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.”

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1. John
   Posted 01/03/2011 at 12:56 pm | Permalink | Reply

   What a tosser

   • Renai LeMay
     Posted 01/03/2011 at 1:09 pm | Permalink | Reply

     Like many business owners, Kogan can sometimes get a bit arrogant. But he’s a nice guy in person :)

2. Matthew Hatton
   Posted 01/03/2011 at 1:07 pm | Permalink | Reply

   >>some of the audience had believed him to be “a loudmouthed punk”.

   He is a loudmouth punk. But it seems to be working for him, so he should go for it.

   As for the retailers being Apple’s bitch, I’d suggest it’s probably more like their customers are Apple’s bitch and the retailers are merely attempting to cash in on that. I mean, if I owned a business, I’d want to get all the popular products on my shelves so people are willing to come in and buy them from me. It’s just normal business.

   • Renai LeMay
     Posted 01/03/2011 at 1:08 pm | Permalink | Reply

     Heh I more or less agree with this — there’s an opportunity, so why not cash in. If the opportunity changes, you change your business model :)

     • Matthew Hatton
       Posted 01/03/2011 at 1:16 pm | Permalink | Reply

       I’ll leave along the irony of him making those statements while wearing an “I’m Ev’s bitch” shirt – deliberate or not, it’s utterly laughable.

       • Renai LeMay
         Posted 01/03/2011 at 1:42 pm | Permalink | Reply

         Actually Kogan’s PR just told me it’s not actually a reference to the Twitter founder — it’s an internal Kogan joke, apparently Ruslan lost a bet with an employee. Will update story shortly.

3. Tom
   Posted 01/03/2011 at 2:42 pm | Permalink | Reply

   Kogan’s products are absolutely awful. His lead products are LCD TVs, and in two separate (for different sizes) Choice reviews his TVs came last and second last respectively. His business model is to buy things absolutely as cheaply as possible and then sell them on the platform of being an “Australian Brand”.

   My beef with this is that people who get suckered into purchasing his products will no doubt be driven away from the idea of online retail.

   Why couldn’t Kogan put a bit more effort into it, hire some more talented industrial designers, and have a product that not only is cheaper but is actually a quality product in itself.

   • Marlon
     Posted 01/03/2011 at 5:43 pm | Permalink | Reply

     I wouldn’t call his products ‘awful’. Granted, I haven’t bought an LCD TV from Kogan, but I have their Blu-ray player and it functions perfectly, especially when you consider the price of other Blu-ray players in the market.

     I had such a positive experience I almost considered buying a 32 inch LCD TV from them to use as a computer monitor before I realise this would be a tad ridiculous.

   • Joel Webb
     Posted 01/03/2011 at 8:29 pm | Permalink | Reply

     Why is it Kogans fault if people want to buy something from an “Australian Brand”? Surely the issue is the person buying the goods based on that alone.

     It amuses me the number of comments across the web that complain about outsourcing and offshoring of business, business functions, customer service etc – when almost every single comment has been typed on a keyboard that was certainly not made in Australia.

     Harvey Norman (who now complain about Kogan) have just as much to explain about their actions in regards to importing goods, selling non-Australian made products and putting locals out of work (by forcing the closure of smaller retailers).

   • Renai LeMay
     Posted 02/03/2011 at 12:12 am | Permalink | Reply

     To be honest, I would describe most of the Kogan products as middle of the road — they’re not amazing, and they’re not terrible. However, there is no doubt that his prices are pretty damn great for middle of the road products, and he truly is an Australian consumer electronics retailer, selling products which people want to and do buy. That alone makes his model worthy of admiration.

     As for the man himself, you can’t doubt his passion and his willingness to stick it to the big guns — even if he does go a little overboard at times ;)

4. Matt
   Posted 01/03/2011 at 10:07 pm | Permalink | Reply

   I find it just ever so slightly hilarious that he slips himself in with Google and Apple at the end.

   • Renai LeMay
     Posted 01/03/2011 at 11:55 pm | Permalink | Reply

     I agree one hundred percent — the journalist audience sort of half-chuckled, half-groaned when he did it. Kogan is nothing if not audacious ;)

     • Brian D
       Posted 02/03/2011 at 1:30 am | Permalink | Reply

       His potential for impact on bricks and mortar boosts his position in any list I can come up with. If Kogan had come up with a ‘BoB’ before iinet … or maybe nailed down the supply chain for tablet components and produced something better than telstra’s effort, that list position would be near unquestionable ?

       • Renai LeMay
         Posted 02/03/2011 at 8:56 am | Permalink | Reply

         Yeah, I never quite worked out what happened with his Android effort, but it seems he mainly gave up the effort. It seems it would have been perfect for Kogan, however — and there are other Australian companies doing it.

         In general terms, however, Kogan is still a minnow — if one punching far above its weight ;)

         • Brian D
           Posted 02/03/2011 at 9:20 am | Permalink | Reply

           Punching above is the problem I have with listing it with other co.

           With it’s lack of movement into the ‘true’ mainstream spotlight… I kinda wonder is Kogan bulking up in stealth or making sure nobody discovers/takes a swing at a glass jaw ?

           and I think we’ll leave the boxing refs. there.

           • Renai LeMay
             Posted 02/03/2011 at 9:35 am | Permalink | Reply

             I don’t think much that Kogan does is done in stealth ;)

             • Brian D
               Posted 02/03/2011 at 9:54 am | Permalink | Reply

               Only takes one punch you don;t see coming.

               dammit.. More boxing.

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