ERP News

Ruslan Kogan reveals secret to cheap prices but fatter margins

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Kogan’s move to a proprietary ERP system helped the online retailer plump up its margins and outpace its best revenue forecast following the acquisition of Dick Smith.

The company completed its “ambitious ERP project” in 2016, with the benefit of increased automation and “the platform required to scale our business”. Dick Smith was quickly integrated into the platform and the historic Australian retail brand has sincerelaunched as an online-only store.

“The hard work undertaken by the team to implement proprietary software solutions has  delivered efficiencies in time and cost via automation, timelier reporting and improved business insights,” founder and chief executive Ruslan Kogan told investors at this week’s annual general meeting.

“We believe our world-class supply chain is the most efficient way to get a product from point of manufacture into the customers’ hands. Our investment in automation has also driven faster dispatches, timely communications and ultimately happier customers. We now have end-to-end automation for the dispatch of in-inventory items.”

Kogan operates a host of websites, apps, databases, IT and management systems, including SAP. CRN has asked for more technical detail about its proprietary ERP.

The company went public on the ASX in July, and in August reported full-year revenue of $211.2 millionbeating prospectus forecast by $10 million. Its gross margin was also higher than expected, at 15.5 percent versus prospectus forecast of 14.5 percent.

Kogan also chalked up 116.7 percent growth in earnings before interest, tax, depreciation and amortisation (EBITDA).

The investment in its proprietary technology was booked prior to its public listing, which also helped beef up margins.

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