Profile of an Aussie startup online retailer: Ohki
- 18 January, 2011 15:47
- Comments 4
Australian consumer electronics startups, Ohki, might appear to be channelling the success of Ruslan Kogan in offering a direct sales model and cheap products sourced from China, but as ARN discovered, the young company is an open book with plenty of ideas.
I recently sat down with the co-founders, Lucas McEntree and Jason Littlewood, to discuss their plans for the near future and how they plan on separating their brand from the controversial Ruslan Kogan.
So how did your company get started?
Lucas McEntree (LM): It was probably about nine months ago, maybe even a bit longer. I had a corporate advisory business prior to this, and I was doing a lot of things trying to help companies. I had a few bad retail experiences and it all combined together when I was speaking to Jason (Littlewood) about it, setting a business up and that’s where it expanded from “we know we can get cheap goods from China” to an online business.
We did a lot of research – looking at what would work and what wouldn’t work, and ended up with TVs.
Did Ruslan Kogan inspire you much, because you seem to have a fairly similar business model?
LM: He’s certainly done a fair bit in the last five years and he’s been pretty inspirational in what he’s achieved. But apart from selling online, which a lot of other people have done as well, that is probably the closest we’ve got to him in terms on inspiration – we want to do things a little differently.
How will you look to differentiate yourselves?
LM: What we want Ohki to be is to be somewhere where people can shop and it’s more competitive than they would get somewhere else. They’d have a wow feeling from customer service. It wouldn’t just be our own product, we’d be happy to sell other people’s products in the future, and have Ohki as our own home brand.
We just want customers to go away feeling that they’ve got something they couldn’t get somewhere else, that’s competitive and they’d want to tell their friends about it in terms of customer experience.
Things like our free trial of our TV, no one has done that before – you just authorise your credit card as you would when you rent your car, and we send it to you for free and pick it up for free if you don’t want it – it costs you nothing, so little things like that differentiate ourselves from the market.
Why did you decide to set up an online site as opposed to a bricks-and-mortar store?
LM: It’s more cost effective – especially for startup costs. We just feel long term online is a cheaper way to do business which means we can pass on those savings to our customers.
Customers will want to do in-store bricks and mortar retail. That’s never going to disappear and I think it’s naive to say it’s a dead business model. But for us and the way we want to position ourselves in the market, there is a big part of it about price point, and having an expensive retail presence is not viable at this stage.
The ideas float around when we finish our warehouse we dedicate a section of that into a pickup, but also where you can look at the products, but still have the cheapest prices.
Will you be offering 3rd party logistics, then?
LM: We still may do that, but we want to offer our own products first, and to get out to the marketplace quicker rather than just selling something that other people are selling and just being 100 per cent about price, we want to know we can offer our own product as well.
Eventually we may sell other branded goods through our portal, but for now the plan is to just to stick with the whole process – purchasing and delivery and quality.
Are you concerned with any confusion in the market between your brand and Oki, given the name similarities?
LM: We talked about when we first started out, and we asked “is it a problem?” And we thought not really – we’re an online retail business, they’re a manufacturer of toner cartridges and printers, and that’s one area we’re really not interested in.
How do you build the brand from here?
LM: It’s a difficult one to answer sometimes, but simply, we’re going hard work – do everything we can to make sure people know about us, and service our customers that they’re happy enough to tell people about us. We believe our biggest asset is the way we service customers, and that’s going to help us grow. It’s not going to happen overnight; it’ll take a long time. We don’t have a massive advertising budget, or the luxuries of being a large multinational company.
We’re just thinking focusing on being an 100 per cent Australia-owned business. Most Aussies like to back an Aussie-owned company, and again going back to making that wow factor.
We’re also going to expand our product range – we’re really going to be pushing our range – we can offer that to a much larger customer base and that in turn will snowball as well.
How many people have you got in the company at the moment?
LM: It’s just the two of us, we outsource everything – our PR and marketing and logistics and call centre is outsourced.
Again, it’s startup phase. We’d like to firstly bring the call centre in – you can control the level of service a lot better if you do that. But everything comes down to how many units we sell, and how much we grow from there.
What kind of response have you seen so far?
LM: We’ve had some good feedback so far on the social sites – for example we do sell a few units on eBay, we’ve had some good feedback on there with some good reviews in the press.
I think having a soft launch only two months ago, in eight weeks we’re pretty happy with how things are going.
You brought up Kogan before in terms of an example, I would say what we’ve done in eight weeks would have taken six months back in ’05 when it was new, so that is the benefit of customers being more online savvy.
You mentioned social media – will that be your main avenue for marketing?
LM: The growth of social media is massive, and we’d be mad not to use twitter and Facebook to allow our customers to talk about us, and also to let people that don’t know about us find us.
It’s a double-edged sword we need to make sure we’re on top of our game so it doesn’t turn into a negative, but we like the challenge and we think that’s the way of business in the future.
Does that mean you’re targeting a younger demographic with your products, given social media is especially attractive to younger people?
LM: We just think the average Aussie needs most of the units we’ll be selling, we don’t have a major age bracket that we’re going for, but we just know that that is one of the areas of growth.
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Comments
Qwert Dog
1
More of these interviews please ARN. Went straight to their website but alas they only have one tv that they sell. It's a start up in its infancy.
Peter
2
These online guys need bricks and mortar stores to survive somehow. Where else can a customer go and see a product, try it, ask for information and get help and then go online and buy it cheaper because the online stores do not offer anything like this?
Of course the online model is cheaper, if you do not have to carry display stock, pay rent for a store, less employees etc this is where the savings come from.
But as consumers we have to ask, although we save money in the short-term due to online prices, when the bricks and mortar stores start to die off or they display less items or they to just move to online, how are we going to try before you buy?
Sure, ok, more stores like the Sony Centre may open up or manufacturers may open stores but these may not be in every city, only the larger brands may do this and it becomes impossible to do an A/B comparison of anything.
What about jobs? Online traders have less costs as they have less overheads which includes less employees. Retail employs a lot of people Australia - imagine if that halves? Where will students go to get part time jobs, where will a lot of part time working mums go, where will people trying to get their 1st job go?
A lot of people have written, get with the "latest technology" to "bricks and mortar" stores. It is so simple to say this and not look at the big picture. If the retail industry were farmers, or the car manufacturing industry the government would be doing everything they can to protect local jobs.
Everyone forgets that it is possible for 1 online store to replace a whole chain of retail stores. Not only does this mean lost jobs in retail, but also less payroll tax, less rent being paid, less products and services being consumed to run those businesses which puts money into our economy.
At the end of the day, that all equates to less tax being paid and less money in the system. Do we really want this just to save 10 - 20% on a product? As consumers are we that greedy?
The only benefit of online are lower prices, but the costs can be so much higher.
Its much worse when consumers go online overseas. Ok sure, other countries may be cheaper (often due to larger markets with more people) but in most of those countries as well costs of goods relate directly to income levels. At least local online retailers pay GST and other taxes.
It is not like the retailers are making massive profits like the banks.
And no, I am not a retailer or a store or work for a retailer.
Josh
3
"Where else can a customer go and see a product, try it, ask for information and get help and then go online and buy it cheaper because the online stores do not offer anything like this?"
They offer free trials? Did you read the article?
"how are we going to try before you buy?"
You don't need to try before you buy. The new trying before you buy is online research of other users.
Do you run around posting on all news articles like this Mr Harvey?
Mike
4
Thanks ARN
I read this story and went to their website.
Bought the 42 inch LED tv last weekend. Received it on Wednesday and couldn't be happier.
It came down to the ohki or a jb hifi brand.
I decided to support the small Aussie start up and glad I did.
The only downside was that I paid $999 (which was cheapest on the Market mind you ) and since I bought they are doing $799 promo special. Oh well that's the way it goes I guess.
Cheers again guys.
Happy Mike.