Online publicity junkie Ruslan Kogan who recently acquired the Dick Smith name and on-line web site is set to continue selling, notebooks, TV’s and smartphones products which research shows are in decline in Australia.
Kogan who refuses to open his books up for inspection claims that the future is not the “bibs and bobs” that made the originally Dick Smith famous and has led to major growth for Jaycar.
Speaking to Fairfax Media Kogan, who famously predicted that Apple was set to shaft Harvey Norman and JB Hi Fi by stopping them from selling Apple products in their stores a situation that never eventuated said that there is a future for the Dick Smith even if it based on selling the same products that led to failure for both Woolworths and Dick Smith stores.
Like the failed Dick Smith Stores, Kogan is now looking for investors, as he attempts to float his online operation, which is set to come under pressure from Amazon when it launches in Australia next year.
Kogan who likes to tell other people how to run their business has made a name for himself selling cheap made in China products which several of his customers have described as “junk” in online forums.
The Melbourne based operator claims that the acquisition of the Dick Smith brand could boost Kogan’s sales by at least 40 per cent.
He said “If they (accessories) were successful product lines for them years ago that doesn’t mean they’ll be successful product lines in 2016,” he said.
“Our approach to determining what products need to be sold is customer driven, based on systems we’ve developed internally that look at search statistics and Google search data,” he said.
“We look at what people are searching for, where is there demand, where are there pockets of opportunity, and we evaluate them on a line by line basis,” he said, including how much it would cost to get a product to a customer’s door and what its competitors were doing.
“Then we make a call on whether that’s a product that we want to do,” Mr Kogan said. “We often describe ourselves as a statistics business masquerading as a retailer.”
Mr Kogan says Kogan is better positioned than any other company to repair the Dick Smith brand and turn it into a profitable part of his $220 million business.
Both Harvey Norman, JB Hi Fi, The Good Guys and several overseas conglomerates rejected the brand after inspecting the Dick Smith books.
“We were both retailers and we both had consumer electronics at our core,” he said. “We would have dealt with similar suppliers whether it be private label contract manufacturers, or other brands.”
“With Dick Smith we instantly become more important to each of those suppliers and manufacturing partners.
ChannelNews understands that several vendors will not supply Kogan direct but instead force him to buy branded products from distributors whose prices are more expensive than the prices big brands negotiate with the likes of Harvey Norman and JB Hi Fi.
Kogan believes that now that he owns the Dick Smith brand he has “got even more leverage to negotiate better terms and that means we can get better prices and pass on a portion of those savings to the consumer,” he said.
He said Kogan had spent the last decade investing in and perfecting systems to make online retailing as efficient as possible. Customer ordering, for example, was fully automated, with no manual input from Kogan staff, while sophisticated algorithms ranked suppliers not only on price but speed of delivery and credit terms.
“All these efficiencies will instantly plug into the Dick Smith brand and leverage our existing investment in IT architecture – that’s how we’ll make it instantly profitable,” Mr Kogan said.
“The best way to rebuild a brand is to deliver on your promises, to ensure every customer gets exactly what they’re promised and to ensure their expectations are exceeded.” he told Fairfax.
Not surprisingly Kogan who does not file consolidated accounts with the corporate regulator is reluctant to talk about sales and earnings or to comment on a float.
Without providing any proof he claims Kogan’s sales are growing at a similar pace to those at JB Hi-Fi and Harvey Norman.
Kogan whose business is not tracked by GFK said “There’s no doubt that JB Hi-Fi and Harvey Norman and The Good Guys are bigger businesses than we are,” Mr Kogan said. “We are a brand that started with nothing 10 years ago, we’re relatively young, we are getting started – we are very optimistic about the future.”
