discount sale Kogan held on their eBay store.

The ACCC determined that Kogan had advertised three products with a reduction of 20 percent during their Fathers day sale between 24 and 29 August 2015. Kogan were found to have increased the price of the products before or at the start of the sale resulting in a real reduction of only 9 percent. Shortly after the promotional discount had ended Kogan had returned the products to their original lower price.

Products

High Definition LCD televisions and LED televisions make up the bulk of Kogan.com' products. In 2011, after asking its customers whether they would like to see Kogan supply 3D televisions,[85] the company also released a range of 3D TVs.[86] Kogan also sells the Agora range of computing products, including a laptop,[87][88] a netbook[89] and 8" and 10" tablets. The Agora range are powered by Google's open source Chromium and Android operating systems – the Agora laptop was the world's first Chromium-powered laptop.[87] The Agora netbook's specifications were chosen after customer feedback through the Kogan weblog.[89] Kogan also offers a region-free Blu-ray player[90][91] and a range of digital internet radios. Kogan also sells a range of home appliances, including microwave ovens, an automatic coffee machine, and a vacuum cleaner.[92][93][94]

In 2012, Kogan released a series of new products into its line, starting in January with its Android wireless keyboard and track pad. The device, which claims a distance of 20 meters unobstructed wireless range, works with almost anything which has a USB including Android, Linux, Windows, and OSX as well as Smart TV's, Xbox, PlayStation, and Home Theatre Systems.[95] Soon after, Kogan.com added brand name tech products such as the iPhone 4S and iPhone 5, iPad 2 and the Apple MacBook air, selling them at discount prices.[96][97][98]

In March 2012, Kogan began selling its custom iPad dock and speaker system that uses a custom iOS app for music playback and internet radio streaming.[99][100][101]

Kogan.com has also caused controversy with its product range. The company voiced its opposition to the Australian government's proposed Internet filter by releasing a fictional parody product, the Kogan Portector,[102] and received media attention during Australian Prime Minister Kevin Rudd's 2007 election campaign because of its "Kevin 37" television, a 37" television marketed using advertising parodying Rudd's campaign, which initially sold for $900 – the value of the economic stimulus payments made to many Australians in April 2009.[103][104]

Kogan financial results

Sales at Kogan's online store in November 2011 were $8.12 million, up 330% from $1.89 million in the same period in 2010.[105] During the period there were 708,525 visitors to Kogan.com.au, an increase from 222,411 the year before.[106]

In October 2010, BRW ranked Kogan as Australia's 15th fastest growing company with yearly revenue of $12.22 million.[23]

Also in 2010, the company released Q1 FY11 growth figures,[107] with revenue up 48.12% on the previous quarter.[108]

The business recorded its highest single day of sales ever on 31 July 2012, exceeding $1 million in transactions.[109]

In October 2012, Kogan again made the BRW. list of Australia's fastest growing businesses, this time ranking at No. 14, noting a 123% growth rate since 2011.[110]

The professional services firm, Deloitte, listed Kogan as one of the top 10 on the Fast 50 Australia in November 2012.[111]

Kogan Pantry

In January 2015 Kogan.com launched Kogan Pantry, an online service delivering non-perishable foods, confectionery, cleaning products, toiletries, and pet food.[112]

Kogan Pantry has a smaller range of products than the biggest Australian supermarkets, Coles and Woolworths. However, independent consumer group Choice says the prices at Kogan pantry are 50-60% less than the big supermarkets.[113]

According to News.com.au, over 30,000 products were sold within the first six hours of the launch.[114]

Kogan Exclusive Brands

In July 2014, Kogan.com launched its first exclusive brand beyond consumer electronics, called Fortis.[115]

By controlling the design, manufacture, packaging and distribution of the products, Kogan.com had increased the number of exclusive brands available to 10, within a year.[116]

Kogan Mobile

Vodafone

Kogan Mobile was re-launched in Australia on the Vodafone network on 19 October 2015. The deal was announced at a press conference by CEO Ruslan Kogan, Vodafone Australia CEO Inaki Berroeta, and Kogan executive director David Shafer. Kogan Mobile is offering 3G-only mobile network with plans to offer 4G in June 2016.[117]

Kogan will be using the Vodafone network, and Vodafone will handle all customer service.[118]

Telstra / ispONE

Kogan Mobile was a pre-paid mobile phone service provider in Australia. It was known for being the first pre-paid mobile provider to use the widespread Telstra network.[119][120]

Kogan Mobile launched on 12 December 2012. By 14 December, it had already sold more than 10,000 SIM cards.[121][122]

In response to the announcement, a spokesman from Telstra stated; "Telstra Wholesale is not in partnership or any other direct relationship with Kogan."[123]

Kogan Mobile experienced many problems with customers being suspended for "overuse" despite offering an "unlimited call" plan.[124][125] Australian Communications Consumer Action Network (ACCAN), stated that Kogan was "falling afoul" of the Telecommunications Consumer Protections Code, introduced in September 2012, which states that a product cannot be called unlimited if it is not actually unlimited.[126]

Kogan stated that they did not suspend customers but is rather the provider ispONE.[127] In April 2013, Kogan took the provider ispONE to the Victorian Supreme Court. Kogan won an injunction ordering service provider ispONE to reinstate the 600 accounts of Kogan Mobile users it had suspended after deeming them to be using excessive the service in excess of the levels permitted. The Business Review Weekly said this was not a good start for the 4-month-old [mobile] business.[128]

The Kogan Mobile service ended with the collapse of ispONE on 19 August 2013.[129]

References

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  3. ↑ Chung, Frank (15 March 2016). "Ruslan Kogan rescues Dick Smith". Daily Telegraph. Retrieved 26 March 2016 – via News Limited.
  4. ↑ "Ruslan Kogan promises half-price groceries with Kogan Pantry, has Coles and Woolworths in sights". The Sydney Morning Herald. 30 January 2015.
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  81. 1 2 World's first 'tax' on Microsoft's Internet Explorer 7, BBC News, 14 June 2012, retrieved 7 December 2012
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  87. 1 2 "Kogan Agora is world's first Google Chromium OS laptop, ships next week". Engadget. Retrieved 1 September 2012.
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  114. ↑ New player in grocery war offers to slash prices, News Ltd, 16 February 2015, retrieved 2 March 2015
  115. ↑ Expanding Kogan eyes sport market with Fortis brand, Fairfax, 23 July 2014, retrieved 22 June 2015
  116. ↑ Ruslan Kogan broadens his retail range, launching four new brands, News Ltd, 8 January 2015, retrieved 22 June 2015
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  123. ↑ "Telstra distances itself from Kogan mobile play". Afr.com. Retrieved 15 June 2013.
  124. ↑ "Kogan Mobile Dumping High-Usage Customers | Lifehacker Australia". Lifehacker.com.au. Retrieved 15 June 2013.
  125. ↑ Porter, Claire (19 March 2013). "Customer booted from Kogan Mobile service for using his phone too much". News.com.au. Retrieved 15 June 2013.
  126. ↑ Porter, Claire (19 March 2013). "Kogan Mobile may have breached telco code, watchdog claims". News.com.au. Retrieved 15 June 2013.
  127. ↑ Taylor, Josh (2 April 2013). "Kogan blames ispONE for mobile customer woes". ZDNet. Retrieved 15 June 2013.
  128. ↑ "Kogan Mobile's communication failure". Brw.com.au. Retrieved 15 June 2013.
  129. ↑ "Post from 19 August 2013". kogan.com.au. Retrieved 8 October 2014.

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