Kogan.com under increasing pressure

From new laws.

Kogan.com has blamed changes to the GST law and the weaker Australian dollar for its subdued gross margin and a sales slump of 27% from global brands in Q1 2019.

Kogan.com founder and CEO, Ruslan Kogan said, “The new GST laws on low value ecommerce import transactions, introduced on 1 July, 2018, initially saw some competitors exit the market and our July revenue grew 33% year-on-year.

“More recently, widespread avoidance of GST has become apparent. At this stage, we are unable to determine whether this avoidance will be temporary.”

Another factor that has hurt margin is increased expenditure of more than 40% as the company expanded its warehousing footprint into additional distribution centres around Australia and grew inventory levels in the lead up to the Christmas quarter.

“We continue to execute our long-term strategy to grow our ecommerce footprint and make the most in-demand products and services more affordable for all Australians,” Kogan said.

“We are better prepared for this busy Christmas sales period than we have ever been with warehouses in Victoria, New South Wales, Queensland and Western Australia fully stocked with the most in-demand products.”

This month, Kogan received a notice from the Australian Competition and Consumer Commission (ACCC) requiring the company to provide information relating to the marketing and pricing of a promotion run in June 2018.

In response to this, the company provided the following statement: “Kogan.com has strict processes and procedures in place to ensure compliance with the Australian Consumer Law and takes its obligations under law very seriously. The company is in the process of compiling all information the ACCC has requested and will cooperate with the ACCC in its enquiry.”

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