To appreciate what boAt has achieved, it’s important to understand the market it functions in. The electronics accessories—or for that matter even the audio accessories—market in India is largely unorganized. With no import restrictions in place, traders are free to bring in whatever they want.
Various market places
There are markets such as Palika Bazaar in Delhi, where accessories are sold at throwaway prices—earphones for Rs 50 ($0.71), USB cables and chargers for Rs 40 ($0.57) apiece. Most of these do not meet any Indian regulatory requirements for quality—such as those laid out by the BIS (Bureau of Indian Standards), which is tasked with quality certification of goods. As such, industry experts say, these are often smuggled into India.
At the other end of the spectrum, we have organized branded players—Sony, JBL, Sennheiser and Skullcandy.
And somewhere in the middle you have a plethora of small companies that buy products in bulk from China, slap a brand name on, and sell through e-commerce portals. None of the people The Ken spoke to could tell exactly how many such operations there were but estimated it to be over 400. An Amazon search throws up unheard-of brands such as Hawksty, Wecool, Feb to, Herdem, and Renyke, among several others.
The BoAt also imports its products from China. But it gave itself legitimacy by creating a brand. It did this by focusing on aesthetics and product quality, apart from the usual importing and branding. There are a few others doing something similar, but none have managed to recreate boAt’s success.
One thing remains true for every segment of the market though, there is no dearth of rivals.
Raising the volume
Compared to some of the organized players, who have been in the market for longer, boAt has risen rapidly. Take, for example, German audio major Blaupunkt. Blaupunkt India’s revenues stood at Rs 55.6 crore ($7.92 million) for the financial year ended March 2018. Its profit inched past the Rs 1.6 crore ($228,000) mark. For a company like a boAt to grow to Rs 108 crore ($15.3 million) revenue in the same period, despite starting just two years earlier, is impressive. It even managed to make a profit of Rs 6 crore. This, despite Blaupunkt having a far greater assortment of products than boAt.
The growth for boAt and several others in the personal audio space has come on the back of two main developments. First, the unbundling of earphones. Smartphone companies have largely done away with freebies such as earphones in order to price their phones competitively. They must now be bought separately, creating an opportunity for the likes of boAt.
The other factor has been the spike in audio-visual content consumption, which spiked thanks to the entrance of Mukesh Ambani-owned telecom company Reliance Jio. When Jio entered the market in 2016, it priced data far lower than its competitors, who eventually followed suit to remain competitive. With data cheaper than ever, people began binging content. Gupta calls it the “Jio-plosion”.
Bluetooth pair of joggling
Demand has also increased as the use cases for audio accessories increased. Shamita Krishnan, a 27-year-old PR professional in Delhi, has spent close to Rs 8,000 ($114.11) on three pairs of earphones—one for movie watching, a wireless Bluetooth pair for jogging, and earpods while commuting. She plans to also buy noise cancellation earphones soon.
“Accessories is a very high-growth category, with products like earbuds, Bluetooth speakers and power banks flying off shelves,” says Anil Kumar Reddi. Reddi is the Chief People Officer at Sangeetha Mobiles, a popular south Indian mobile phone retail chain. Reddi adds that while many customers do buy headphones while purchasing a phone, 90% of Sangeetha’s sales come from standalone purchases of accessories.
Futuresource Consulting, a London-based consulting firm, has the numbers to back this up. It says that 19 million units of headphones—worth $749 million—were shipped to India in 2018, up 10% year-on-year. It expects a further 11% growth in 2019. In comparison, the smartphone market grew 14.5% in 2018, according to smartphone market research firm IDC.