Kogan goes where others fear to tread, dives into energy retail
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Kogan (ASX:KGN) will be one of, if not the first non-telecommunication businesses in Australia to add electricity sales to its retail portfolio.
It plans to add energy sales by the end of 2019 to its mixed bag of insurances, ecommerce, superannuation, telecoms and loans.
The ecommerce site will re-sell electricity and to consumers bought from Meridian Energy’s (ASX:MEZ) retailer Powershop.
Kogan has been contacted for comment. Its shares remained flat on the news at $5.13.
Kogan’s move marks a broader market shift that analysts have been suggesting may happen for some years given the deregulation of the energy retail market. But it’s been slow in coming.
In 2017 Paul Curnow, a partner at Baker McKenzie, told Stockhead it’s a model that supermarkets could consider as they look to make further use of their loyalty card databases and already offer branded phone services.
So far bundling has been limited to energy companies offering phone services, or vice versa.
After initially struggling to get customers interested in a phone-plus-electricity bundle, last year telco TPC Consolidated (ASX:TPC) said its energy retailing business would be the largest contributor to the business’ revenues and profits.
Phone seller Amaysim (ASX:AYS) offers a phone, internet and electricity bundle, as does Dodo. A small handful of energy companies, such as AGL, have started to offer internet packages.
Qantas and Virgin offer frequent flyer points deals for signing up with specific energy retailers, but don’t re-sell power themselves.
What could lift non-power company interest in the sector is the government’s new default power price offer, which could allow them to sell higher priced electricity by using other services as the loss leader.
The federal government’s default market offer for energy in each state, which will set a price between the median market offer and the median standing offer for power, comes in on July 1.
It’s governed by the competition regulator’s energy retail code, which says energy retailers must include the lowest possible price when presenting quotes to residential and small business customers.
But, bundled advertisements only need to comply with the new rules if they specifically mention an energy discount, meaning retailers can market a cheap internet deal when bundled with power, but don’t need to also mention the lowest power price.