Kogan strategy pays off with strong result

Written on the 23 July 2019 by Business News Australia

Kogan strategy pays off with strong result

"In contrast to what has been reported as a tough retail environment, we have been able to grow the business and earnings while investing significantly in the Kogan.com customer experience and enabling our long term strategy," says founder Ruslan Kogan. 

Online shopping behemoth Kogan.com (ASX: KGN) saw its shares rise 5 per cent in early trading after a quarterly update demonstrated year-on-year EBITDA growth of 25 per cent and promising signs from its 'Kogan marketplace'.

The unaudited results did not include firm figures, but the market was encouraged by strong indicative growth rates for active customer growth of 15.9 per cent to more than 1.6 million.

Commission-based revenues for Kogan Mobile rose by more than 5 per cent in the second half while commissions for Kogan Insurance more than doubled.

Exclusive brands revenue rose 30 per cent in the half, with Kogan noting the white goods and kitchen appliance category - only launched in 2018 - had become the second-largest segment in the exclusive brands division.

The announcement was particularly bullish on Kogan Marketplace, a platform launched in March to provide retailers with an e-commerce shopfront and give Amazon a run for its money.

The period marked the first full quarter of contribution from the new platform, generating revenues of around $3 million in April, $4 million in May and $5 million in June. 

"The launch of Kogan Marketplace is proving to be a transformational step for our business," says Kogan.

"Marketplace gained momentum during the quarter and we have been overwhelmed by the response from both sellers and customers," he says.

"Our team is working hard to onboard the backlog of sellers who want to reach the Kogan customer base."

Another milestone was the formation of the company's US-based subsidiary that supplies exclusive brand products to US retailers, with the first orders from large retail chains received.

"In contrast to what has been reported as a tough retail environment, we have been able to grow the business and earnings while investing significantly in the Kogan.com customer experience and enabling our long term strategy," says Kogan.

"We have a very exciting pipeline of new business units that will delight our customers in even more ways and bring more competition to some very important industries.

"We will soon be launching Kogan Credit Cards, Kogan Super, and Kogan Mobile New Zealand. We also launched Kogan Cars just before the end of June, and formed a strong partnership to power Kogan Energy which is set to launch before the end of calendar year 2019."

The executive highlighted continued investments in Kogan's platform and logistics capability, allowing for the faster and cheaper delivery of products to more locations.

"Kogan.com now leverages 13 fulfillment centres, which enables us to delight our customers," says Kogan.

"The Kogan.com team is continuing to build an innovative, efficient, agile and resilient business.

"We are obsessed about delivering our customers better value, and look forward to the start of the new financial year with confidence in our team, and our business strategy."

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Business News Australia

 
Author: Business News Australia

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