OnePlus, a technology startup conceived in October/November 2013 in China, has worked on a unique sales model globally. The company which sells mobile handsets, seeks to deliver maximum value to the consumer by keeping operational costs at a bare minimum.
Vikas Agarwal, general manager - India, OnePlus, explains, “It’s all about ‘word-of-mouth’ and social media for OnePlus. We don’t have an advertising budget too. So, we don’t need an advertising agency. For us the focus is on giving value to the consumer, which essentially means keeping cost as low as possible, which means steering clear of the biggest cost component for any brand – which is the marketing cost. For us, marketing is almost zero. That allows us to have a price benefit of almost 30 to 40 per cent versus competition. We keep all our costs low. We have a six-member team in India. We don’t have any operations locally and just sell through Amazon. We bypass all the retail platforms. When customs duties were increased and the dollar appreciated, then too, we tried offering the best cost to Indian consumers. (Basically) We try to avoid unnecessary costs.”
Launch in India an afterthought
The firm launched in India in December 2014 with the One (OnePlus One). Agarwal describes the launch in the Indian market as 'an afterthought'.
He says, “The brand first launched in 16 countries (in April 2014), after China, of which India wasn’t a part. We didn’t expect the phone to be bought at a price point of more than Rs 20,000 in India. We didn’t think the market was right. But, within three or four months (of the global launch) we figured that India was in the top five countries when it came to traffic. On a closer look of data, we realised a lot of Indians were buying the device by placing an order in a country where it was available. There were forwarding services which allowed Indians to give a foreign address and then get it delivered to India. The phone that was sold globally for around US $ 350 was going up to around 400 to 450 dollars through such services for Indian users. That’s the kind of popularity it had. That’s when we launched in this market.”
OnePlus is divided into two companies or operations – one takes care of China operations and the other global, catering to 33 countries. India is managed by this team and is the first country where there’s also a local (team) presence.
He adds, “The penetration of smartphones in India is still very low. The number of IT-aware people in India is very high. India has 60 to 70 per cent of people under the age of 35 years, so these were pro-OnePlus points. That’s when we thought of launching the brand in India. We started focusing towards the Indian market in August 2014. We wanted to launch by Diwali, but because of operational delays, we launched in December. We explored all possible models and we finally agreed on using the ‘invite only’ model on Amazon. They (Amazon) stood out because of their customer focus. They developed the whole platform within two weeks.”
For OnePlus, the market which was an 'afterthought' is now among its top three. India has seen sales of over 2,00,000 units, which is about 30 to 35 per cent of its total global sales (outside China).
Agarwal explains, “India is in the top three markets for OnePlus. The focus area for us is very simple. We have a good product, at an attractive price. If you go through the reviews by bloggers etc – it’s constantly ranked as the best device to buy. Pretty much everyone who has heard of OnePlus, would recommend it (OnePlus One). Now, we want to focus on the service part. We have been trying to do many things on the service front. When we launched, we worked on global warranty, as the phone was available across various countries. Even when we weren’t in India, we didn’t want the customers (who had bought from other markets) to suffer and extended the global warranty to users in India. So, it was pretty much the first time a brand had offered a global warranty. Then, we partnered with HCL on our support. Thirdly, there were some issues which took time to close... various warranty issues (sometimes parts were not in stock etc). So, the consumer loses the period because he wasn’t able to use the device. We compensated users in case of delays by giving complimentary three-month extended warranty.”
He adds, “Almost 20 to 25 per cent like to buy extended warranty along with a purchase. Online, people don’t really sell extended warranty right now, but going forward we’re going to see brands beginning to. So, there’s demand for this and we received favourable feedback."
Along with India, the USA contributes highly and so does Europe, informed Agarwal. The China-born company counts China as a major contributor to sales, but the country only makes it to ‘the top four’ in terms of largest markets.
This ‘invite only’ innovative model, has kept the brand in the news, and also kept the buzz alive on social media. This model changed on 21 April 2015, as the company celebrated its first anniversary in the global market.
Agarwal explains, “The sales model is that OnePlus has a website, and customers can buy the product through the website. When it started, there was a team of 10 to 15 people. We started selling through a forum on which there were some contests. We saw the demand chart growing and there was no supply in stock. So, the invite model was conceptualised. The idea was to have the amount of supply that could be sold. So, an invite had to be requested. In the handset industry the production turnaround time is two to three months. There was such a huge demand that we were running out of stock every day. We’re probably the only company that was selling mobile handsets through invites. The concept was used in other verticals, like Google did for Gmail to begin with.”
‘Invite only’ vs ‘Flash sales’
While OnePlus works on the invite model, another handset company, Xiaomi, took the market by storm with its flash sales. Agarwal explains why the company adopted the former: “People prefer the invite model. Other companies used the flash sale model, but the disadvantage is that for a popular device it comes down to the luck of a customer. There’s no surety when it comes to a purchase. In our model, a consumer has to get an invite to buy and that is the surety. Getting it was easy; one had to engage with us on our forums and help spread the word. We personally know our fans, and we’re sending invites to people who help spread the word. Or, a buyer would need to know someone who bought the phone and use his or her invite.”
Agarwal explained that the OnePlus Two, which launches in the next quarter, will have the ‘Invite Only’ model of sales again. On whether this model can sustain and whether the company will look for other marketing and retailing plans in India, Agarwal said: "It’s not a part of the plan currently."