Tuesday, March 26, 2013/
Ruslan Kogan has made quite the impact on the local consumer electronics scene. From a small start-up in 2007 to a $250 million powerhouse today, Kogan has made a name for himself in spruiking the company – and his own name – in unusual ways.
We spoke to Kogan about his humble beginnings, his supply arrangements, and his move into telecommunications.
When I first started Kogan the general sentiment was no one would ever buy a tv online and that sort of stuff, and then in our first year I did $300,000 of revenue. And I was like, “yeah, check this out!”
Then the next year, we did $800,000. At that stage I thought it’s gone bananas. Year after, it was $2.8 million. I was running a business. It went from $2.8 to $8 million, so on, and no we’re on $250 million.
It’s easy to grow from $300,000 to $800,000, but once you start doing serious turnover, try and maintain it. I think $250 million in our seventh year is significant growth.
We had a lot of haters along the way. But yeah, we’re now at that point we were are significantly hurting the Harvey Normans and JB Hi-Fis. We have them directly responding to our marketing.
We’re no longer a tiny little speck of a business.
Of course I want to hit $1 billion. I want to hit the many billions, I think we’re a year away from that if we maintain our current growth.
I laugh at the whole Kickstarter concept, because I know what it takes to actually run a business. We are in the business of actually going through the huge effort of producing [a business], and here are guys getting millions of dollars for making a video.
Mobile services is an awesome fit for our business. We sell thousands of smartphones a day. We have a brand associated with technology. Nearly every technology device is connected to the internet – they need broadband.
Don’t be surprised if you see us selling NBN services. There are lots of fits to our business and we’re expanding into multiple directions, we have a customer base that’s very loyal.
The migration to Kogan mobile has been the biggest migration in Australian telecommunications history.
We haven’t spent a cent on telco marketing. It reaffirms our position. We’ve got more customers on Kogan mobile than some mobile carriers.
If we don’t change anything, we’re going to grow by 500% in the next five years. That’s if we don’t optimise anything, don’t change anything, we’ll continue to still grow.
But we’re concentrating on getting smarter in the way we do things.
Take the Samsung Galaxy phone. At Kogan that phone is $449 and at Harvey Norman it’s over $800. Typically consumer electronics works on margins of 5-10% – but how can Harvey Norman sell it at that price?
Retailers accept there are exclusive supply arrangements. But at Kogan, we want competition for the customer. We want competition at the supply level.
Distributors from all over the world bid on our business. Whoever can give us the lowest price, that’s who we award the supply contract to for that today. But if they win today, they may not win tomorrow.
By giving that competition, we’re able to give a lower price than other stores.
Suppliers didn’t want that at the start. But now they see we’re pushing volume, they’re going along with it.
We don’t want to be someone’s bitch. We don’t want to be locked into one supplier.
Our perception as discount will never change. I’m happy to be everybody’s first choice for a second television.
Four or five years ago, we weren’t as good as we are today. And in two years, we’ll be even better. It’s a continual improvement process.