Kogan becomes a telco: Retailer will target dissatisfied customers with prepaid SIM cards

Internet entrepreneur Ruslan Kogan is once again expanding his bulging online empire, this time moving into telecommunications, with his company now selling pre-paid 3G cards for use with smartphones and tablets.

The move addresses what Kogan believes to be a distinct lack of satisfaction among telco customers – a dissatisfaction once again confirmed by today’s Telecommunications Industry Ombudsman statistics which continue to show a high number of complaints in the mobile space.

“People are receiving their bills and just having this massive bill shock. They’re on an unlimited plan and they’re receiving massive bills, so they’re just wondering what’s happening,” Kogan told SmartCompany today.

“The other problem is that none of the plans give you enough data. Mobile data has exceeded desktop data usage, but the companies are still offering bugger all data.”

Kogan will offer new prepaid SIM cards that range in cost from $29 for 30 days, to $299 for a year. Each offer unlimited calls, texts, and 6GB of data a month. There’s also a data-only plan for $9.99.

Kogan is buying network access from Telstra. However, he says the investment isn’t so much to do with capital as it is demonstrating the company has enough scope.

“In order to secure something like that, you do have to show that you have a lot of traffic and volume, and all of that. Obviously a company of that size wants to move money,” he says.

Kogan certainly has the volume. Business has doubled in the past year, exceeding $100 million a year. The company now says it’s the biggest online retailer in Australia, and this is just its latest venture.

“One of the most commonly asked questions we get from customers is who we recommend for mobile coverage. We realised we’re selling thousands of phones and tablets every day, and we investigated that we’d be able to offer this type of service.”

“We’ve got the product, we’ve got the customers, and we’re in a position to make this sort of move.”

One of Kogan’s main targets is what he believes to be confusion among mobile customers as to what they’re actually buying.

“There’s so much bullshit in the industry, you hear things like you’re buying $100 worth of credit for $150 worth of calls. But you can’t compare dollar to dollar values because it’s confusing.”

“We just need to simplify it.”

This confusion has been a major point of contention in the telecommunications industry over the past few years, and even prompted the Australian Communications and Media Authority to adopt strict new regulations on advertising and how businesses actually promote deals.

From now on businesses need to break down how much phone credit a plan will actually buy, and they need to create simpler ways of comparing deals across different companies.

But Kogan has no intentions of moving into post-paid plans, he says. Instead he wants to focus on prepaid, which can deliver better returns and is easily marketable.

“It’s all we plan to do; it’s all about the simplicity.”

The move comes as the Telecommunications Industry Ombudsman released new complaints figures today, which showed that although complaints fell by 11% in the September quarter, the mobile phone industry still accounts for a majority of complaints at 57%.