Nine Media Sucked Into Kogan Puff Piece No Questions About COVID-19 Price Gouging
Ruslan Kogan the CEO of the Kogan online retailer has done what appears to be a PR puff piece with the Nine Publishing owned Australian Financial Review, without any mention of why he is price gouging during the COVID-19 epidemic.
The article complete with dog in bow tie, is gushing about the way he is working from home and how as a 23-year-old when he started his online retail business, selling cut-price LCD televisions sourced from China from the garage of his parents’ home in Melbourne.
What the AFR failed to address was why he is constantly in the cross hairs of the Australian Competition and Consumer Commission and is yet again in the Federal Court over claims of dodgy dealings with consumers.
The ACCC instituted proceedings against Kogan Australia Pty Ltd (Kogan) in the Federal Court alleging that Kogan made false or misleading representations about a 10% discount promotion, in breach of the Australian Consumer Law.
Between 27 and 30 June 2018, Kogan ran an online promotion where consumers could obtain a 10% discount on most of its products by using the discount code “TAXTIME”. The promotion was held ahead of the end of the 2017/18 financial year.
What the AFR spruiked was that the now 37-year-old is working mostly from the dining table of his mansion in Toorak – his sister Svetlana, a digital marketer visiting from New York, is occupying his home office – and using just his laptop and mobile phone to communicate with his 200-plus staff and suppliers around the world.
He told the AFR “We’re in a fairly privileged position because this business was started as a work from home operation in 2006 so all our systems are cloud-based – even our call centre staff can take the phone home, connect to the internet and work from any location,” Mr Kogan told The Australian Financial Review.
Another question the AFR failed to address is why Kogan is price gouging freezers and biological hand sanitizers on his web site and whether he fears being taken to task by the NSW Government with their recently launch name and shame COVID-19 retailers operation to name questionable retailers who are seen as ripping off consumers during the epidemic.
Kogan claimed the COVID-19 pandemic is not only likely to permanently change the way we work – reducing the need for face-to-face meetings and overseas business travel – but the way we shop.
“When the world was normal a few weeks ago you’d have an 11am meeting in the CBD – by the time you’d get there and parked and have a one-hour meeting and gone back to the office there goes half the day,” he said.
“In a digital world you all click a button and have a discussion and it’s very efficient and you can do it at times that suit everyone.
“It’s the way we’ve been working for some time – we have the lowest cost of doing business of any retailer in Australia and probably the world,” he said. Kogan.com’s CODB to sales was just 6 per cent in the December half.
“Companies are now going to realise ‘hang on a sec – we’ve been doing all this wasteful activity that doesn’t need to happen’.”
The AFR gushed on that Mr Kogan is enjoying seeing his colleague’s children drop in on video conferences and indulging his love of cooking (his specialty is bolognaise with plenty of mushrooms) while in lockdown.
“We’ve all been so spoiled with Uber Eats and hipster cafes and restaurants and it’s been such an eating-out culture in Australia, but I’m loving shutting down at home and cooking meals for my wife and sister,” he said. “It’s clear from shopping behaviour I’m not the only one that’s caught onto that.”
Back in 2016 Kogan was forced to pay penalties totalling $32,400 following issue of three infringement notices by the Australian Competition and Consumer Commission.
The ACCC issued the infringement notices because it had reasonable grounds to believe that Kogan had made false or misleading representations about the price of three computer monitors advertised by Kogan during a Fathers’ Day promotion.
What was revealed was that before or at the start of the promotion, Kogan increased the prices of the three computer monitors featured on its eBay store.
As a result, although consumers received a 20% discount off the newly increased prices, they in fact only received a 9% discount off the previously advertised prices for each of the three computer monitors.
The ACCC has previously taken enforcement action against other related Kogan entities in 2016 and in 2009 for allegedly engaging in pricing conduct which raised similar concerns.
The AFR a Nine Media owned Company failed to address any of these issues with Kogan or his latest price gouging.