Home > Latest News > Kogan Suspends Warehousing Plans As Losses Mount

Kogan Suspends Warehousing Plans As Losses Mount

Kogan.com has been forced to suspend plans to launch its own warehousing and delivery services after a horror financial year saw the online retailer post a $35.5 million loss.

Bloated inventory saw the company embark on a wide discounting scheme, which saw Kogan’s gross margin take a 0.4 per cent drop.

To fight this drop, Kogan has embarked on a cost-cutting exercise, which involves continuing to rely upon third-party warehousing.

“When we look forward into the future, we do think that there is eventually a likelihood of Kogan running its own warehousing and delivery network. We thought that plan was sooner than it actually is,” chief financial officer David Shafer said in an earnings call.

“Our sales originally were growing at a much faster pace so we’ve taken the opportunity now with this period of consolidation to pause that exercise.”

Kogan currently has $159.9 million in inventory, still an excessive amount, but well below the $227.9 million the company held on June 30, 2021, after it overestimated the demand that stemmed from changing shopping habits during COVID-19.

“As the true volatility of the situation settled in – caused by stay at home orders and lockdown ambiguity – e-commerce did not continue to grow as anticipated,” Kogan said of the situation.

“This led to us holding excess inventory, and an associated increase in variable costs and marketing costs to sell through the inventory.”



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