Ruslan Kogan's nod to OzBargain and his most valuable business mistake: The coffee mug price error

neil on 03/07/2013 - 23:29

I attended Shoptalk in Melbourne tonight where Ruslan Kogan was giving a talk. Anyone doing retail should attend these meetings if not for the interesting talks, do it for the free food and booze.

It was a very interesting talk about how he built Kogan from the ground up. Parts of what he said can be found in this RMIT podcast from earlier in the year.

In his talk he mentioned OzBargain twice.

An audience member asked about competitors and comparing with brick and mortar shops. He made a comparison between an online tennis shop and a offline shop. He made the assertion that the 2 are different and most people who would go to an offline shop would pay the extra money to try out the racquet, have a swing with it, advice etc. He then made a reference to people trying out the product in the offline store and buying online like the tightarses on OzBargain. Heh OK.

More interesting was a question from the audience asking about his most valuable mistake. He referred to the $5 mug price error where he lost $30k. The figure he quoted in the talk was higher than $30k and he also said that OzBargain users used some special codes to get the discount, which is not true (although I couldn't remember the details at the time). From that he has tightened his IT procedures so we aren't likely to see any price errors in the future.

Keep in mind, he had no idea OzBargain was attending this nor did anyone bring up OzBargain.

Site Discussion

Comments

  • neil on 03/07/2013 - 23:33
    +12

    Other possibly interesting facts:

    • He hired his first employee after 8 months.
    • He initially was doing much of his sales on eBay which worked well until eBay & Paypal froze his account for too many sales with no feedbacks given. I'm sure we can all relate to that.
    • The most expensive car he drives is an M6. (Someone asked this randomly then went on a rant about China selling stuff below cost which almost started fisticuffs with another person in the audience.)
    • He holds a CCIE (Cisco Cert).
    • issh on 04/07/2013 - 00:17
      +1

      Sounds like a decent hard-working guy.

      Deserved every dollar he made(and lost lol)

    • Velocita on 04/07/2013 - 11:19

      He holds a CCIE? Wow really?… Just Googled that and this page came up.

      • neil on 04/07/2013 - 11:28
        +3

        I feel creepy that I all of this about him but it was all mentioned in the talk.

        Yes, he did engineering at Monash, got a CCIE, and worked for GE as an engineer on a $150k salary. He got bored and started working at Accenture on $40k. Different stuff but more interesting although he had nothing nice to say about them. He quit that job and started Kogan.

        • Velocita on 04/07/2013 - 11:41
          +1

          Respect, CCIE is nothing to scoff at. I'm studying my CCNP R/S at the moment and there's somewhat difficult concepts in it, not to mention the amount of knowledge you have to have before walking into the T-Shoot exam.

        • adn on 04/07/2013 - 21:38

          You will be fine mate. As long you did your routing and switching properly t shoot will take much less time to prepare for.

      • MrZ on 04/07/2013 - 11:29

        What page comes up?

        • Velocita on 04/07/2013 - 11:39
          +2

          Google "Ruslan Kogan CCIE"

          And you'll find this page as the top hit.

    • MrZ on 04/07/2013 - 12:06
      -5

      I can buy an M6 for 59 grand if I really wanted one. Nothing that special.

      • mskram on 04/07/2013 - 19:51
        +9

        I think that's the point…

  • whywaitaustraliadeal on 03/07/2013 - 23:56

    I would love to go to shoptalk when is the next sydney one?

    • neil on 03/07/2013 - 23:59
      +1

      It alternates between Melbourne and Sydney. First wednesday of every month so Sydney one is on August 7. Scott will be attending that one. :)

      • BuyNow Think Later on 04/07/2013 - 13:51

        According to Shoptalk: "Retailers only. Please note this event is open to retailers and associated sponsors only." Their events would be overwhelmed/overloaded with some of us going there. I haven't been to one. Do any gatekeepers check to make sure you are really a retailer or associated sponsors?

        • neil on 04/07/2013 - 14:00
          +5

          They didn't use to have that note on there. Not all of those who attended were strictly retailers but yeah they probably don't want these meetups "OzBargained".

          There was no gate keeper and no signs indicating the event was occurring. I asked the bartender and was told the event was upstairs. No checking of RSVPs which was dissappointing as it would have been good to know who everyone was.

          While it said there were 100 who rsvped, in actuality it was probably closer to 40 or 50. I honestly had no idea there was going to be free food (spring rolls, chicken skewers) and a bar tab. I was interested in the talk but I'm never one to turn down free beer. :)

        • hahaboy on 05/07/2013 - 13:05

          Sounds good. I might come down for one in the future! Free beer and good business talks sounds like a great night to me :D

  • Forfiet on 04/07/2013 - 00:05

    Kogan obviously didn't realise that retail "professionals" attend shoptalk too… too bad he and Gerry arn't always on good terms. eh?

    • neil on 04/07/2013 - 00:18
      +2

      No mention of Gerry.

      When asked about who his biggest competitors were he couldn't name any. Apparently no one is doing what he is.

      I'm not sure if other retailers do this but he has an auction system in the backend where suppliers place bids to supply products to Kogan. So I guess in his point of view, it's a unique business. To most observers it's just a website selling electronics.

      • cannedhams on 04/07/2013 - 07:11
        +18

        I suppose its unique in the sense that he is a grey importer, but not as ostensibly dodgy as other grey importers, maybe he is more like a beige importer.

      • Davo1111 on 04/07/2013 - 12:16
        +3

        yep, he spoke about how his store was the only one that stayed alive during click frenzy (compared with jb/myer/bigw etc). He also processes 10,000 orders a day, which is above anything other companies have done.

        He mentioned how most of the companies are drop shippers. Where he actually has to run everything from the supplier to the consumer

      • JimmyF on 05/07/2013 - 22:57

        The problem with the lowest bidding on supplies, he is just getting just that. They cut corners to meet the price he wants.

        It also shows in the UI design, after sales server of products etc. All these products are full of firmware and have some 'features' in them that need working out (bugs), but once Kogan has sold the last unit, the supplier is well and truely forgotten and they don't want to know about fixing issues!

        I've used a few of kogans products and the firmware/UI could do with more work. But if its a bidding war, then yeah I can see this being why :(

  • cannedhams on 04/07/2013 - 07:13
    +24

    I remember the coffee cup but didnt order one as it wasnt my cup of tea. However if I knew that I was costing Kogan 30,000 by buying one then I definitely would have bought one.

    • soupiejr on 04/07/2013 - 07:30
      +22

      The true ozbargainer, ladies and gentlemen. It's not enough we get a good deal out of it, the other guy has to hurt too.

      • kwaker on 04/07/2013 - 07:44
        +11

        Yeah good idea cut off your nose to spite your face.

        30k lost on 1 deal : price rise on another

      • cannedhams on 04/07/2013 - 12:05
        +2

        Mainly because he is a tit, and his business offers terrible customer service should you ever want to return anything.

        • exulted on 04/07/2013 - 19:47
          +10

          I bought a smart phone, opened it up and used it for a couple of days with my sim in, but I realised I didn't really want that particular brand/model phone after all. The 14 day money back guarantee is AWESOME! I simply called them, filled out a form, and then dropped off at their shopfront in South Melbourne.

          I know this isn't in the group spirit of flaming Kogan like the rest you but I don't know many online/offline stores that take a product back no questions asked if it has no fault/defect. Sorry :)

        • [Deactivated] on 05/07/2013 - 08:38
          +2

          I've met Rus a couple of times. He's an ok guy who wears cool t-shirts. Why don't we like him?

        • T1OOO on 05/07/2013 - 10:28
          +1

          yeah, making millions, while your here posting in your jocks…

        • cannedhams on 05/07/2013 - 11:51
          +4

          who needs jocks?

        • [Deactivated] on 06/07/2013 - 09:46

          T1OOO 23 hours 17 min ago
          yeah, making millions, while your here posting in your jocks…

          I don't wear jocks and I'm an octillionaire. Proof :p

          Edit: btw, its "you're here" not "your here":)

        • T1OOO on 11/07/2013 - 09:05

          well played

      • Ry009 on 04/07/2013 - 12:09
        +1

        Any retailer that engages in activities that border on bait advertising deserve all the criticism they get IMHO.

      • dealman on 04/07/2013 - 17:35
        +1

        The true ozbargainer, ladies and gentlemen.

        It's not enough we get a good deal out of it, the other guy has to hurt too.

        Only if the other guy is Ruslan Kogan, who tried to make mugs of everyone by giving free shipping.

    • huntress_love on 04/07/2013 - 11:49
      +2

      Maybe that's how much profit he lost, but i doubt it cost him that much.
      These stuff is cheap as from China. He probably just cover cost!

      • Briggles0 on 04/07/2013 - 13:03
        +1

        yeah lost profit. he would have payed no more than $5 for them each which i found on a quick search. he would have got a better deal than that.

        • t_c on 04/07/2013 - 20:50
          +1

          mug was free post, so he probably lost $5 postage on each order, deal had over 7000 clicks, 7000 x 5 = 35k

        • berger on 05/07/2013 - 15:15

          clicks have no reference to the amount of purchases.
          its more so a guide, the purchases would be no where near the clicks

        • inherentchoice on 06/07/2013 - 08:27
          +1

          The purchases could be more than the clicks. Those clicks just represent ozbargain traffic.

      • bchliu on 05/07/2013 - 14:43

        http://www.aliexpress.com/wholesale?SearchText=camera+lens+c…

        Under five bucks each..

        • scrimshaw on 05/07/2013 - 15:41

          $7 something actually, the mug I got from Kogan was this model. The cheaper ones selling for $5 are inferior variations.

          Much of the loss however was from the costs of Austpost shipping (which would've been at least $5 minimum).

        • Briggles0 on 06/07/2013 - 16:05

          just saw same model for $5.60

          another one for $5

    • cruise control on 04/07/2013 - 12:11
      +10

      He manned up and honoured the deal despite the pricing error. I think that helped Kogan's reputation a bit and good decision by Kogan.

      I know a few places cough thehut, which sometimes did not honour pricing errors

  • scotty on 04/07/2013 - 07:57
    +6

    Nice one! Yes I will be going to the Sydney one on 7 August.

    However now you've mentioned free food & BOOZE, I am afraid those events would be packed with ozbargainers going there just fit the freebies :)

    • [Deactivated] on 05/07/2013 - 08:41

      If we see you or Neil at the one of those meetups , can we come over and say hi? and more importantly, will we get a Not bot badge? :)

      • scotty on 06/07/2013 - 12:18

        Only if somehow we turn one if these into an official OzBargain meetup, but I doubt shop-talk guys would be happy about it.

        We are still looking at Melbourne meetup options though.

  • CyberMurning on 04/07/2013 - 09:24

    nah i dont like kogan, after find out they put rpp $49 for a $0.99 headphones ! it was on sale $9 so i bought but regretted. no shops should do this kind of scam to australian people, especially since he is so proud that he is australian.

    • samfisher5986 on 04/07/2013 - 11:13
      +5

      All shops do that…

      Niche 500% markup items are how many businesses make money

  • MrZ on 04/07/2013 - 11:15
    +3

    The only thing I've bought from Kogan was their $19 32GB USB 3.0 stick a few months back. It's been great, one of the best USB sticks I've owned.

  • samfisher5986 on 04/07/2013 - 11:23
    +1

    I'm not a big fan of Kogan, but I do see them as necessary simply because their mainstream popularity keeps some degree of competition.

    Their Kogan branded products are too expensive for what you get though, their business popularity seems to be having the confidence to import things like iPads without being taken out by Apple etc.

  • counterbargainglobal on 04/07/2013 - 11:40

    Very interesting topic, if I could vote +1 this topic up I would.

    I will definitely be in for the August 7.

  • Davo1111 on 04/07/2013 - 12:11
    +5

    If you guys haven't already done so, have a listen to the podcast mentioned in the OP. It's very good.

    I thought he was a bit of a scumbag, particularly appearing on TT etc. Anyway, what he has considered in his business is very clever. he also discusses how he has competed with the brick and motar stores, and how he has scaled his business.

  • PissLUR on 04/07/2013 - 12:13
    +2

    he should be our role model.

  • CI on 04/07/2013 - 12:54

    The branded stuff they sell have always been good

    • Davo1111 on 04/07/2013 - 13:11

      really? i've read plenty of comments about it being of crap quality

      • CI on 04/07/2013 - 18:19

        i meant non-kogan branded, such as samsung apple etc.

        • Davo1111 on 04/07/2013 - 19:15

          ahh ok, misread it.

  • c64 on 04/07/2013 - 14:37

    $30k? meh. never underestimate the value of a good education.

  • goosegog on 04/07/2013 - 15:33
    +3

    We have bought a large screen T.V. from this company which does not work properly & although have sent numerous emails re the issue have not received any satisfactory answer.
    Also purchased a "professional" strength coffee machine for $500.00 ( supposedly worth $1900.00) which delivers luke warm coffee.
    Not at all impressed.
    We were sucked in by all the hype on how this company could deliver top class merchandise for a fraction of normal in-store prices but have learnt to our expense that this simply is not true.
    Mr. Kogan can keep his products & we will keep our hard earned cash in the future.
    They say the best advertising is through recommendation - well Mr. Kogan, be prepared to lose quite a few future customers now as we will never recommend your products to anyone & will put reviews on every site available to warn others of the lack of customer service.

    • Jesmond on 04/07/2013 - 17:22
      +5

      Just buy a Sony TV and Nespresso machine like everyone else.

      • goosegog on 04/07/2013 - 19:58

        So you obviously agree that buying through this company is not worth the effort. Please pass both my & your comments to everyone you know until Kogan changes their company attitude towards customers. Thank you for your response

      • Bunnyburger on 04/07/2013 - 20:00

        Yea at least they work.

    • rekabkram on 04/07/2013 - 23:46

      That's the beauty of paying by credit card. Contact your credit card company (if you payed through CC) and let them know that you've bought faulty electronics and the retailer won't do anything about it. I'm fairly sure all credit card company's offer warranty on electronics. They will at least get in contact with the retailer for you and kick their ass.

  • meong on 04/07/2013 - 22:51

    I feel missed out!

    How do you guys get updates on this? Do you just sit through MeetUp page and check for interesting meetups?

    • neil on 04/07/2013 - 23:04

      We are always on the lookout for events that could be useful for OzBargain. We noticed shoptalk on Twitter a couple of months ago when Gabby from CatchoftheDay gave a talk. Once you sign up to shoptalk, they send you email for their upcoming events.

      I haven't looked into other Meetups but there seems to be lots of local groups with shared interests meeting on a regular basis. We are using Meetup for our OzBargain meetups (when they finally happen!). It's a great system.

      • meong on 04/07/2013 - 23:18

        Thanks Neil!

        Is there an OzBargain meetup group set up that I can subscribe to?

        Btw, is ShopTalk only open to retailers? Does that mean regular OzBargainers can't join?

        • neil on 04/07/2013 - 23:31

          This is our official Meetup page. Unfortunately, our 1st official one was canceled at then end of May because of a council issue with the venue. We are waiting to see if they are allowed to host events there anymore. If not, we will find a new place.

          Btw, is ShopTalk only open to retailers? Does that mean regular OzBargainers can't join?

          Well, no one checks your credentials at the door but you don't really want to be gate crashing events.

  • [Deactivated] on 04/07/2013 - 23:57

    Good on him, but I wish he'd give his marketing/IT people a rocket. Bought something cheap from them recently, didn't sign up (knowingly) to anything and now can't get rid of their spam. Hope he doesn't mind the vote I gave them on the ACMA spam database.

    • Conka on 05/07/2013 - 12:53

      Yes; I have the same problem with their SPAM. Pretty happy with the TV though (2 weeks old, and going strong)…

      • kwaker on 07/07/2013 - 23:58

        Same I got a sim card

  • Davo1111 on 05/07/2013 - 10:56
    +1

    Actually 2 things i was very impressed with.

    1. He geotargeted ads so they appeared in the vacinity of shopping centres where JBs/myer/DSE were located. So when you were in there, and you googled the price on your phone, his site was first.
    2. He uses the search terms from google to find the best value adwords.

    I.e. "ipad" adword costs $5, and his purchase rate was 1% of click-throughs. "Ipad 4" search term is only $1.50, and has a 5% purchase rate on click-throughs. He can then run stats and find the most beneficial adwords.

  • spare13 on 05/07/2013 - 12:54

    He lost $30k. Gained 2000*5 = $10k (from sale of mugs). That means that the cost to him was $40k.
    So, it cost him $40k / 2000 per mug = $20 per mug. And yet he was planning to sell them for $15 each, which meant an instant loss of $5 per mug = $10k anyway.
    Also, as a side note, there's not way that even with shipping those mugs cost $20 each.

    • bchliu on 05/07/2013 - 14:42

      A quick check on Aliexpress shows this:

      http://www.aliexpress.com/wholesale?SearchText=camera+lens+c…

      Under $5 per cup.. Not sure if he really did lose $30k on this..

      • berger on 05/07/2013 - 15:17

        he would have paid less for a bulk purchase.

        he could have lost 30k from his full RRP.

        • Davo1111 on 05/07/2013 - 22:08

          he also has to pay import costs, gst, repacking costs etc

        • Bargainboogan on 06/07/2013 - 10:46

          He wouldn't as his business doesn't import into Australia, his suppliers either dropship or his company posts from China/HK.

        • PissLUR on 06/07/2013 - 14:08

          no, it was delivered via aus post.

        • Davo1111 on 06/07/2013 - 19:42

          you should listen to the podcast, he doesn't dropship

        • berger on 10/07/2013 - 08:49

          $6000 roughly for a container. everyone pays gst. Things like these would cost no more than $1 - 1.50. I'm in sales for an importer, the cost of things from china really are that cheap.

  • erroorfree on 06/07/2013 - 14:55
    +1

    the coffee mug error is BS. by some basic calculations you can figure that it doesnt make sense

    • so the coffee mug was $15 including delivery originally and the price error was of $5. Now lets suppose his cost is $13 which means he lost $13-$5 = $8/unit X 2000 = $16000. even if he sold 3000 units it will come out to be $24000.

    • lets suppose he lost $10 instead of $8 (unlikely), he would still would have never lost 30k+

    • Conclusion
      We at ozbargain are not idiots! You can sell cheap china but you cant sell lies!

    • liverpool2009 on 06/07/2013 - 15:50

      Spot on. You know why Kogan is successful? He knows how to get free advertisement by talking full of bullshit. IMO I reckon he made a loss on delivery that lens mug wasn't even bought by him for >$5

      • erroorfree on 07/07/2013 - 00:41

        Exactly. Hes a smart a$$. He just made some less profit or no profit and made it look like he has been ripped off for sympathy vote !
        I wouldn't b surprised if something like this happens again and gets publicized as an epic error and ends up on the news!! Cheap publicity!

    • Briggles0 on 07/07/2013 - 06:17

      cost is easily $5 at most someone posted a link with that price. prob got a better deal.

  • Bappy on 08/07/2013 - 11:39

    He referred to the $5 mug price error where he lost $30k.

    But he never said anything about $9 HD Set-top Box and $46K loss?!

  • neil on 26/07/2013 - 13:42
    +4

    Tweet from Ruslan today

    Your site is full of tightarses but being like minded I respect their skills and frugalness!! I love digital transparency!

  • scotty on 08/08/2013 - 12:11
    +3

    Went to the ShopTalk event last night and it was packed (small venue though). Ruslan was again the main speaker sharing the same talk as last month's event in Melbourne. I also had coffee with him before hand. So, a few things,

    • He is a very smart guy. Well, his rise from nothing (with a bit of luck) proves it.

    • He generally likes OzBargain because he would call himself a tightarse as well.

    • He mentioned OzBargain in his talk but this time describing OzBargainers as "experienced shoppers"

    Finally, it's something that has always been in my mind when I try to steer the culture of OzBargain — while it is primarily a consumer-focused site, we do need to remember that ultimately the deals are from the merchants. It's no benefit to the community if the merchants are all squeezed dry & having no incentive for them to continue to participate on OzBargain and continue to offer good deals on this site. The assumption is, if the merchants are getting good feedbacks and can be made profitable here, more likely they will come back to offer better deals.

    Kogan puts it in a much simpler term in his talk — it's all about win-win situation. Yes he was mainly talking about in the retailer business, but I guess it also implies to OzBargain as well. Screwing around the business because "they are faceless big corporate that should be screwed" is bringing benefit to neither parties. At the end of the day we at OzBargain are building a platform/eco-system that can hopefully benefit not just the consumers but also merchants, who will hopefully feed back in the form of better bargains.

    • spackbace on 13/05/2016 - 15:10

      So, considering this post has already been thread-mined, 3yrs on is the site/community going in the direction you wanted it to? Has it really even changed?

      Interesting that the most popular store in March was Kogan, actually that whole list are major companies that don't really have store reps on here. I wonder if that's kind of indicating that many stores are getting scared off?

      • scotty on 13/05/2016 - 15:25

        is the site/community going in the direction you wanted it to?

        We are still working on it as you can tell…

        actually that whole list are major companies that don't really have store reps on here

        By the way Kogan is actually rep-banned due to their sockpuppeting history here. Majority of the deals are actually shared by community members rather than store reps. I'll say for large retailers, they probably don't care. People are buying from them with or without OzBargain, nor do they want to allocate resources dealing with customer support issues on a 3rd party site.

        Maybe we'll run a merchant survey or something. However around 1/4 of deals are posted by reps on OzBargain and many of them come back again and again (despite sometimes getting ruthlessly nit picked by the community). Maybe they don't care as long as they make sales, but I am still hoping that people should be nicer to everyone online :)

        • spackbace on 13/05/2016 - 15:30
          +1

          but I am still hoping that people should be nicer to everyone online :)

          Wouldn't that be a change ;)

  • Third_Gear on 16/08/2013 - 19:03
    +1

    I'm an ex employee from the early days and I doubt much has changed from a few years ago…. Could say quite a few interesting things but all in all it was a good learning experience. Most of us original guys went on to start our own ventures with great success after leaving for varying reasons.

    • congo on 11/05/2016 - 20:35

      What company did you startup?

      • Third_Gear on 11/05/2016 - 21:37

        Third Gear and now I also own Dungeon Crawl.

        • congo on 12/05/2016 - 09:35

          That's awesome!
          I made the mistake of joining a big corp company, so I now lack the entrepreneurship skills :-(

        • Third_Gear on 12/05/2016 - 09:47

          @congngo: I was an entrepreneur from a very young age and have been buying/selling for as long as I can remember. Being an entrepreneur isn't a skill set that is acquired. If you want to do your own thing just get out there and do it. Dont quit your job but start small.

        • congo on 12/05/2016 - 10:17

          @Third_Gear: Thanks. Sounds like good advise.

      • spackbace on 13/05/2016 - 15:02

        3 year old threadmine comment, and you got a reply, I'm amazed lol

  • congo on 11/05/2016 - 20:37

    Missed out on those mugs :(

    • Clear on 11/05/2016 - 21:41

      I remember the post and thought it was too good to be true and never jumped on it.

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