Kogan captures online market with SAP Business One

Why Australia’s leading ecommerce presence selected SAP Business One from Cloud Factory?

One of Australia’s fastest-growing and highest-profile online retailers relies on SAP Business One to run its business. When the company realised that maintaining the pace of its explosive growth depended on better systems, it looked to Cloud Factory for the software, and today enjoys a company-wide solution which provides control and visibility across increasingly diverse operations.

With the flexibility to rapidly take advantage of new business opportunities, the organisation is equipped to continue its growth trajectory well into the future.

Founded in 2006 by Ruslan Kogan, Kogan.com is the largest online department store in Australia, selling tens of thousands of products through its online direct-to-customer store. Kogan achieved a turnover of more than $201 million in 2017 and nearly doubled in 2018 with a turnover of $405 million.

The organisation’s rapid growth has been both organic and through acquisition (adding Dick Smith Holdings' online business in 2016) and, as of July 2016, Kogan.com is listed on the ASX under the ticker KGN.

Have a look at this video to learn about the challenges of Kogan before they decided to contact Cloud Factory to implement SAP Business One and how it has helped them achieve growth.

The Problem

Like many businesses which have expanded rapidly, Kogan didn’t have a unified system used by the whole company.

There were multiple divisions within the business and each had its own systems. That made for a big job reconciling them all: finance, purchasing, sales, support; all had their own databases, with spreadsheets and workarounds that connected things together. 

Providing an idea of the scale of the operation, Kogan does approximately 2.5 million sales orders per year. It fluctuates seasonally, but they are processing 5 or 10 thousand orders a day, and everything that goes through their systems has associated upstream purchasing and downstream support.

The business is multifaceted, with a combination of own-brand manufactured products, which it imports, warehouses and sells, third party branded goods which also go through Kogan’s warehouses and drop-shipped goods from distributors. Kogan offers products from leading brands across a wide range of categories including consumer electronics, appliances, homewares, hardware, toys, and many more. Kogan also owns and operates a suite of exclusive private label brands. Kogan is a portfolio of retail and services businesses including Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Travel and Kogan Money.

Due to the high level of complexity, the company recognised that if it was to continue its growth trajectory it would require a rigorous ERP solution to manage everything. Their biggest issue was data integrity and reporting before installing SAP Business One. Being able to run general operations became a headache – just something simple, like if the support team needs to replace a product for a customer, this meant multiple manual tasks, like checking inventory, getting purchasing involved, interacting with sales. 

The upshot was that people were not only wasting time, but also making mistakes which could, ultimately, impact on customer service and satisfaction.

The Solution

Kogan initially went out to tender to look for suitable solutions. After researching all possible solutions it was decided by the team at Kogan that SAP Business One would be the quickest to implement. 

Their main aim is to keep customers happy with thousands of orders every day. They didn’t want to be caught up in a never-ending software systems implementation. They wanted to get the business running better, fast.

Even more importantly, with our help the team at Kogan could grasp a better understanding of how the SAP Business One solution would work for Kogan. In their experience, other systems were too complex to demonstrate due to the amount of configuration which would be needed to do a demonstration. Not only were they able to see exactly how the system would work day-to-day, but Cloud Factory showed them how the implementation would be achievable.

With operations that complex and a desire to get the system in ‘ASAP’, from start to finish it was around 3 to 4 months. The implementation was quick but also very challenging at times.

“The implementation wasn’t fun and games by any means. It was at times quite challenging, and with an ERP project, things always go wrong. But it is how those things are handled which is important.” says the team at Kogan.

By the end of the implementation, Cloud Factory was described as ‘bloody hard-working’. “The support and engagement are terrific. If there is an issue, it doesn’t matter if it is night or day, they are available.” says the team at Kogan. 

The Outcome

Things changed dramatically post-implementation for Kogan. They were able to continue their growth path with a smaller headcount than before. They now have far more automation. For example, a customer places an order and it goes straight through to warehousing, distribution and dispatch automatically, with an email sent to confirm dispatch. That’s not how it was done before, where they had had people involved every step of the way.

For Kogan, the automation is not the exciting part. Instead, it is the impact on customer service which matters. With all their data now in one place, it means they can proactively communicate with customers if need be. They can serve customers better and they can even forecast, manage stock and manage delivery performance.

For a fast-moving company, there is a further competitive advantage which flows from the modern, integrated Business One solution: “We can integrate with other systems or gear our own ERP rapidly when new opportunities present themselves – and at Kogan, we are constantly looking for new ways to serve our customers,” explains the team at Kogan.

Cloud Factory, they add, has played an ongoing role which the team at Kogan describes as enablement. “They have trained up our developers on Business One so we are good at it ourselves, but they are also our backup if we need it. And this isn’t ‘set and forget’. We are constantly improving the way the system operates, adding in our own automation, adding new business verticals, integrating with new third parties. Across that,Cloud Factory has always been willing to help us in whatever way required.”

This is crucial for Kogan’s dynamism: “We have direct control over our systems, including building our own reporting and running our own SQL jobs. That means we have the flexibility to do things fast, without lengthy approval processes or having to schedule work with external service providers.”

That’s the ‘innovation’ side of the coin. The other one is day-to-day operations. “In this regard, there are lots of wins all over the place. It comes down to efficiency, visibility across multiple business units and functions. With this system, we’re in a really good position now, with a strong database, excellent reporting and operations which run smoothly, positioning the business to scale further.”