Tuesday, 01 March 2011 12:29

Kogan ROARS, royally ripping retailers a new one


Kogan has ripped retailers a new one claiming that when Apple decides to cut third party retailers such as JB HiFi out of the loop, a huge part of their business will simply evaporate.

Ruslan Kogan, the Han Solo-esque rogue of the e-tail world, has ripped into retailers at MediaConnect's 'KickStart' Conference on the Gold Coast.

The eponymous Kogan of Kogan Technologies says that his company 'lives technology', 'loves it' and that there is 'always a better way', with Kogan's direct-to-consumer model a clear example of Kogan making his beliefs a reality, something famed free marketeers and champions of individual freedom such as Ayn Rand would likely be very proud of, where she still alive today to see the Roark, Rearden and Galt-esque Kogan in action.

While the world does not yet ask 'Who is Ruslan Kogan?' in the same way a shrugging Atlas asks of Mr Galt, retailers who haven't yet uttered these words would well be wise to, lest they find themselves in the hardly normal shoes some in the retail industry are now wearing, with those shoes filled with the lead of high commercial rents and sky high advertising costs the traditional retail space and media demands.

Although some of those retailers have tried to copy Kogan in developing their own product lines, with Dick Smith Electronics coming to mind for having done so before Kogan first opened doors, many of those 'home branded' products have been at the lower end of the scale, whereas Kogan has instead promoted, where possible, premium-style products at punchy, competitive pricing, without the massive retail overheads that plague the 'JB Hardly's' of the world.

So, what did Mr Kogan say that might cause some retailers to wish they could hire a Shogun to eliminate Kogan and his slogans?

He said that 'the biggest retailers are Apple's bitch', sharing details from some bankers Kogan recently met with who noted that 30% of JB HiFi's sales, in the last quarter, came from Apple products and Apple related accessories.

This meant, he said, that 'Apple is an innovative company with a unique product offering', and that 'the biggest bricks and mortar retailers are relying on Apple to stay alive'.

Kogan warned that the day may come when Apple only sold from its own stores, both online and offline, and that Apple was heavily involved in tracking its users to see when to make this stellar shift, from the offer to email you a receipt when you purchase from a real-world Apple store to watching everything you do on iTunes and everything you do on its websites.

The rip-roarin' rogue continues to rave on page two, please read on!

Kogan reckons that 'Apple is silently waiting for the perfect moment to pull the pin on its third party distribution network. It might be next year, or later - make no mistake about it, the time will come when Apple pulls out and it may be the end of bricks and mortar as we know it.'

Kogan said that while Apple gains an immediate customer relationship once one of its users registers a product either directly, or via iTunes, 'Apple has a way of communicating with you again, but JB has no way of contacting you again', showing a weakness in JB's relationship with consumers and showing that the future of the online business model is bright.

Kogan ended his presentation with an insightful quote from Charles Darwin of 'evolution' fame, who noted that 'It's not the strongest of species that survives nor the most intelligent - it's the one that's most responsive to change', with Kogan clearly claiming his company has been responding to change all along, while the hardly's of the world try to fight what is normal, which is that change is the only constant in the universe.

After the main presentation was over, Kogan came to our table to have a chat. In response to a question about his UK operations, Kogan said that the UK was going well, with the UK start going much faster than it did in Australia.

He noted that there were now over 2 million articles about Kogan online worldwide (make that 2 million and one, Mr Kogan), with the UK growing faster than Australia, and that with 'over 99% of UK customers making a purchase last year and spending more online per capita than anywhere else in the world', the future was definitely bright.

Kogan said that there were two other geographies in the world that he was going to expand to, one after the other, but that those geographies were confidential at the moment.

Asked about the chances of a Honeycomb Android OS 3.0 based k-Pad, Kogan said that there were some spaces Kogan hadn't bothered creating a product due to existing market leadership, such as mp3 players in the face of the iPod, and for now at least, Android tablets in the face of the iPad, given its superiority over everything else.

Kogan's slogans and rogue-ish raging concludes on page three, set your phasers to stun and read on!

That said, Kogan said he thought that 'Android is the future, the fact that it is open source, they don't block things, it is an open system'¦ but when it comes to usability, Apple is  excellent', so there'd be no kPad - yet.

Kogan also said that he'd played with over 100 different types of tablet and had spent thousands on R&D, but after all that, 'we're not ready to launch one'.

Kogan explained that 'We don't create demand, we service demand. We let the big guys create the demand for LED's or PVRs first, then we service the demand. We use science to decide what customers want and then get it all assembled.'

'Apple didn't invent the keyboard, hard drive, ram etc - they just found a better way to piece it all together. For instance we were the first LED TV with Blu-ray. We didn't invent the Blu-ray player or LED TV, but there were a lot of people searching on Google for a TV with Built-in PVR or Blu-ray, we saw it wasn't in the marketplace, so we decided to put it together', using Google Insights and Google Trends to gain this insight into what consumers wanted. 

'We back up every single decision in our business, but unless we see the raw facts of people searching we're not going to do it', said Kogan.

Talking about 3DTV, Kogan said 'PVR in a TV is searched for 24 times more than 3DTV, a Blu-ray player in a TV is searched for 7 times more than 3DTV.'

'We didn't invent the Blu-ray player or the TV but we did invent the business model behind giving people what they want'. 

Kogan also said that 'We work with several manufacturing partners - 20 of them -  big guys like Foxconn to the small guys', and that a 'Happy customer tells 4 people, an unhappy customer tells 12 others. Word of mouth is big. We use Google ads [and other ways to get promotion, visibility and coverage'.

Kogan also said that 'Any business in business has a story to tell', and clearly, much to the chagrin of his old-world retailing competitors, Kogan's story is certainly compelling.

And who knows? Perhaps Kogan has an Overton window of his very own, too. Figure that one out, dear reader - you'll certainly do it faster than the JB Hardly's of the world!


Alex Zaharov-Reutt attended the MediaConnect KickStart Conference on the Gold Coast as a guest of MediaConnect.

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Alex Zaharov-Reutt

Alex Zaharov-Reutt is iTWire's Technology Editor is one of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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