Kogan sees biggest monthly increase in customers since IPO
A strategic increase in marketing spend has given Kogan.com the biggest monthly increase in active customers since its IPO, according to the online retailer’s unaudited Q3 results.
An additional 62,000 customers shopped on Kogan.com in the month of March, lifting the number of active customers in third quarter to 1.81 million, a 13 per cent increase on the prior corresponding period.
The company attributed the increase to its strategic investment in marketing activities, which drove up its overall operating costs in the quarter by 37 per cent year on year.
It expects this investment to have an ongoing and long-term benefit to the business, and said the efficiency of its marketing spend would improve as it collects and acts on data collected from more customers.
Like many online retailers, Kogan benefited from the closure of bricks-and-mortar stores in March, with sales and profit growing faster in the month than the quarter as a whole.
The company’s unaudited results showed gross sales up by more than 30 per cent in the quarter ending March 31 and 50 per cent in the month of March, revenue up by more than 6 per cent in the quarter and 19 per cent in the month and gross profit up by more than 23 per cent in the quarter and 50 per cent in the month.
Gross marketplace sales were up 7 per cent on Q2 and 69 per cent month on month in March.
Adjusted EBITDA was 4 per cent up on Q3 FY19, according to the unaudited results.
CEO Ruslan Kogan said the company’s “world-leading supply chains” in China, the US, Europe and Australia and New Zealand, and rapid fulfilment and logistics capability, have allowed it to deliver essential items to customers despite the global pandemic.
Its cloud-based systems have also allowed the business to achieve full productivity while working from home.
“As a result of these long-cultivated elements of our business, we have been able to delight our customers and respond positively to these new circumstances,” he said in a statement to the ASX.
Kogan noted that the company’s Shenzhen staff started working from home after the Chinese New Year holidays in February, and have been back in the office since mid-March.
Local staff in Melbourne have been working from home since mid-March, and were still working from home as of the announcement on April 20. The company has given each team member a $500 bonus to assist their families during the crisis.
Kogan.com experienced some disruption to its supply chain in the quarter, with the supply of exclusive brand products out of China and the reliability of international shipping disrupted after Chinese New Year.
The company responded by working with suppliers and logistics partners to ensure the supply of the most in-demand products, and by onboarding new sellers to its marketplace. Exclusive brand products from China have been largely delivered on time over the past three weeks.
The company’s unaudited results show Kogan Marketplace had its highest gross sales on record in the month of March, and the pipeline of new sellers remains strong. The number of new sellers in the integration phase, which are yet to go live, is more than 50 per cent of the number of current active sellers.
The company had $63.8 million worth of inventory in its warehouse as at March 31, 2020, and $15.5 million in transit. Trade and other payables were $44 million, and cash was $47.8 million, with the debt facility drawn to $26 million.
This story first appeared on sister site Inside Retail Australia.