Kogan.com: Business Analysis And Strengths Essay.

You must write a critical discussion of the business of kogan.com. Your discussion should include, but not be limited to, the following issues:

1. The current business environment of kogan.com (i.e., via Porter’s five forces model) and the organisation’s strengths and weaknesses and the opportunities and threats it may face (i.e., SWOT analysis). 6 | ISY93210 Managing Digital Enterprise (Online) (Study Period 3, 2017)

2. What are the core components of kogan.com’s business model? What value can it create for its users, its business partners, and itself? How widely applicable is the model of kogan.com?

3. Do you think kogan.com will ultimately succeed or fail? Why?

4. What are your suggestions for sustaining or/and improving the business of kogan.com?
 

About Kogan.com

1.Kogan.com is a retail and services business which is a pure –play online retail website. The various business of Kogan is Kogan Marketplace, Kogan Mobile, Kogan Insurance and Kogan Travel. The company was founded in 2006 by Ruslan Kogan headquartered in Australia (Kogan, About us, 2017).

It consists of the few factors which need to be taken into consideration:

Threat of substitute-

The new product segments of other companies can create trouble for Kogan.com as it might give wide range of products to the customers. But the treat for Kogan.com is low as it has already launched many product areas.

Threat of competitors-

This is a worried factor for the company as other giants have created a huge level of competition for the cited organization.

Bargaining power of buyers-

Due to the availability of substitute and other retail services the bargaining power of customers is very high.Therefore,Kogan.com have to keep the price low and reasonable in accordance to the market costs so that the customers remain intact.

Bargaining power of suppliers-

Kogan.com is at low threat here even if the competition is high. As the company has  maintained a healthy relationship with the local distributors and supplier to get the product at a low cost. 

Threat of entry-

The entry barriers are also very low in retail industry, but Kogan.com need not to worry as to reach up to their market share or brad valve other start up organization has to put extra efforts. So in near future the threat of entry is next to impossible in case of Kogan.com (Michaux, 2015).

 Thus with the help of above analysis it could be stated that industry related business environment is in favour of cited organization.

Strengths of Kogan.com Ltd

Kogan.com has a large number of strengths and this is the only reason why it is one of the best firms in the market. Some of the strengths of Kogan.com Ltd are:

• High level of customer fulfilment-The main strength of this company is the relationship it maintains with the customers. It has gained a high level of customer satisfaction. It also maintains good brand fairness among the customers.
• Highly proficient labour pool- Kogan.com provides training and learning programs for its employees and hence has a skilled workforce.
• A good record of success of the new products and the innovated products.
• A good quality is maintained by kogan.com and it scales the production according to the conditions in the market through automation of activities.
• com has created an active distribution chain and hence majority of its products reached the market.
• Along with this, the company has a strong network of suppliers of raw material as the result the company has best supply chain management system(Sarsby, 2016).

Kogan.com’s weaknesses

These are the areas where Kogan.Com can improve upon. Few of the weaknesses are:

• com has higher abrasion rates as compared to other companies. Hence, the company have to keep investing in the training and learning programs.
• There is little scope for expansion of the current business models as the structure of organisation is in respect to these models.
• The inventory is huge as compared to the other companies and this makes more investment in the inventory resulting in wastage of capital.
• When there were new entrants in the market the company was not able to handle these challenges and it lost many market shares. This will displace the long-term growth of the company.
• The company’s investment in research and development is still not good when compared to the competitors with respect to the innovation.
• The amount of investment in technology is very less. The adaptation of new technology is very difficult because of less investment.
• The marketing promotions are not up to the mark. Although the sales of products good but the unique selling proportions of the company is not defined. As a result, the competitors can easily attack on these portions(Kogan, Anuual report 2016, 2016). 

The company keeps influencing and adapting new opportunities to maintain its customer’s satisfaction. Few more opportunities are:

• The new environmental policies are a great opportunity for Kogan.com to adapt new technologies and hence capture market share in the new products category.
• The low expansion rates let customers of Kogan.Com to get credit at low interest rates.
• The online portal has increased the sales and the future scope of the portal is to include big data in it.
• The constant cash flow from the bank lets the company to invest in new product areas and in new technologies.
• The government free trade agreement has let Kogan.com to make a place in new emerging market.
• The new product segment provides Kogan.com to differentiate its price strategy. With this opportunity, the company can give additional benefits to its old customers and can attract new customers by new policies.
• The company’s core capability can be in other product fields as well and hence the company should keep finding new products(Kogan, Annual report 2017, 2017).

Threats for Kogan.com

• The trend of isolationism in the government’s economy can influence the international sales in a negative way.
• The new environment regulations can be a threat to the product categories which already exists.
• The rising pay levels and increasing prices in the other countries will pressurise the profitability of the company.
• The changed behaviour of customers and using online channels rather than physical infrastructure can be a threat to the existing supply chain model.
• The adaptation of new technologies by the competitors can be a threat to the company’s products.
• The less number of skilled workforce in few global markets is a threat to the profits of the company.
• The supply of new products is irregular and hence it is a threat as the competitors can take advantage of this thing and can launch the same product with good sales.
• The local distributors are the biggest threat to the company as the competitors pay higher margins to these local distributors and get an advantage(Kogan, FY17 Result Presentation, 2017).

2.Kogan have created a business model whose base of gaining strength is by online trading and hence creating a new experience for consumers. The business model of Kogan.com targets to create strong online communities, keep ahead of technology trends, implementing e-business cost-cutting policies and using advertising methods. These business models cuts out the middle men’s and deals directly with the customers. The core components of the following business models are the customers, suppliers and the competitors. Few other components are,

Industry-Related Business Environment

Kogan’s business models cuts the costs so that the customers can avail maximum benefits. The cutting of costs is done at packaging and by providing paperless information. It also runs a paperless office and therefore is able to provide low cost products.

There are special widgets on the website of Kogan so that the customers easily link their social media accounts. By this policy, the company is able to advertise it socially and hence a large number of customers get attracted. Kogan has used social media as a way to gain trust of the customers. 

Customers can easily gather the product information on just one click. This makes easy for the customers to research all the retailers and the brands and find the best products. Kogan also keeps a check that what actually the consumers are searching and then they use this information for their marketing. By this they can easily find out what the customer wants.

Kogan takes care that it keeps up with the new technologies and keeps an update of the latest customer trends. The business models of Kogan keep introducing new features to attract the customers. It also has a notification feature which tells the customer that there product is located to a nearby location and the expected time in which they will get the product. It also keeps a check of the product which is the most popular.

These business models create good value for all its customers as they get many advantages. At each point, Kogan’s business models provide profits to the customers. Consumers have to pay less as there is cost-cutting business model and they get all the information they need at one place. If the profit is more the company gets benefitted as a result the business partners also gets the benefits. The local distributors, the suppliers everyone gets a huge amount of business with the help of these business models. With the help of these business models, Kogan has captured a big market and gained reputation along with this it has made profits (Braithwaite, 2015).

According to the annual reports of Kogan, it can be concluded easily that the business models adapted by Kogan are applicable in real-life. These business models have been strength for the company. It has attracted a large number of customers and has taken up the retail services market with the use of internet.

3.Kogan.com will ultimately succeed as the company has taken over the market and is growing day by day. The various factors according to which Kogan.com will succeed are:

Kogan.com has made a community of its customers and business partners. As it follows a concept which says that the old customers should remain. This community has gained a huge market for Kogan.com.

Kogan.com targets marketing services like Google AdWords and gets to know the strategies. They monitor what people are searching and according to that they change their business models.

Kogan.com has hundreds of AB tests which run continuously. With this Kogan.com tests many number of variations of a page and can see how the customers will react to it. 

The most important thing for Kogan is to benefit their customers. They provide low cost to the customers and also provide them with many advantages and hence gain their trust (Mason, 2017).

4.For sustaining and improving the business of kogan.com it can implement the following things,

• com should build internal feedback mechanism directly form sales team to handle the challenges of new entrants.
• A proper management of the inventory should be implemented.
• Promotion of new products should be more and should be balanced with the old products.
• The sales should not be irregular; all the products should have equal sales(Kogan R. , 2013). 

References

Bishop, J 2010, Ruslan Kogan: Young, Rich and Growing Two Businesses Fast, viewed on 3 January 2018, < https://www.dynamicbusiness.com.au/entrepreneur-profile/ruslan-kogan-technologies-dynamic-business-01.html>.

Braithwaite, A. & Christopher, M 2015, Using operations to build successful business models for competitive disruption, viewed on 4 January 2018,< https://www.koganpage.com/article/using-operations-to-build-successful-business-models-for-competitive-disruption#>.

Kogan 2016, Annual Report 2016, viewed on 3 January 2018, < https://www.kogancorporate.com/resources/pdf/Kogan%20Annual%20Report%202016.pdf >.

Kogan Corporate 2017, Annual Report 2017, viewed on 3 January 2018, < https://www.kogancorporate.com/document/73c43b2fa1cd4706851051ddaaced964/KOG0004%20AR17_PFO_web.pdf>.

Kogan, R 2013, Ruslan Kogan: Online Retail’s Success is About Much more Than Just Decent Websites, viewed on 3 January 2018, < https://www.businessinsider.com.au/ruslan-kogan-online-retails-success-is-about-much-more-than-just-decent-websites-2013-11>.

Kogan Corporate 2017, FY17 Result Presentation, viewed on 3 January 2018, < https://www.kogancorporate.com/resources/pdf/KGN_Kogan.com_FY17_Results_Presentation.pdf>.

Kogan 2017, About Us, viewed on 3 January 2018, < https://www.kogan.com/au/about/>.

Kogan 2017, Department Menu, viewed on 4 January 2018, < https://www.kogan.com/au/koganmobile/?ref=department-menu>.

Kogan 2017, Brands, viewed on 4 January 2018, < https://www.kogan.com/au/shop/brands/?ref=header-link>.

Mason, R. & Evans, B 2017, Customer Value: How to deliver it, viewed on 3 January 2018, < https://www.koganpage.com/article/customer-value-how-to-deliver-it>.

Michaux, S., Cadiat, A. & Probert, C. 2015, Porter's five forces, Belgium: 50Minutes.

Sarsby, A. 2016, SWOT Analysis, England: Leadership Library.