Kogan.com founder reveals plan to take on Amazon and give Aussie telco industry a shake-up

HE is the self-made retail millionaire. And now this Aussie has a secret plan to not only take on Amazon, but beat them.

Ruslan Kogan remains confident he can take on Amazon.

WE ENTER the penthouse of a hotel overlooking the Las Vegas strip and are greeted with an extravagant platter of lobster tails, gourmet cheeses and artisan breads.

Our host arrives from behind a closed door wearing sneakers, jeans and joke T-shirt usually reserved for a discount souvenir store — not what you would really expect from a millionaire.

He is relaxed and jokes around about South Park, not showing any signs of concern the company that has made his fortune is now in direct competition with online retail goliath Amazon.

But after talking with Ruslan Kogan — the founder of online retail store Kogan.com — it all becomes clear.

He’s calm because he’s been here before. He welcomes competition and doesn’t think his business model is going to stop him from making money.

He is so confident his online retail store will maintain the discount prices that made his business thrive that he also has plans to shake-up the Aussie telco industry.

TAKING ON AMAZON

For the past 11 years, Kogan.com has gone from selling two TVs to stocking more than 50,000 products including consumer electronics, rugs, watches and everything in between.

The website has become renowned for its cheap prices — attributed to not having traditional bricks and mortar outlets like Harvey Norman and JB Hi-Fi.

And despite internet shopping only accounting for around 7.4 per cent of the retail sector in Australia, Kogan welcomes another online retail store to the market.

“We’re excited by Amazon’s launch, anything that can be done in Australia to bring more significance to our online retail industry to make more people aware of it, the better,” he told news.com.au.

Kogan believes history has shown the introduction of a big marketplace player will ultimately boost online shopping as a whole, which is something he is both prepared and excited for thanks to the flood of data collected since launching his business.

“We consider our data to be very valuable and we have a lot of it,” he said. “We are one of the biggest advertisers on Google and know what people are searching for and how many impressions every term gets.”

Kogan products can be found on Amazon.

The 35-year-old said this allows him to be in the business of responding to customer demand rather than creating it, which means he doesn’t have to raise prices to increase profit margins.

“We order stock at the right time in the right quantity so we don’t have excess inventory,” he said. “We know when to order s***loads of fidget spinners and when to discount them and never order again.”

As a testament to how much Kogan values data, every employee — no matter what department or position — must take an analytical reasoning test and Microsoft Excel data modelling test before they are hired for the position.

“We joke we are a statistics business masquerading as a retailer,” he laughed.

Ever the businessman, Kogan understands his competition and said he views Amazon closer to eBay than traditional online retail outlets.

And in a very smart move, he doesn’t blacklist the marketplaces, rather he sells his exclusive Kogan-branded products on both platforms for extra revenue.

“We have been on eBay for over 11 years and have hundreds of products across 16 Kogan.com exclusive private label brands on Amazon.”

THE SHAKE-UP TELCOS NEED

Kogan has heard all the horror stories about customers waiting to be connected to the National Broadband Network and plans to fix this by offering his own Kogan.com NBN service in the coming months.

“With the NBN, we are in a position where we have all these teclos with fixed infrastructure that have had capital expenses building out networks over the last few decades — all of that just becomes meaningless,” he said.

“Everyone gets to buy at the same price from NBN and it becomes a customer acquisition play: Who can acquire customers the cheapest?”

And Kogan believes he in the position to be very competitive because he has already built a brand with a huge customer base, so cost of acquisition would be very cheap for him.

“As a result, we can pass these savings onto the customer and build and even more compelling offering,” he said.

“It’s basically a government-mandated switchover of a huge utility that people want, need, and are using more and more of, and we will have an incredibly competitive price on it.”

Kogan promises to keep its NBN customers in the loop.

Kogan said the prep work for his NBN service is currently in motion and will launch off the back of Vodafone Australia’s network access

“Most of the prep work is in Vodafone’s court, so they are obviously launching an NBN service themselves which they’re currently rolling out, and we’re going to have parity of service with our product that will be through the Vodafone network, everything going through the same pipes,” he said.

Kogan acknowledges the high number of customer complaints and NBN’s rollout issues, but feels these should be ironed out by the time he is ready to launch.

“We obviously want to launch NBN as quickly as possible, but there is some advantage in the fact that they’re working very hard at fixing a lot of the issues that have happened,” he said.

“We’re probably launching at the perfect time, where a lot of those issues that are related to NBN itself will be sorted.”

While he couldn’t disclose pricing, Kogan said his NBN plans would offer “incredibly attractive” prices across all speed tiers. He also promised to keep customers in the loop of when they are ready to be connected, how long it will take and everything else in between.

This will be the second deal Kogan has with Vodafone, with the companies extending their agreement for mobile broadband services to 2022

“We have a unique structure with Vodafone, where we are the branding, marketing, and customer acquisition arm,” he said.

“Vodafone runs the service, Vodafone runs the network, the call centres, absolutely everything, and it’s branded as Kogan mobile.”

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