How OnePlus Became The Hero of Indian Smartphone Market
OnePlus recently surpassed Samsung and Apple to lead the premium smartphone segment in India for the first time ever for a full quarter
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OnePlus recently surpassed Samsung and Apple to lead the premium smartphone segment in India for the first time ever for a full quarter.
The "Never Settle' philosophy of OnePlus has always been about disrupting the market. It all began with the inception of an idea to launch an Android smartphone that could be the next game-changer. Its CEO-founder, Pete Lau and co-founder Carl Pei were working with Oppo when they realized they themselves were all using Apple's iPhone rather than an Android phone. Both of them had great love for Android phones and realized there were hardly any smartphones in the market that could match an iPhone's build quality with the openness of the Android ecosystem.
They began to ponder how they can create a smartphone brand with product at its heart. With this thought, OnePlus came into existence and began the quest of the founders to make a mark in the fiercely competitive smartphone market. The idea was to be a product-first company. They opened a forum to ask users to share what they want from the phone (even today the brand asks users to share what they actually want). OnePlus officially launched in India in December 2014 as an internet-centric, invite-only brand with a community-first approach. The phones sold out instantly and that's when the company saw that the demand was surging way faster than they had initially anticipated.
Getting the India Act Right
For OnePlus, the expansion in India actually happened unexpectedly after the unprecedented response the start-up witnessed from the Indian community on its forums. Infact, OnePlus users in India found indigenous ways to import its phones from developed markets to India through global logistics firms and even paying import duties or going through customs-clearance hassles themselves. Even in the early days, the country was already ranked seventh in terms of traffic to its site. Today, India is the largest market for OnePlus, contributing 33 percent to global revenues, followed by China, Europe and the US. The five-year-old company's journey may have not been so fruitful and exultant had it not been for India.
A lot of credit for OnePlus' exploits in India can be attributed to one man — Vikas Agarwal, general manager, OnePlus India. Under Agarwal's leadership, OnePlus became one of the fastest growing smartphone brands in India. Prior to OnePlus, Agarwal held top management positions at Naspers' funded ibibo Group and co-founded Bulbtiger.com, a niche e-tailer of home decor products. Earlier, he co-founded an investment fund that was later acquired by Caisse de dépôt, a $270 billion Canadian pension fund, and repositioned as its investment and asset manager for $250 million portfolio in Indian real estate.
The role allowed him to interact with CEOs in ways he could not have done at a more traditional firm. Agarwal completed his education at IIM Ahmedabad and also holds a dual degree in Chemical Engineering from IIT Delhi. Coming from a business family, he was always clear in his head about wanting to be in an entrepreneurial position — whether it was having his own start-up or working with a start-up. For Agarwal, OnePlus has been the biggest opportunity so far. Although he possessed an investment and e-commerce background, Agarwal understood very well the potential of the smartphone industry and the trillion dollar opportunity it held. The Indian market then was flooded with around 200 brands when OnePlus entered the fray.
At that time, all these brands plying their trade in India had a global presence and each of these companies possessed advantages that were driving results for them. But, with the passage of time, things have changed drastically — only a few of those brands have survived and even among survivors, most of them have a tiny presence today. In the words of Agarwal, "Although we entered the market late, we still believe we were early as the industry at that time was in a consolidation phase. We had the benefit of learning from the mistakes that some brands made in the past. I believe our community first and product focused approach is what enabled us to not only survive but also to thrive in this consolidation phase."
When Agarwal joined OnePlus, it was October 2014 and the next employee didn't come until March 2015. During the first year in India, OnePlus had less than 15 employees, the number has almost doubled every year and has now reached 90. Agarwal shares, "We wanted to follow a lean model. However, it didn't initially allow us to successfully set up the scalable processes and focus on developing the right culture. That's what we realized in 2016 - when we were growing in a healthy manner on the business front. Our focus changed after that and we began to focus more on team-building and company value."
That's when the brand became more inward-looking. Soon, OnePlus India began showing the results that it always expected and its global management also started paying more attention to India. As OnePlus started off focusing on the US and Europe, it didn't realize at first what to expect from India as it wasn't a focus market earlier. In fact, the US and Europe took much longer to respond. The India market remains on top amongst all other markets not only in terms of sales but also in terms of the size and engagement of the community. In India alone, the company has around 5 million active members in its community, which israpidly growing by the day. However, when you consider the overall smartphone market, the share of the pie is much smaller.
While the second year provided a lot of learning, the third year was a year of resurgence for OnePlus. It was the time to recreate the same user excitement and trust that it had promised at the time of OnePlus One. The fourth year was a year of expansion as the brand expanded its partnerships with carriers and e-commerce platforms in global markets as well as ventured into offline retail through its flagship experience stores in top cities in India. However, the focus remained on keeping the sail adrift as this was the year when the industry started consolidating and a lot of brands started exiting the market.
The Story of a Chinese Brand Born Global
With the internet as its key medium, OnePlus was very much about building a global brand from day one. Even the name, "OnePlus' was chosen because it is easy to understand across all regions and smartly captures the essence of its community-focused business model. From branding to team to product perfection, everything was global in nature. OnePlus never focused on China as its primary market. If one goes by the global rule that the product has to be perfect across markets, then that's what OnePlus delivered. Being a young company with limited resources, OnePlus always had to compete with global brands. "We are quite conscious of who we are as a brand. We do not aim to convince everybody to be our customer," says Agarwal.
At OnePlus all employees share the same vision and are committed to the long term growth of the brand as each of them are offered stock options and it's not just at the global headquarters, even the Indian team is offered the same. OnePlus, this year, is also launching its global campus hiring program for management trainees in India. The culture and team-mix have always been global for OnePlus; in fact, when Agarwal first visited Shenzhen before joining, he met people from over 19 different countries working at OnePlus, making it a truly global company. Even in India, the current team includes employees from Poland, China, Indonesia and Croatia among others.
OnePlus' product obsession is evident from the fact that there have been instances where the company has sent back consignments, which did not meet OnePlus standards. "Pete's passion for perfection is such that once a whole consignment was burnt because it didn't meet our quality standards. We actually deferred a couple of launches when the product software didn't meet our expectations," Agarwal shares.
The Service Surge
Service was the biggest learning that the brand had in India. One and a half year ago, the team realized it still was not good enough. One evening during one of Pete's trips to India, he paid a visit to the service center and was absolutely aghast to see a long queue and nobody paying attention to the customers. The brand has always stood for providing the best experience to its customers whether in sales or after-sales. That day, Pete committed to enhance the service platform and since then, the entire global service infrastructure has been rebooted including the internal service management team.
Now, service is something that OnePlus confidently vouches for. Today, it is looking at taking the number of exclusive service centers to 25 in India by the end of this year. "It took us almost two years to have these centers where we guarantee to repair the device within one hour. Today, we are able to resolve 70 percent of queries within an hour. As part of enhancing the experience, two years ago, we also published the prices of our spare parts to bring in transparency," claims Agarwal. Earlier, the company used to outsource but now it has its own network of exclusive service centers.
All of this has now helped OnePlus enjoy a level of trust in India, which other brands have somewhat failed to garner. Over 44 percent of its users chose to again upgrade to a OnePlus phone. Its typical consumers are those who have abandoned Samsung and Apple for a better value proposition. Although OnePlus hasn't gone into open distribution model, it chose to open offline stores that it calls OnePlus Experience Stores across key cities as it saw that Indian customers preferred to touch and feel the product before making the purchase -- it has partnered with Croma to expedite offline expansion. The exclusive Amazon India partnership has performed so well for OnePlus that globally it has explored the same in other markets. In China, it went on to partner with JD.com, one of the largest e-tailer in the country. Similar partnerships were extended to telecom carriers in western markets including the UK, the US and Finland.
Ask him why India has outperformed and Agarwal says, "India is an early stage market that allows for experimentation. Our community in India is very tech-savvy and knows what it expects out of a good smartphone. They are vocal about their needs and we are happy to incorporate their suggestions in our products. Globally, we are headquartered in Shenzhen but now we have reached a point wherein we consider India as our first headquarter in the global market. We have the second biggest team and our biggest user base is here in India."
The community-first approach has actually brought together a tech-savvy audience, which gives great suggestions and is more participative in the development of the product. The company even brings its core community users along with its global management and senior product managers together for the Open Ears Forum workshop that aims to help in identifying the customer pain points and the gaps in the product. Their suggestions are then recorded and the company publishes a roadmap to deliver on the mutually agreed priorities within a defined period of time. The first such workshop was held in San Francisco, USA last year and the most recent one was held in Goa, India in July, this year.
People also queue up in large numbers at OnePlus pop-ups to be the first to buy the new phone. "We are quite active on the digital side but we also complement it with offline experience oriented events. So we do a lot of pop-ups in New York, London and Paris," Agarwal says.
What's Behind the OnePlus Phenomenon?
One Plus aims to be the most respected company in the world. In the words of Agarwal, "I don't think our users really worry about competition. We care a lot about our brand. We deliver on a premium experience that our customers want including quickest software updates and quality service delivery. If you are someone that looks for value and rationale, you will go for us."
Every brand has a different philosophy and OnePlus focuses on experience. While, the brand has now started advertising in select markets, it still has a no pre-installed apps or bloatware policy across all regions except for its exclusive distribution partner Amazon in India.
About margins, Agarwal says, "The margins are not high enough to allow us to discount. For other brands, prices are averaged out but we don't believe in higher pricing at the start and lowering it later. We price our products at what is sustainable for us and not look for external funding." Currently, the company is prioritizing investments towards offline stores, service centers and building its first OnePlus R&D center in India. Globally, the company has close to 10 offices. The brand has now reached a critical mass and is now looking to further its reach beyond its loyal core audience.
Beyond the Smartphone
The next extension for the brand is its recent announcement to get into the television space. "When we entered the market we knew we would have to spend atleast five years in the industry before looking for a fresh line of products. In the past decade, when it comes to TV segment, innovation has only happened on the screen front. We are trying to find the gaps in the current TV system. If we get it right I am sure there will be enough users who will share the same belief. For us to get into TV took us these many years," says Agarwal.
Sharing the brand's philosophy, he further adds, "Once you start focusing on user experience, things become simpler for us. Our focus is about not getting distracted by external developments or trying to do too many things. We are not looking for market share as we aim to remain an online-first brand. By staying true to your business model — as long as you have healthy margins — you can sustain and grow."
Sharing future plans, Agarwal says, "As a company, we have that 10-15 year long horizon to focus. So short terms goals are to survive. We are happy with our strong double digit growth across regions, which is a bit challenging to sustain but our brand acceptance is now accelerating especially in the US and European markets. Going forward, the pilot for R&D center in India should be live this year."
Recently, OnePlus got Bollywood superstar Amitabh Bachchan on board as the brand ambassador. Agarwal says, "Stars come and go but none has stayed as Mr Bachchan who truly embodies the "Never Settle' spirit." And that's the core philosophy of the company — always getting the best people and resources on board to remain on top of things.
This article was first published in the October 2018 issue of Entrepreneur Magazine. To subscribe, click here