Ruslan Kogan’s rag’s to riches story, is one, which demonstrates how the power of an idea, lateral thinking, empowerment of staff and cheeky tenacity, can lead to amazing results. Ruslan like many entrepreneurs, does not come from a background of wealth and like myself, comes from an immigrant family, who decided to make Australia their new home. He is truly a self made millionaire, with the power of the online sphere and one big idea, he has gone from nothing in 2006, when he launched his dream, to a whopping $320 million empire. Yes in eight years, he has become one of the richest people in Australia and has created the largest online Australian electronics retailer.
Hang on wait a second, but how did he get there? Amazingly and true to entrepreneurial stories, this one also starts in a garage, yes, in the garage of his parents house in 2006, with zero capital and one big idea. What was this big idea? To leverage an untapped electronics manufacturing in China, cutting out all the levels in supply chain and selling quality product at sometimes ridiculous prices. Launching a challenger brand to the consumer electronics market in Australia, one which was itching for someone to come in shake it all up and as simplistic as it sounds, that is what he did. Causing disruption within a market, which was dominated by a few traditional retailers, his goal, creating a new value propositions for consumers. For years many have literally been taking the piss out of consumers and he was one of them, this inability to afford new LCD TV technology was something that rubbed him the wrong way. So the opportunity was there. A strong value proposition was his competitive advantage and now, he has literally changed the landscape of Australian retail in just eight years.
But how does one overcome the barrier of having no capital to invest in stock? You get clever! Harnessing the power of the largest e-commerce community , eBay, he setup an account with eBay, where he offered people the opportunity to pre-purchase the products. Whilst customers understood there was a wait involved, they were willing to allow for this as there were substantial savings involved for them. The funds were collected through the pre-sales and this then allowed him to then arrange the manufacture of the the low cost televisions, breaking the traditional model of buy and sell, to this new pre-sale launch model, it’s quite simple yet mind blowing at the same time. Although eBay didn’t like these practices, they swiftly shut down his eBay account. But the idea was already proven, he demonstrated that the concept worked and with the help of some friends and family he was able to get some credit advances, to allow him to fulfil the orders. And this was the tipping point.
Continuing with the ideal of reducing the steps in supply chain, he then branched off into 3rd party distribution of household brand names such as Samsung and Apple. Again remaining inline with the continued ethos of providing the ultimate value proposition to the end consumer, these products were able to be sold at a much reduced amount compared to his friends in traditional bricks and mortar retail. It’s not hard to understand the growth that comes with such a value proposition. But it’s not just the products and their unbelievable prices, he also values the customer, setting unprecedented levels of customer service. Understanding that the customer is your soul concern and doing all that you can to keep them satisfied can only be beneficial to the longevity of the business. Whilst many traditional retailers value that ‘one off’ purchase of the consumer, Ruslan understands the value of a lifetime customer and repeat purchases is something that Kogan has mastered extremely well. Especially in the technology world, where things are continuously changing, he knows the next time a customer is looking to make another purchase of a new piece of technology, he believes he has done everything in his power to reassure them that Kogan is the place to return to, for both quality, price and customer service.
My out takes from looking at what Ruslan Kogan has achieved are:
- What is your competitive advantage? What makes your product or service different / better than others?
- Create disruption, in large markets there are always opportunities for challenger brands, it’s a big pie, just take one bite of it!
- Online retail can operate with greater efficiencies of their real world retail counterparts.
- Be more efficient then those bigger than you. Kogan $1.5M turnover per employee, Amazon $600k.
- Think different. Just because things have been done traditionally one way, flip it and say why can’t we try this way?
- With big ideas comes big risk, not everything is going to work out, but persistence will always overcome resistance.
- Build a community, engage with your customers and find out what they want.
- Analyse the facts not the emotions.
- Continuous improvement and change, analyse whats working and what’s not, drop the not and look for other opportunities.
- Understand what your customers want and optimise your product to exactly what they want.
- It’s hard work and a lot of hours, be prepared for that.
- Last but not least, be yourself, Ruslan is a straight up dude and has not conformed to perceived images, it’s working for him and it can work for you.
Think about all these areas, remember there is so much to learn from those who have done it before you. The opportunities are endless and with our ever changing consumer landscape, this is your time to shine. Who knows, your little idea may well be the thing to take you on your way to being the next online success story. Take inspiration from Ruslan Kogan’s story. It demonstrates to all of us, that with dedication an idea and some pure grit, you can make big things happen.