update Controversial Australian entrepreneur Ruslan Kogan today labeled bricks and mortar retailers like JB Hi-Fi “Apple’s bitch”, claiming that the iconic US technology giant was planning to completely shut down its third-party distribution network and go it alone with its own stores, both physical and on the internet.
In a fiery speech to the Kickstart Forum on Queensland’s Gold Coast this morning (full video above), Kogan claimed the sale of Apple-related products and accessories made up more than 30 percent of Australian retail giant JB Hi-Fi’s local sales over its last financial quarter – making the company’s revenue dependent on Apple. He said the information came from a recent meeting he held with local investment bankers.
The problem, according to the Kogan Technologies founder, is that JB Hi-Fi didn’t own customers who bought Apple gear from it, having no way to continue the conversation with them once they walked out its doors, while Apple could communicate with the customer continuously through its iTunes ecosystem.
“You may not know it yet, but the biggest retailers in Australia are Apple’s bitch,” Kogan said. “The biggest bricks and mortar retailers are relying on the genius of Apple to stay alive. But what would happen if Apple decided that it could make more money by selling direct through its own stores or online store, rather than meet that third-party distribution network?”
Apple already makes substantial sales in Australia through the local versions of its online stores, as well as software and content sales through the local versions of its iTunes platform. In addition, the company continues to roll out new physical shopfront facilities in Australia, targeting high-profile retail locations and investing heavily in glamorous facilities.
“Apple is silently waiting for the perfect moment to pull the pin on its third-party distribution network. It might be next year that I stand here and say, I told you so, it might be the year after, but make no mistake about it, the time will come when Apple pulls out, and that may well be the end of bricks and mortar as we know it,” said Kogan.
Wearing an “I’m EV’s bitch” t-shirt in a reference to an internal company bet he lost with a staff member named Evgeny, Kogan – who has picked a purely online model for his own business – said three years ago, when he had stood at the same conference and said the future of retail was heading online, some of the audience had believed him to be “a loudmouthed punk”.
Since then, he pointed out, Kogan had sold over 200,000 products and expanded internationally, becoming what he described as “Australia’s only international consumer electronics brand”. “All this from a little Aussie garage startup,” he said.
The entrepreneur quoted evolution pioneer Charles Darwin as saying that it wasn’t the strongest of species who survived the evolutionary process, nor the most intelligent – it was the one who was most responsive to change.
“In an industry where only those who can innovate on an ongoing basis can survive. It’s brands like Google, Kogan, Apple, Dell, Amazon, Hunch.com, Boutiques.com, that you’re going to hear the most exciting news from in the next couple of years,” said Kogan, who has for the past year or so been enmeshed in a high-profile war of words with Harvey Norman chief Gerry Harvey.
“I don’t need to tell you what brands we’re going to stop hearing from.”