This is how just 1% of the market is driving growth at Kogan.com

Ruslan Kogan (r) fishing with his dad Alex. Image: Supplied
  • Kogan.com estimates it has 1% of mobile phone users in Australia.
  • It is this that is driving strong growth at the pure-play online retailer.
  • Founder Ruslan Kogan plans to grow this to 2% and bring along his other portfolio businesses to similar market shares.

Ruslan Kogan, the CEO and founder of Kogan.com, estimates the mobile phone part of his business now has about 1% of the Australia’s total number of mobile phone users.

Doesn’t sound much until you work out that Kogan Mobile is now the biggest contributor from the company’s portfolio business, the groups of products in key verticals.

Kogan Mobile, delivered via a deal with Vodafone, grew gross profit by 233.3% to $12 million in 2018.

“Kogan Mobile is an exemplary part of our strategy,” Ruslan Kogan told Business Insider.

“It’s a strong contributor to our business. We have an incredible offer … and we have over 1% of the market.

“Kogan Mobile has obviously been the longest running of our new verticals.

“Many of our other new verticals have launched in the last year. If we can get close to 1% of the market in those key verticals, they will all be very strong contributors to the business.”

The deal with Vodafone is a commission-based model, meaning minimal operating costs, leaving marketing as the key cost.

During 2018 the company launched Kogan Insurance, Kogan Health, Kogan Pet & Kogan Life, and Kogan Internet. ACrooss them all, the new verticals had a gross profit of $800,000, of which $600,000 was generated by Kogan Internet.

But if Ruslan Kogan is right, they will soon be punching above their weight, just like Kogan Mobile.

He will do that by selling more to his growing active customer base which now numbers 1,388,000, up by 433,000 or 45.3% over the last year.

So far he’s been doing just that. Average revenue per customer is trending up, as this chart shows:

Source: Kogan.com

The big growth is at mobile which now contributes 14.9% of Kogan.com’s gross profit, up from 7% a year ago.

Here’s the contribution:

Source: Kogan.com

And the growth in Kogan Mobile:

Source; Kogan.com

The biggest contribution is still Kogan.com’s own brands, the core of its business and how Ruslan Kogan got his start.

If you search Amazon.com.au for LED TVs the Kogan brand will fill the results. The same with eBay.

The return from selling on other platforms is understood to be small but each little bit adds up.

Kogan.com’s gross margin was 19.5% in 2018, up from 17.9% the year before.

Ruslan estimates Kogan.com has grown its market share to about 2% of Australian online retail.

Australia Post estimates that Australians spent $21.3 billion buying goods online in 2017.

Kogan.comn had revenue of $412.3 million, up 42.4%, in 2018.

Here’s the contribution from each division:

Source: Kogan.com

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