Sunday, March 18, 2018

Why you need to watch Kogan!

There was a time I despised the name, Kogan. It was just like many other players in the business, touting their own TVs or computers. However, over the last few years, Kogan has shown that it is more than about selling used TVs.

It was probably the time when Kogan bought the failed Dick Smith brand that really got me. They relaunched the iconic electronics store a few weeks after that as an online store selling a mix of Kogan products along with what they used to sell. 

Then they started reselling Vodafone mobile plans and prepaid sims at prices that beat their provider's offeirngs that had me thinking of buying in to their stocks. Now, Kogan is worth twice the market capitalisation of Myers and is nearing their Unicorn day, when they will be worth $1 billion dollars. 

However, there are good reasons for me to think that this is not a passing fad or a house of cards like the Big Un. Firstly, it is the attention to detail of their CEO Ruslan Kogan. The fact that he sees his company as a statistics company masquarading as an online business should have people worried about how big Kogan is going to get. 

Everything that they have entered into recently has been based on their own customer analytics. Their influence is growing as they acquire new customers every day, practically giving away sim cards in exchange for access to customers' inbox. From there, they can find out whether you clicked on the email about furniture, which furniture you were looking at and when you came back through a google ad back to that same furniture, before finally buying that product. With millions signed up to Kogan, even if there are some which are duplicate customers, this means that Kogan has behaviour analytics that you are now reading about all over the news - Facebook, Putin, Cambridge Analytica, 

 The fact is, Kogan can start providing health insurance, life insurance, car insurance, financial products even mortgages in future, using their analytics to determine how much commission each of these ventures are generating and which new ventures they should pursue. So when Kogan announces they are going into the Pet Insurance business and launching Life insurance products, you have very good reason to be excited because they would have gone to these businesses with the analytics to convince them that Kogan would be good for their business. 

Whether you are Vodafone or Hollard Insurance (pet insurance), why wouldn't you let someone else get you customers, do your online marketing and retain your customers, for a reasonable commission? Or rather, why wouldn't you want to be Kogan's only provider for your type of product? 

On the Kogan website, everything is being sold on there. Much of their product range are their own brands, which means that they have a higher margin. However, there are many other products there that probably help to build people's comfort with purchasing from Kogan. Many of these products I would imagine to be a drop ship arrangement with the supplier. The downside of the Kogan experience is that it is very easy to buy something and very difficult to return products due to fault or change of mind. The talk of Amazon taking the Australian market by storm still has not eventuated and all such hype has benefited existing players like Kogan. 

I've experimented with Kogan Mobile and it is very interesting what Kogan has done with Vodafone's product.
  1. They signed up with Vodafone at a time Vodafone lost many customers and spent billions of dollars expanding their mobile tower capacity. 
  2. The time taken to port in to Kogan seems to be unusually fast. 
  3. They have been giving away 28 day sims, which most businesses know, will lead to many long term customers who can't be bothered switching out after the 28 
  4. With a few days left of your prepaid sim, every time you call someone, they remind you that your sim card is going to run out in a few days and to login to koganmobile to recharge. 
  5. They started selling buy one get one free 365 day plans which I know of a few people who have taken up this offer after getting free sims to try out. 
  6. Their data speeds have been very fast. 
Their shares today touched $10 for the first time before dropping back like an excited toddler. Be sure that as Kogan grows up, we'll be talking more about Kogan as a household name. 

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