Ever heard of a bloke called Ruslan Kogan? No? Well, he’s an Australian entrepreneur whose cut-price online electronics shop has already taken Oz by storm, crushing a few of its rivals in the process. Now he's set his sights on Britain. Talking to us over a phone interview from "down under," he foretold great promises of bringing his affordable electronics to the UK masses.
For most Brits, Ruslan will have come out of nowhere – indeed, as he is only 29, he’s not been around all that long. Like you, me, and many of the larger Giz massive, as a kid Kogan was a proper geek. He built his first computer at the age of nine, when upgrading to 512KB of RAM was an amazing thing and Windows 3.0 was the hottest ticket in town.
By his own admission he’s also a bit of a wheeler-dealer and has run about 20 companies since the age of 10. He likes to think an entrepreneur is a combination of an inventor -- because you have to come up with the idea in the first place -- and an athlete, as you “have to work your butt off to make it happen”.
So Kogan’s taken both elements and combined them into an innovative company that prides itself on being as efficient as possible -- from selecting products; sourcing them; building them, and then shipping them to your door. The idea is that through these efficiency savings Kogan can offer customers great tech at incredibly cheap prices, and not just Kogan’s own stuff either -- the company and the man both apply the same ethos to branded products as well.
The man is on a mission because he believes technology is the answer to many of the world’s problems:
“My view on technology is that it makes the world a better place. The more people that we give access to technology and products, to let them communicate, the more efficient the world becomes.”
“You could take it even deeper and say it’s the only way to achieve peace.”
Rather than have those statements seem like glib throw-aways, Ruslan truly seems to believe that technology is the answer; that through new communication systems we can get to know each other better, reducing the hate in the world. It’s a noble cause, that much is certain. You only have to look at the Arab spring, which was aided by communication technology like Twitter, to see that perhaps he’s right (though if you paid any attention to the UK media during the "BBM-fuelled UK riots," you may seem the -- incorrect -- flaw to that.)
Kogan the store is an online consumer electronics retailer that currently only sells its own-brand equipment in Britain. Kogan designs and builds its own products based on what people actually want – not what manufacturers think they want. In that respect you’ll never get anything truly cutting edge out of Kogan electronics. But Kogan’s ethos is to give you decent technology at rock bottom prices.
It choses which products to offer based on search statistics because, according to Ruslan, "a Google search is brain-to-keyboard with no filter."
One example of a product born out of what people were searching for is Kogan’s 32-inch LED HDTV with a built-in Blu-ray player. "People in the UK were searching for LED TVs with built-in Blu-ray… eight times more than they were looking for 3D TVs. We were surprised not a single company in the UK had a LED TV with built-in Blu-ray,” Ruslan told us over the phone.
That's not to say that Kogan just relies on search numbers; it also takes masses of feedback on what people want through its blog, Facebook page and Twitter feed. When in doubt, the company throws up a blog post asking what users want; what they don’t want, and what they'd actually pay for. So far it’s worked out great.
Over here, the company currently fields a range of “designed in Melbourne” own-brand products including TVs; Android tablets; and a digital camcorder, all at “the cheapest prices in the UK”. They’re designed and built by Kogan; assembled in China, and shipped to your door from a warehouse in Birmingham.
According to Kogan, efficiency; global sourcing and giving the customer what they want is the way to affordable electronics. Parts for each product are sourced from the cheapest place in the world at that time; collected and put together in China, and then shipped in bulk to good old Blighty.
Once the products are in the UK, Kogan even plays the big delivery couriers off each other for cost savings, with each vying for Kogan's business on a daily basis. If one courier is cheaper for a particular part of the country at the moment the customer plunks down their order, it gets the business – Kogan shows the rest of the couriers who gets what and why each week. "It means they're constantly fighting it out with each other for a better price; that's our duty to our customers."
Kogan also has a patented “Live Price” pre-sale system, which essentially works a bit like Kickstarter, where you buy-in on a product during the early stages, getting it at a saving over standard retail because you’ve funded its production run. That does of course mean that you have to wait for the product to be made, packaged, shipped to the UK, and then to your house, which takes weeks. The price also increases the closer to the end of the production run you buy it, explains Ruslan:
“One of the things you find with any product on the store shelves is that they have the hidden cost of finance [for the production run] built into it...Our business is all about transparency. Live Price enables people to buy the product the moment it hits the production run. If you’re happy to buy the product as soon as the production run has started you don’t have to pay the hidden cost of finance, but you’ll have to wait for a few weeks for it to get delivered."
Surely the UK isn’t the biggest cash cow out there for an expanding retail business – the US is a much bigger target for instance. Apparently it’s that exact challenge that excited the Australian entrepreneur. Britain is the most competitive consumer electronics market in the world, and Kogan wants to prove that his way of doing business is the right way. Just call him the Australian Battler Who Could.
As I said before though, it's not all about Kogan-built products. In Australia, and soon the UK too, Kogan sells branded electronics like iPads on its store. Like its own-brand products, Kogan attempts to beat its competitors on price by leveraging a global sourcing infrastructure, pointing at "your traditional retailers, your typical John Lewis or Currys, they just source their products from UK distributors. A local approach." But according to Ruslan, "not all distributors around the world sell these products at the same price; depending on currency exchange rates and stock levels, there are efficiencies to be made by purchasing the stock from overstocked distributors or in a country who’s currency just weakened."
For products that are sold globally, like Apple’s iPad, you get the same product for cheaper if you shop around at the distributor level, just like the consumer would online. Of course that means you might not get UK stock – we used to call them “grey imports” because they came with a different mains plug and might not conform to British requirements. Things have changed these days; most products are the same no matter where you get them from, while Kogan compensates for differing electrical outlet adapters with replacement plugs. That’s something some people might not be all that chuffed with though, but Kogan’s betting the savings will make the customer forget the odd adapter here and there.
In my short time talking to Ruslan Kogan, I got the impression he truly believed in his mantra – that he was doing all this not just to make money but to change the world through affordable electronics. Whether you believe that is another matter; it’s pretty easy to take the cynical “it’s all about the money” view, but I’ll leave you to make your own mind up on that one.
Kogan also believes that there are a lot of similarities between Britain and Australia – that we think more alike than it would appear on the surface. Given the UK is a different retail climate than Australia, the jury's still out as to whether Kogan’s model will work here or not. We could certainly do with some downward price pressure to help our struggling purses, but is it worth it at the sake of technological innovation?
While Kogan's business approach is innovative, is that enough to ignore the fact that the products just aren't? Kogan runs the risk of only giving us what we want now, not what we want going forward. You will have heard the famous Steve Jobs quote from 1998, of people not knowing "what they want until you show it to them," which flies in the face of Kogan's methods. But then, isn't a tech entrepreneur with a different approach a jolt of fresh air?