Ruslan Kogan has bad news for bricks and mortar giants like David Jones and Myer: there’s no such thing as “omnichannel retailing” and anyone arguing otherwise is just trying to bail out a sinking ship.
Kogan founded his eponymous online electronics retailer about eight years ago, and grew its revenue from $300,000 in 2006-07 to $300 million last financial year.
Australian online sales have grown significantly in that time, prompting multimillion-dollar “omnichannel” business transformations by traditional retailers looking to reclaim customers online.
Kogan told StartupSmart’s So You Think You Can Start-up pitching competition this evening that online retailing wasn’t so easy:
“There’s no such thing as omnichannel retailing and those that claim that there is are just trying to rescue their bricks and mortar business.
There’s no way you can price properly if you’re an omnichannel retailer. Say you’ve got a store and the product costs $100, what do you charge for it on your website?
That $100 takes into account the cost of running the store, all the overheads and inefficiencies. If you’re going to charge $100 online, no one is going to buy it on your website, because the moment they open another tab and type that product into Google, they’ll find it cheaper elsewhere.
So then you’ve got to lower the price on your website but the moment you lower the price on your website, why would anyone walk into your store? So you have a Catch-22.
The other thing is, people say, ‘Oh look at Apple – they’re an omnichannel retailer.’ No, Apple is not an omnichannel retailer, they’re a products business.
If the new iPhone 6 was exclusively available from the lion’s den of Melbourne Zoo, it would still be the highest selling phone in the world. That doesn’t mean the lion’s den of the Melbourne Zoo is an awesome channel for sales.
They’re a products business. That is their competitive advantage: they sell an awesome and well-designed product.”
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