Kogan Marketplace revenue soars, pushing profit to new heights
18 February 2020, Written by David Simmons
The launch of Kogan Marketplace has done wonders for the online retailer's bottom line, with Kogan.com (ASX: KGN) reporting record sales and profit in 1H29.
The company's gross profit was up 10.6 per cent at $49.9 million, while the growth rate was higher still for gross sales reaching $322.9 million.
Kogan's revenue was down 5.3. per cent during the half to $219.5 million. The group attributes the dip to the success of Kogan Marketplace because only the seller fees generated on the platform are recognised as company revenue; the rest went towards Kogan's profits.
"We are proud to have delivered a record half in gross sales and gross profit whilst delighting our customers with the broadest offering we've ever had and the widest distribution network we've ever had," says Kogan founder and CEO Ruslan Kogan (pictured).
The addition of Amazon-style business initiatives like Kogan First (a customer loyalty and free shipping program) and Kogan Marketplace (a program that enables brands, retailers and distributors to sell directly through the Kogan website) have buoyed the group in the half.
The retailer has already funded over $1 million in benefits to Kogan First subscribers, including things like free shipping, free upgrades to express shipping, and exclusive discounts.
Kogan Marketplace saw its gross sales increase by 44.6 per cent quarter on quarter, and grew its seller base by 55.2 per in the latest quarter.
The overall Kogan customer base also grew healthily by 10.2 per cent during the half, with the retailer claiming 1.7 million active customers at 21 December 2019.
Investment in 'Exclusive Brands' has similarly paid off, with 46 per cent of overall gross profit in the half coming from sales of these select items.
Retail is just one element of the Kogan business that performed well in the half; its Internet, Mobile, and Insurance verticals also saw significant growth over the half year, with Kogan Internet in particular achieving 344.4 per cent year on year growth in its customer base.
Going forward the company says it is looking for more ways to grow its existing platform.
"During 2020, we are due to further develop and enhance the Kogan Marketplace platform, enabling the rapid onboarding of new sellers, and the enhancement of both customer and seller experience," says Kogan.
"We will also be focusing on the Kogan loyalty program, growing Kogan First and Kogan points programs with a view to enhancing customer engagement and enabling our customers to shop more frequently across a wider array of items."
Shares in Kogan are down 0.19 per cent to $5.15 per share at 10.09am AEDT.
Business News Australia
Author: David Simmons