Kogan: a generation-Y business

Twenty-six-year-old Ruslan Kogan has grabbed headlines again with the international expansion of his consumer electronics business.

But his model only works because he stands on the shoulders of other people's innovation.

Kogan Technologies is an online retailer ­ with a difference.

This retailer designs its own products, manufactures them in China, warehouses them in Melbourne, and then sells them on its website - bypassing the channel.

And the company has been doing so successfully since it launched three years ago.

Kogan says it's all about efficiency, listening to the consumer and then giving them what they want, directly and without any middlemen.

He argues that the conventional retail model is "old technology" both for the consumer and the retailer. "On our website we know what pages you're looking at, we know what you want," he says.

Kogan is the quintessential Generation Y businessman.

He is able to cater to his generation's ways: I want the best, at the cheapest price, right now. He applies the same methodology to his own business.

Kogan piggybacks years of R&D by his competitors, fuses the best of what's most popular and designs his own version at a cheaper and more affordable price based on user feedback.

He also does away with the overheads that come with a typical retail store. But if all businesses were to go in the same direction, innovation would come to a standstill.

Kogan should be applauded for his success. However, retailers shouldn't be concerned that Kogan is the future model. Retail has its advantages: parts and manufacturing are somebody else's problem.