august 2012
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>> THE ORIGINAL AND BEST INTERNET MARKETING MAGAZINE DESIGNED SPECIFICALLY FOR THE IPAD, IPHONE, ANDROID AND THE WEB From the Desk of the Editor getting good value from Internet Marketing Maga- Last month was a great month for Internet Market- ing Magazine with the ‘Monetizing eBay’ with Matt minute of your time and click this link to give us Clarkson a real talking point. a quick honest review (click ‘view in iTunes’ then scroll down and click ‘write a review’, thanks :). Chain & eCommerce Masterclass’ Ruslan Kogan In- terview audio in the ‘Audio Expert Interview’ sec- Until next time… Wishing you the best of success tion of the member’s area. Ruslan is a revolution- online ary thinker and Entrepreneur. His skillset is vast and deep and the full interview is not to be missed. It’s free; so if you haven’t been sent your link to the member’s area please feel free to register for it today at http://internetmarketingmag.net/be- come-member/ GregCassar Important: We’re working on building the number Greg Cassar of reviews we have on the Apple platforms so as to Internet Marketing Strategist keep dominant rankings in the search. If you are & Editor – Internet Marketing Magazine
internet marketing magazine august 2012 5 > EXPERT INTERVIEW SUPPLY CHAIN & ECOMMERCE MASTER CLASS An Interview by Internet Marketing Strategist Greg Cassar Ruslan Kogan is a product and industry innovator and an outstanding eCommerce success. Kogan Technologies is a manufacturer and retailer of consumer electronics devices. Founded in 2006 by Ruslan Kogan, it sells products direct from Asia to customers in Australia and the United
Greg: Ruslan, it is my understanding that you - so essentially it is manufacturers direct to con- were an entrepreneur even as a child. Can you sumer. We are using advanced analytics in order tell us a bit about that? to determine what consumer electronics products are in demand and what consumers actually want. Ruslan: A big part of that is Google searches, and know- of ten, so I’ve always been wheeling and dealing ing how many times certain words and terms are and trying out new things. I love the market place searched, based on what people are looking for and business and essentially for me that’s what an and what they want to buy. entrepreneur is – someone who looks at the mar- ket place as it currently is and tries to invent a Then we’ve got manufacturing capacity over in new way of doing things that creates extra value Asia. We get all the products manufactured in for the consumers. China and then sent to our distribution facilities in Australia and the UK, and then sent directly to So, for me as a ten year old I ran a business where the customer. So it cuts out all the middle men I was collecting and re-selling golf balls; then I ran and enables us to be a price leader in a very com- a car wash business. Through high school I had a petitive market place. website design business and a mobile phone repair business and all of that sort of stuff. So, I’ve al- Greg: My take on it is that your business produces ways been active in the business world. products the same quality as Sony or Samsung etc with even much of the same componentry, but it Greg: I can really relate to that, because in high is branded as Kogan. Is that correct? school my school shut down the junk food in the Ruslan: Yes, agreed. We make a very good prod- lockers and set up shop – I bought confectionary uct, but being an Internet business we leave that wholesale and set up a business that was doing 50 up to the consumer. So, if anyone asks us how good is your product, we tell them, well, don’t So, I can very much relate to what you’re saying take our word for it, go online, read reviews, read there. what people are saying about Kogan, read what they are saying about our products, our customer The Kogan business model is different to most service and all of that sort of stuff. We think the electronic retail in that it has a whole bunch best opinions on any product are from the users - who are actually using them. plain the Kogan business model for those who That said, the componentry in our products, like an LCD panel makes up the majority of the cost of Ruslan: We do things pretty differently at Kogan a TV. And we’re using panels from Samsung and LG
internet marketing magazine august 2012 7 and other big brands. So what a lot TV’s and our business will ramp of people don’t know about LCD up over time. They laughed at me and LED TV’s is that, even though and they weren’t interested in there are thousands of brands out the order at all. Because the way there that essentially there’s only China works is it’s all about mass a win/win situation.” a handful of manufacturers of the production, you need to do things core component - being the LCD in huge scale in order to gain that So I sent them all of the market- panel, and no matter which brand ing material and pricing stuff that you get, the panel, is made by one make it worthwhile for them to I had re-done for them and I got of those big brands. set up a production run and a pro- a reply from them within hours duction line for you. So initially saying, Greg: The manufacturing of they didn’t want to work with me. much for all of this. We accept your own product range is very much one of the keys to your But the way that I view business success. What strategies did you is that it’s all about creating a . use to get the factories in China win/win situation. So, I lost a bit to take you seriously when you of sleep over the factory knock- What happened after that was a were just a start-up? ing back my order and I thought week later they emailed me and “how can I ensure that this is a they said, Ruslan: That is a very good ques- win/win situation for both of us?” tion because you are a hundred So, the idea I came up with was percent spot on. The only way to pretty simple actually, because I be really competitive in the con- don’t know if you’ve dealt with the US”. So it had helped them sumer electronic space at the mo- China before but even the big- ment is to be the manufacturer gest factories in the world, these direct to consumer. It’s such a multi-billion dollar organisations, competitive market place that they still don’t know how to deal that’s the only way to make a sus- with the western world. All of tainable margin, whilst offering their marketing material is in Ch- your customers the sort of value inglish - none of it makes sense. that will keep driving them back They’ll use images that are differ- to your business. ent sizes and model lines are not in proportion. When Kogan was starting out I had zero dollars start up capital. Their pricing spreadsheets will I had no money in the bank, and - my initial production run was for ing is aligned, numbers will be Kogan TV’s one container - I wanted to pro- centred rather than right aligned and all of that. So, I stayed up for Greg: That is very clever. You the massive factory to cooperate a couple of days and re-did all of were able to engineer a win, win with, initially I had told them that this for the factory that I had cho- there. I know that you’re also we’d planned to place an order sen to work with and made all of stocking other brands now, like for a hundred thousand TV’s. So their product brochures look real- Apple, Samsung, HTC etc. And they were pretty interested in the ly professional. I made all of their often you’re able to sell for far business and we’d discussed the user manuals very detailed and cheaper than much of your tra- order and I put it out for tender made them make sense. I re-did ditional competition. What do and then I picked the best factory all of their pricing spreadsheets. you think you’re doing right to and wanted to work with them - Then I emailed the factory back buy so well from major brands then when I told them the order and I said to them, “I know that that others may be are not?
internet marketing magazine 8 august 2012 Ruslan: budget. And what we saw very quickly is that our we have done with the other brands stock now is we’ve created a business model that positions us as a global price leader. Our prices on Canon and Nikon ten friends about it. And the ten friends would look cameras and Apple iPads is even cheaper than cus- at it and tell all their friends about it. tomers in America get from Amazon. And the way that we set all of that up is we’ve now got a Hong So organic growth has been exponential based on that price leadership position, and it has really been and suppliers of these products around the world. helped along by the whole eCommerce phase, and the fact that more and more people shop online Now, on every single order that we get we’ve got these days. Because information like this propagates these massive distributors bidding on who can pro- through the internet very, very quickly. vide the order at a better price. So, we’ve got the worlds biggest distributors competing against one A perfect example of it would be the time we had another to win every single customer order. And that a glitch on our website about a year ago where one creates a free market for these products and en- of our products – it was a product that was worth sures that we’re a price leader for these products. website that made the product available for nine Typically, the way that these big retailers work is dollars. The glitch had only been active for about they will have a supply arrangement with a certain distributor for a certain product. Usually they will it shows that it made it on to a few of those forums be exclusive arrangements and things like that. With and websites, and all of a sudden sales of that prod- us, we don’t believe in things like that. We believe uct took off, because it was at a crazy price. in free markets and creating as much competition as possible surrounding every area of our business. Now, it was an interesting learning experience for So, through this business model that we created it us, because on one hand – look, we could have hid ensures that we are the best price in the world on behind our terms and conditions and refunded all iPads, Canon DSLR’s, Nikon DSLR’s, Samsung Smart those people and said “We’re not accepting the or- Phones and all of those sort of products. So it has ders”. But instead, what we chose to do was said, been a massive addition to our business and really “Look, we are fully accountable for everything that boosted things for us. we do. The glitch was our mistake. We will honour all of those orders”. And yes, we lost a bit of money Greg: Kogan has a massive online customer base on honouring those orders, but we became a multi- in 2012, but like any business obviously it wasn’t million dollar better business because of it. We always smooth sailing. What were your main chal- looked at the root cause of the problem, we opti- mised a lot of internal processes and a problem like that will never happen again. Ruslan: there are not that many challenges. One thing that we’ve done very well is we’ve kept our blinkers on, in terms of really being focussed on what our busi- - ply chain and business processes that results in the best prices for consumers. What we learned from day one is that there is no better marketing than the world’s best price.
When we launched Kogan we had the best-priced TV’s in the country. We did not have a marketing Kogan Email Opt-in Popup
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We’ve got an internal mantra at Kogan and that is
““there is always a better way”. We
know that however we do things right now, that is the best“ way we’ve come up with until today, and tomorrow there may be a better way.
internet marketing magazine 10 august 2012 On the other front what it taught If you look at Apple, they’re not They’re going there with the in- us was, look how effective price being written about because they tent in mind. marketing is. When you have the do PR really well, they’re being best price you don’t even have written about because they’re Ruslan: Exactly. Other than that, to do anything, people will learn breaking through on so many Search Marketing is a great tool about it - and in the age of trans- grounds when it comes to awe- for us. A big part of our marketing parency created by the Internet it some products. Nobody has caught spend is with Google Adwords, be- is bound to bring thousands of cus- cause they’re the people that are tomers. That has been the core to actually searching for our prod- Kogan’s marketing. what is causing the media to write ucts. So someone goes to Google about them. and types in “Digital radio, or cof- Greg: Ruslan, you are very much fee machine, or iPad, or Canon a master of PR these days with So, we’re doing a similar thing press features on all major net- when it comes to online retail and Nobody is searching those things works across all different me- how a retailer should operate in unless they’re really looking to dia’s. Has PR been part of the buy that sort of product. So it is strategy from day 1? should operate, but how a manu- very targeted and it reaches the facturer should operate. Because right audience. Because we’re a Ruslan: PR is not a point of strat- price leader in the space we’ve egy. We do get a lot of coverage for a manufacturer to communi- got very high conversion rates. All all over the world, in terms of cate with the end consumer. But of that targeted marketing works what we do, but nothing we ever with this awesome communica- really well. do is actually about PR. My view tion tool we’ve got called the on business is that, I think that Internet you no longer need this - whole set of middle men in order for a manufacturer to sell directly year. So, if your business is still in to consumer. business it means it is there for a reason. It has got a story to tell. Greg: You have very dominant And we’re just really good at tell- rankings in Google PPC, product ing our story. search, re-marketing and organ- ic as well as Yahoo and Bing PPC. Consumer electronics is such a that you have found to be more everyone’s lives, because every- effective than others over time one buys consumer electronics for your brand in terms of con- Kogan Multiple Ad Placements on Google products and they’re buying more versions? Search and more of them every day. The impact we have had on the mar- Ruslan: Yes. Nothing converts bet- Ruslan: Other than that, Search ket place is what has resulted in ter than a customer who got to Marketing is a great tool for us. us getting a lot of attention. It is our site by typing Kogan TV into A big part of our marketing spend - Google. Obviously the conver- is with Google Adwords, because book, they’re been written about sion rate on a search like that is they’re the people that are actu- by every single media outlet in insane. They already know about ally searching for our products. the world - not because they our brand and they know what So someone goes to Google and have an excellent PR department, they’re looking for and they want types in “Digital radio, or coffee they’re being written about by a Kogan TV. every publication in the world be- camera” they see our ad. Nobody cause they’re changing the world, Greg: They are predisposed to buy is searching those things unless they’re changing the way we com- when they do the search. they’re really looking to buy that municate. sort of product. So it is
internet marketing magazine august 2012 11 Kogan.com
very targeted and it reaches the right audience. We’ve become immune to all of this advertising that Because we’re a price leader in the space we’ve interrupts our experience and we want advertising got very high conversion rates. All of that targeted that enhances our experience. And that’s exactly marketing works really well. what digital and search marketing is all about.
Greg: The Weekly Deals opt-in is a very promi- as effective as all the targeted stuff. That could nent feature on your new site, even with a pop- explain why Google has something like a hundred up. Email Marketing is obviously a bit part of your billion dollars spare cash in their bank accounts and online strategy. Are there any key lessons you’ve why they’re such a successful organisation, because been able to learn over the years for delivering their product really works. It is an excellent prod- effective email campaigns? uct. Ruslan: Email marketing is an important part of our If I see a friend reading a newspaper, I’ll come up marketing mix because we’re all about the Kogan community. We’ve now got a lot of people in the the newspaper and take it away from them and I’ll Kogan community and our promise to them is that ask them, just saw?” And you’ll be amazed how many people and special offers. We’ve really built a very loyal following surrounding that sort of stuff. have on average they’ve probably seen a hundred Email marketing has tremendous return on invest- recall a single ad. ment as it’s all people that have opted in; it’s all people that want to hear about us; it’s all people So, it just shows that we’ve become immuned to that have already got a connection to the Kogan all of this advertising that is interruption based. All brand, and that’s what we see as one of the major the traditional advertising is all about interrupting advantages of being a leading player in the online the consumer. You’ll be watching a TV show, they’ll community - that customer base that you get to interrupt you and scream a message at you. You’ll build. be reading an article, it’ll interrupt you and show you an ad you’re not interested in.
internet marketing magazine 12 august 2012 Because for instance, if you walk We are in our sixth year and we in to a major traditional retail- er like Harvey Norman and you in our business this year. You buy an iPad, you will walk out of don’t hear of too many business- the Harvey Norman, they’ve got es with that sort of growth, but no way of ever contacting you we’re not taking any of that for again. Whereas the moment you granted so we’re working harder plug your iPad in to your comput- than ever to keep all of our cus- er, Apple has you registered as a tomers happy. We’re still on an customer. So they will market to ongoing basis working to make you for eternity from that point our processes more and more ef- forward. Whereas Harvey Nor- man, who has spent all that mar- keting dollar trying to get you in We’ve got an internal mantra at to the store has no way to con- Kogan and that is “there is al- tact you again. ways a better way”. We know that however we do things right now, that is the best way we’ve a new customer than it does come up with until today, and to keep an existing one. So the tomorrow there may be a bet- whole strategy surrounding the ter way. Every process is up online community is a very im- for scrutiny and questioning, portant one to us - and we look because we know that in order at it as two-way communica- to evolve with the business and tion. We don’t just want to pump survive as a business, you must deals out to our customers; we embrace change and keep the want to hear what they’ve got to improvement cycle going. say as well. What we aim to do at Kogan is constantly expand our product of it is us engaging in conversa- range and target more and more tions, asking our fan base what geographies. Over a year ago they think. We’re giving them now we expanded into the UK poles. It is a market research and we plan to be in more geog- tool for us. We don’t want to just raphies by the end of this year as scream at them in one direction, well. Our goal is to make Kogan a we want to engage our com- world wide household brand very soon. they’re thinking and feeling and that’s the sort of stuff that makes Greg: more and more people want to be part of our community. encourage all our listeners and Greg: The rate that your busi- Kogan.com and ness has grown and continues to grow is phenomenal. What’s see how great an ecommerce - store that Ruslan and his team gan brand? able to pick up a bargain while Ruslan: Yes, the growth has been pretty spectacular up until now.
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