Published on 17/02/2016 by Punchmedia

Electronics Empire Considers ASX Charge

The founder of Australian online retail giant Kogan, Ruslan Kogan, is understood to be considering an ASX listing.

It's understood BRW Rich-lister Kogan is working with UBS and Canaccord Genuity with a $300 million initial public offering pegged for the second-half, subject to market conditions.

The announcement comes on the back of a number of technology companies announcing their intentions to go public in the coming months.

Kogan started his online empire selling TVs out of his parent's garage in 2006 and has continued his challenge to the traditional bricks-and-mortar retail giants by expanding into new private label brands.

The firm, most well known for selling electrical and computing goods, has expanded into sporting, camping/outdoors and homewares through new private brands Fortis, Komodo and Ovela.

Revenue is now at about $250 million per year, with Kogan using a combination of information technology, market analysis, logistics and efficiency to minimise costs and sell at least 10,000 different line items. Kogan also owns a stake in online furniture store Milan Direct.

Consumers' ability to search for and compare electronics products in the digital space has seen the industry continue on an upward curve throughout 2015-16 as consumers sought to find bargains online and not in retail stores.

Internet Connectivity

A surge in internet usage has been a driving force behind the rise of online shopping, which has supported the expansion of industry revenue over the past five years. The number of internet subscribers has soared over the period, led by the popularity of mobile wireless connections as the most dominant type of internet connection. Growth in internet connections is attributable to faster download speeds, reduced subscription fees and falling computer prices. The rapid increase in the number of internet subscribers reinforces the rising technological literacy of the Australian population, which has resulted in greater acceptance of purchasing items online.

Technological Developments

The industry has been affected by considerable technological change over the past five years, including the increasing sophistication of consumer electronics such as tablets, smartphones, notebooks and high-definition TVs. Demand for mobile gadgets such as tablets and smartphones has been supported by an improvement in mobile phone coverage as wireless telecommunication providers invest in infrastructure to better service rural and regional customers. The greater affordability of mobile connections has aided demand for mobile consumer electronic gadgets.

Price Competition

Enhanced online connectivity has fostered greater price competition, as it enables consumers to more easily compare prices and read reviews. At the beginning of the five-year period, instability in financial markets caused volatility in consumer sentiment and households attempted to cut back costs. Industry revenue grew as cost-conscious consumers gravitated online to search for affordable deals and cost savings. Online retailers benefit from not spending on as much on rental fees as traditional bricks-and-mortar retailers, which enables them to save on overhead costs and keep prices down.

Industry Structure

Enterprise numbers have increased over the past five years, driven by the strong revenue growth in the young industry. There is a trend of increasing revenue per enterprise, which is indicative of the larger players building economies of scale. The average wage has increased over the past five years, partly due to initiatives to increase operational efficiency.

*With AFR

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punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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