Is Ruslan Kogan the Jeff Bezos of Australia? — The Kogan Empire Grows

Love him or hate him, you can’t deny Jeff Bezos’ greatness.

As the wealthiest man in the world, Amazon’s CEO and founder has made a lot of smart moves. Helming one of the few dotcom era companies to truly live up to its potential. And more…

Bezos not only created a retail empire; he changed the very way we shopped.

Amazon certainly didn’t invent e-commerce, but it damn well perfected it. Pushing the limits of what consumers could expect from buying online.

Granted, for Australians, the impact of Amazon will seem far more tame than other markets. It’s only been about two and a half years since the platform officially launched locally. A launch that may not have been as explosive as many expected.

I doubt Bezos will be losing sleep over it though.

At the end of the day he’s already made his fortune. He has far bigger aspirations to attend to now.

But luckily, we don’t need Bezos in Australia. We’ve already got a healthy and evolving retail sector, one that is gradually realising the importance of e-commerce.

I know, I know — online shopping has been a thing for years now in Australia. We’re not that backwards (thankfully).

We do however have some companies that are doing better than others. And one company in particular has caught my attention recently…

Kogan.

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Foundations of an empire

Just like Bezos, Ruslan Kogan — the founder and CEO of Kogan — is a polarising figure.

I know plenty of people who can’t stand the man or his company. Writing him off as a purveyor of junk goods and a systemic price gouger.

On the flip side, I also know people who love Kogan. Not just because they’re cheap, but also because they’re quick.

Frankly, I don’t really care either way. In fact, I have personally never bought anything from Kogan.

But, at the rate things are going, that may change very soon.

See I’ve always been aware of Kogan. As both a retailer and a stock. I just wasn’t totally convinced that Ruslan had what it takes to make it in retail.

At first glance, he seems like a younger Harvey Norman. A breed of retailer that can certainly find success but is a far cry from the likes of Bezos.

This pandemic though, has changed my assessment of Kogan. Both the CEO and the business.

That’s hardly some grand revelation though, I’ll admit. All you need to do is look at Kogan’s share price to see that I’m not alone in this assessment. The company has clearly been one of the biggest winners of 2020 to date.

Their share price is close to double what it was at the start of the year. A result that puts them well ahead of most listed companies, let alone retailers.

Part of this success is certainly about better sales. But it’s not the main part.

No, the real driver of Kogan’s success is their diversity and simplicity. A formula that worked just as well for Amazon when it was climbing the corporate ladder.

To illustrate my point, do you know how many businesses fall under the Kogan empire?

The answer is 15, covering markets such as retail, superannuation, and even pet insurance. This is a company that has its fingers in a lot of different pies. Though they are obviously renowned for their retail operation.

And even then, Kogan isn’t your typical retailer.

The right stuff

As cruel as it is, most of the retailers in Australia are destined for mediocrity or even failure.

That’s just the reality of the industry. It’s not easy to create a super successful business in retail.

You have to have a certain mindset, a certain edge.

It’s not even a quality or skill that I think can be put into words. It’s just something that works when you see it. And I think Ruslan Kogan has it.

Take this comment from the man himself from an interview on 20 February:

It is the businesses that know what customers want and go out there to fight for the customer and provide a unique offering that are always going to be winning

There is always going to be poor retailers that forgot about the customer, and they’re going to be going out of business. But the ones that are customer-centric and giving customers exactly what they want will continue to win market share.

What Kogan is saying is simple, and dare I even say, boring. You don’t have to be a genius to know that being ‘customer-centric’ is pretty important in retail.

However, just because it’s simple to understand doesn’t mean it’s simple to do.

Figuring out and providing what customers want is not easy. It takes a level of understanding and drive that not everyone is cut out for.

Knowing your customers’ needs and wants is everything. And Kogan knows that.

Here is what he had to say of his own customers:

In e-commerce, they want the most in-demand products, at the best prices, and they want them delivered fast.

We’re a convenience service essentially.

Again, not exactly a ground-breaking insight. That doesn’t make it any less true though.

It’s a simple yet very precise summary of Kogan’s strategy. They know what their customers are after, and they give it to them.

There is no ‘secret formula’ or ‘life hack’ to his success. Ruslan Kogan is simply an astute businessman who knows how to appeal to his market.

And as the Kogan empire continues to grow, I expect more people will realise this. Just as they have with Jeff Bezos.

Whether or not Kogan will ever become a trillionaire like his US counterpart, well…we’ll see. No one knows how far he could go.

What we can say with confidence though, is that he is doing exactly what Amazon did a decade ago. Upending the retail landscape as we know it with a simple yet effective strategy.

Love them or hate them, Kogan and Bezos truly are some of the best at what they do.

Regards,

Ryan Clarkson-Ledward,
Editor, Money Morning

PS: We believe these rapid fire market opportunities are a fantastic way to grow your wealth. Which is why you’ll find us talking about the big trends that can uncover them. If that is something up your investment alley, then click here to learn more.

Ryan is also the Analyst of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.


Ryan Clarkson-Ledward is one of Money Morning’s analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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