Online Services - A Catalyst for Booming Kogan.com Sales

  • May 13, 2020 AEST
  • Team Kalkine
Online Services - A Catalyst for Booming Kogan.com Sales

Mac and cheese, anyone? Let’s run to Woolworths and grab some stuff to make. However, today, running to a retail store is perhaps our biggest nightmare, considering the overwhelming sense of fear, caution, and concern that COVID-19 has unfolded.

Novel coronavirus, the biggest disrupter of life and businesses, has changed our lifestyle in terms of how we shop, work, study, socialise and what we eat. And, when it comes to eating or shopping, the name that comes to our mind is a retail shop, the hub of all our essential or non-essential needs.

In wake of the prevailing crisis, several retailers, especially non-essential service providers, are battling loss in-store revenue due to shut down and less footfall, and the only way to sustain seems like accelerating a shift to an online platform.

Online Platform – Aid in Fighting the Battle

It would not be surprising to say that the retail scene has changed due to the ongoing coronavirus pandemic. While the closure of several physical stores due to lockdown and social distancing measures rolled out by the government is quite uncommon, it has led to a huge opportunity for online platforms to meet the demand, as well as for retailers to adopt the digital way of conducting their business to help them sail through the corona storm.

“No more going to the store, No more waiting” – is the mantra that has made online presence upsurge big time.

Today, majority of people, globally, are following social distancing norms and looking forward to touchless shopping experiences, as access to a product without direct human contact seems more secure.

Must Read: Online Business Models come to the rescue of ASX Retailers amid COVID-19

Customer Engagement - Paramount to Weather COVID-19 Storm

Wave of store closures, low footfalls, and change in shopping patterns due to a paradigm shift in the consumer behaviour have forced several retailers to act quickly and consider transforming to e-commerce or omnichannel organisations.

At the same time, all these organisations are required to ensure that the customer experience on their web platforms is convenient and enjoyable, which in turn would make customers revisit and purchase while engaging in a soothing way. This change in the retail space while fighting the pandemic or after winning the battle is needed to keep people engaged.

The re-engagement plans would enable best retailers to outshine and recover quickly while rebuilding their loyal customer base. Rebuilding can be executed in a variety of ways, such as marketing via social media or consumer email marketing.

Did you read: Retail Industry Embraces Re-openings and Digital Shift amid COVID-19 Disruptions

Online Platforms to Have Lasting Presence

An incremental number of retailers have bolstered their online presence to offset COVID-19 impacts and ensure business continuity. Though retailers need to mitigate cash flow issues to sustain market share, boosting their capacity to smoothen transition to online platform or provide hassle-free customer experience would require additional expenditure in terms of advertising, ordering, promotions, and messaging.

Owing to the current pandemic situation across the globe, increasing number of consumers are purchasing products online. This change in shopping patterns is expected to take a big leap and stay in the upcoming period as well, thereby boosting online sales of various retailers with incremental growth.

Did you read: Property market takes a hit while retail surges

It is often said that True Leaders emerge during the crisis. Let us have a look at one such example of an ASX-listed retail player, which has beaten the blues and continued to work hard to emerge as a winner amid the current COVID-19 pandemic.

Kogan.com Limited (ASX:KGN)

Kogan.com is an Australia-based online service provider focused on making the in-demand products and services economical and reachable. The Company engages in a diverse range of retail and service businesses including internet, travel, mobile, and insurance.

Considerable Growth in Active Customer Base

KGN ensured high-quality services to its customers amid COVID-19. On 12 May 2020, the Company published its business update for the month of April and reported a positive outlook by successfully outpacing itself through the roadblocks due to coronavirus.

The Company registered considerable growth in active customer base to 1,948,000 at the end of April 2020 with the addition of 1,39,000 active customers in the month of April 2020. Also, Kogan reported accelerated growth in the monthly marketing expense for April with the rationale of building its brand and active customer base.

Following are the key highlights for April 2020

  • Growth of more than 100 per cent in gross sales on a year-on-year basis
  • Gross profit increased by more than 150 per cent when compared with the same period a year ago
  • Strong growth in adjusted EBITDA of more than 200 per cent over pcp

 

KGN Key Business Takeaways for the Quarter ended Mar’20

On 20 April 2020, KGN released its business update for the quarter ended 31 March 2020, highlighted strong results on the back of substantial growth in active customer base, gross sales and gross profit while successfully fighting the battle against the COVID-19 pandemic.

 

Source: KGN report

 

  • At the end of Mar’20, active customer base stood at 1,809,000 with the growth of over 13 per cent year-on-year
  • Gross sales saw an improvement of over 30 per cent with revenue growth of over 6 per cent
  • Gross profit increased by more than 23 per cent
  • At the end of period, the Company had net cash of AUD 47.8 million and debt facility drawn to AUD 26 million.
  • At the end of March 2020, inventories stood at AUD 79.3 million, inclusive of AUD 63.8 million in warehouse and AUD 15.5 million in transit.

 

Stock Information - On 13 May 2020 (AEST 01:05 PM), the stock of KGN was trading at AUD 8.560, down 3.277 per cent from its previous close. KGN has an annual dividend yield of 1.77 per cent, approximately 94.8 million outstanding shares and a market cap of AUD 838.96 million. The last one-month and three-month return of the stock was noted at 39.93% and 73.53%, respectively.

 


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