Growth, Management, Sales and marketing

OHKI takes aim at Kogan as online retail war intensifies

Oliver Milman /

Start-up electronics retailer OHKI is set to further ignite competition in the online retail space after claiming that a new acquisition will help it overtake high-profile rival Kogan within a year.

 

OHKI, which appointed prominent entrepreneur Siimon Reynolds as its chairman in July, has entered into an exclusive heads of agreement to purchase Stax Electrical, a Sydney-based electric goods retailer.

 

The details of the deal to buy Stax, which is 18-years-old, have not been revealed.

 

However, OHKI, which only launched in December last year, says that the move will allow it to purchase “name branded” electrical product at a 15% greater margin, meaning that current margins of 25-30% will increase to 35-40%.

 

The combined business is estimated to generate a revenue of more than $7 million, with a “healthy” profit. The deal, which will be funded via a debt facility, is expected to be concluded prior to Christmas.

 

Stax currently supplies businesses with new electrical products in return for their old items. The combined business will be able to offer a range of around 11,000.

Lucas McEntee, managing director of OHKI, tells StartupSmart that the retail compared favourably to Kogan, which announced yesterday that it would start offering new brands, including Apple iPads.

 

“People want products with the bells and whistles – Kogan realised that yesterday, but we realised it awhile ago,” he says.

 

“Kogan has turned into an importer of products from Hong, with a three-day dispatch. With us, you’ll pay a bit more, get next-day delivery and not be at risk of ‘grey’ imported goods. You know what you’re getting.”

 

“You don’t really know what you’re getting from Hong Kong. Price is number four or five on the list of what people look for.”

 

“We are already doing half of what he claims he is doing. A race to the bottom on price isn’t a game we want to play. We want to be a fair dinkum Aussie retailer with locally serviced and supplied products.”

 

“I don’t see it being an issue for us to overtake them (Kogan) in the next 12 months.”

 

McEntee says that OHKI is setting up satellite warehouses across Australia in order to fulfil the company’s pledge of next-day delivery.

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