How Indian start-ups came to dominate the wearables space

Remember the time, more than a decade ago, when smartphones started entering the mass market in India? Around the same time, another category of devices had started gaining traction—the humble earphones. Riding on the easy accessibility to multimedia content through smartphones, most new smartphone owners used to be on the hunt for a trusty pair of earphones or headphones. But all they used to get were either expensive products from companies like Sony, Philips, Bose, etc., or cheap Chinese knock-offs.

Despite that, there was a boom in the personal audio device market in India. But back then, these products were not designed for millennial or GenZ customers. To compound matters, most of them were expensive, while the Chinese products were usually of poor quality, lacked a comprehensive warranty, or didn’t provide reliable after-sales service. That meant, if a customer accidentally damaged his or her device, they had to buy a new one.

Aman Gupta and Sameer Mehta were some of the first few people who recognised this gap. The duo started a distribution company called Imagine Marketing in 2014 that secured the exclusive distribution rights for House of Marley headphones, earphones, earbuds, and audio systems in India. Building upon the insights gleaned from this endeavour, they took the leap to launch their own brand, ‘boAt’, in 2016.

“We did a lot of research in terms of what customers wanted. We understood the pain points and the needs of consumers, and thought, why don’t we make a product that is as good as these international brands, gives the durability that Indians want, and make them sound as per Indians preferences with heavy bass and loud sound output? We even gave the products a funkier and more aspirational look,” says Mehta, who co-founded boAt along with Gupta. A notable innovation was earphones with tangle-free flat cables that enamoured many customers, and brought many word-of-mouth customers to the brand. While that’s how they started, they’ve come a long way since then, learnt a lot along the way, and kept on building the brand. “We didn’t want to be the most expensive brand, nor the cheapest. We wanted to position ourselves in between,” he says.

It comes as no surprise then that with these guiding principles, boAt has emerged as the second largest brand in the global wearables market, comprising everything from headphones to earphones and even smartwatches, per the International Data Corporation (IDC) Worldwide Quarterly Tracker Q3CY2022 report. Not only that, the firm has also led in both the hearables and wearables categories in India for the past two years. While boAt’s journey began with an initial capital of just Rs 30 lakh, it had clocked revenues of an impressive Rs 4,000 crore by FY23-end.

While Gupta and Mehta were setting up boAt, many others were building other brands in India such as Boult, Noise, pTron, Fire-Boltt, etc. Together, they have orchestrated a paradigm shift in the country by establishing their dominance over India’s wearables market. Incidentally, this is in stark contrast to the country’s smartphone market, where not even a single Indian brand has a significant presence.

“India-based vendors have edged ahead by being early to the market and offering affordable but good quality/specification devices compared to China-based vendors or smartphone players. They currently hold more than 70 per cent share in the overall wearables category,” explains Vikas Sharma, Senior Market Analyst at IDC India. While boAt and Noise lead the pack, smaller India-based vendors are further fuelling growth in India’s wearables market.

It is on the back of these offerings coupled with the contribution of international players, including Chinese brands, that India is poised to become one of the largest markets for wearables in 2023, per IDC estimates. India will account for 130-135 million units of the estimated 504.1 million units that are expected to be shipped by 2023-end. Interestingly, out of the total of 492 million units sold in 2022, around 100 million were sold in India, placing it behind China and the US. But experts say that India has already surpassed the two countries this year on the back of low-cost yet feature-rich devices from local vendors.

Getting it Right

When Varun Gupta started Boult Audio in 2017, he was selling anywhere between a few hundred units of wireless audio devices to a thousand units, every month. But today, Boult sells anywhere between 500,000 to 800,000 units a month. “In a good month, we’re able to sell over a million units when there’s an event period, or there’s a big sale event,” says the Co-founder and CEO of the company.

For him, it all started with his previous start-up, Brand Hawkers, an e-commerce consulting firm that was helping brands transition from offline to online sales. Of the 70 brands he worked with, around 15 were in the audio category. “On the demand side, I was very connected in terms of the product line based on emotion—what was working, what was not. When you work closely in any category, you start identifying the gaps. I took these gaps to my clients, but they were not so interested in fixing them. They said, you guys just sell the goods and don’t worry about how we [could] make them better, and how [to] price them, what colours, etc.”

Then from 2016 to 2017, Gupta started spending a lot of time in China, in the production facilities and research labs to understand how the product is made. His background in computer science and engineering helped him decode the engineering behind the product. Further, being a musician and a marketer helped him fix the demand side of it. When he launched Boult Audio with his brother Tarun Gupta (Co-founder) they decided to launch with Myntra exclusively. “We had an 18-month contract with Myntra, and never had to worry about demand. They took care of the demand and sales, and we cared about the product.” After mastering the product in the next one and a half years, they started scaling up, started spending on ads, brand ambassadors and building the teams. Tying up with Amazon and Flipkart in 2019 further helped them scale up.

But scripting success in the Indian market amidst the dominance of global players hasn’t been easy. Localising the products for the India market, multiple and timely launches with close price differential, along with high decibel marketing and promotion campaigns have contributed towards the sustainable run. Mehta of boAt points out that earlier, the products available in India were not customised to meet local needs. In contrast, Indian wearables brands harnessed their understanding of local consumer preferences, cultural nuances and lifestyle requirements to design products that clearly resonated with the Indian audience. One example of this is the fascination Indians have with watches. During the initial days in that segment, while Chinese players primarily concentrated on fitness bands, the Indian brands introduced budget-friendly smartwatches priced in the range of Rs 1,999-3,599, which hit the sweet spot with many millennial and GenZ customers, significantly contributing to the sales numbers of the Indian brands.

Not only that, understanding the nuances of how Indians are value-conscious customers who are mindful of the quality of the products, the home-grown brands offered better features at competitive prices compared to their Chinese counterparts.

Amit Khatri, Co-founder of Noise, which started as a mobile accessories brand in 2014, and entered the smart wearables space in 2018, explains, “Our thesis was, how can we create a differentiation. Before Noise, I used to work with brands like H&M, Zara, and JCPenney, and if you look at them, they are not as cheap as some Big Bazaar products. So, there is Big Bazaar and then there are these brands on top, but there was nobody in the middle.” Fascinated by how these global brands were selling products that were designed at value pricing, Khatri decided to emulate them. “With that thesis as the key, we wanted to build something at the centre, not at the top or the bottom.”

From that standpoint, Noise started selling its smartwatch at Rs 3,000, when other brands were available for as little as Rs 1,000. But, with consumers willing to invest in slightly higher-priced yet feature-rich and superior-quality products, this has fuelled remarkable growth for not only Noise, but other brands as well. Noise also onboarded Olympics gold-medallist Neeraj Chopra as its brand ambassador recently.

Another critical area that convinced consumers to go for Indian brands was after-sales service. Earlier, when many of the accessories bundled with smartphones only came with a six-month warranty, Indian brands offered a one-year warranty on their products. Some even allowed customers to return the product within a week or a month if they did not like it. And if the device malfunctioned within a year of purchase, seamless repair or replacement was also available. For instance, boAt still continues to offer door-to-door service on products priced as low as Rs 1,000. This has helped them retain customers, who often return to the brand for their next purchase, and even contribute towards word-of-mouth publicity.

But back then, going for offline sales was more about burning money for these companies as consumers were doubtful about investing in a new Indian brand. And for the brand, the channel distribution costs were high, while its reach was limited. E-commerce platforms, however, offered the perfect solution. First, their reach was not restricted to the top-tier cities and towns, helping make these products available in Tier II, III and IV cities and towns. Second, instead of taking the shopkeeper’s word about the quality of the product, customers could check the community reviews on e-commerce platforms before making a purchase. This helped the Indian brands reach a larger section of customers.

Interestingly, it turned out to be a win-win situation for the e-commerce players as well, as they were able to get rid of the non-branded products prevalent on their platforms. A perfect example of this is how home-grown brand pTron has managed to have at least 20-25 per cent products from its stable in the Top 100 products on Amazon. The company, which sold mobile accessories on its own platform between 2014 and 2019, realised that it couldn’t compete against the dominance of the e-commerce giants. Hence, it opted to tie up with Amazon. “We knew that there is a huge demand for good quality products at the right price point,” says Ameen Khwaja, Founder and CEO of pTron, adding that the company decided to make a pitch to Amazon. pTron’s pitch was that among the e-commerce giant’s Top 100 products, about 30-35 per cent came from unorganised players, and these always had complaints or some issues, resulting in Amazon having a bigger customer support team to keep working on those sellers. “We pitched to Amazon to help clear this.”

Another tipping point for the Indian players came when the ‘Make in India’ wave started changing the mindset of customers. “Earlier, people wanted to buy imported products from America or London. But now customers take pride in buying a ‘Made in India’ product ,” says Mehta of boAt.

While the Make in India scheme started with smartphones and other categories of devices, it has also spurred the assembly of wearables in the country. The government has also helped by imposing duties on importing fully assembled units into the country. This has resulted in about 70-85 per cent of these accessories being assembled in India. Further, industry players are pushing the government to launch a production-linked incentive scheme for the category so that they can source more parts locally. “Two-thirds of the smartwatches are currently being produced in India and almost half of the hearables are currently being manufactured here,” says Anshika Jain, Senior Research Analyst at Counterpoint Research. “This share is likely to go up in the coming period as the phased manufacturing programme by the government is helping the ecosystem to drive volumes.” More OEMs (original equipment manufacturers) have also started assembling in India, and even the EMS (electronics manufacturing services) players are expanding their production lines to accommodate the rising demand, she adds.

Future Play

India’s smartwatch market grew 90 per cent year-on-year (YoY) in H1CY23, driven by affordability, rising customer demand and the availability of a wide variety of options. The True Wireless Stereo (TWS) segment also grew by 42 per cent, while the neckband market declined by 17 per cent in the same period. But the growth rate is soon expected to start flattening. Gupta of Boult explains that the sales of headphones has started stabilising, but they’re still growing 40-50 per cent YoY. Smartwatches had also been growing at around 300 per cent, but that too is projected to stabilise to around 100 per cent, and further come down to around 50 per cent in FY25.

The trends are worrying as the plateauing sales might put a break on the strong run of these start-ups. But these brands are already exploring and investing in new categories, or entering new geographies. For instance, Boult is looking at smart wearables and IoT devices, and has entered the UK market as well. Meanwhile, boAt’s Mehta says the company has already come up with a new wearable form factor, the Smart Ring—a next-gen wearable device made of premium materials and offering health monitoring, smart tracking, with up to seven-day battery life, and priced at Rs 8,999. Noise, too, has announced a similar product category. “As young India’s pulse keeper, we understand the importance of driving new-age tech solutions and as a step towards sustaining our R&D efforts further... We’ve launched three innovative products in the past one year, Noise i1, Noise IntelliBuds and Luna Ring,” says Khatri.

Separately, pTron is planning to expand its portfolio with sound bars and party speakers. Plus it plans to get into the gaming segment with headsets, keyboards, mice and other gaming accessories. “We have a very good manufacturing unit. We can scale this up and look at exporting as well. We can also do an OEM-ODM (original design manufacturer) business for brands in Europe and the US,” says Khwaja.

But in the end, all the brands realise that keeping the customer at the centre of their strategy is the best way to ensure their good run continues. Says boAt’s Mehta, “Whenever we launch a new product, Aman and I track the product and its reviews every two hours, even today. That is how obsessed we are about the customer and customer experience.” No wonder, these brands are singing their way into Indian consumers’ hearts.

@nidhisingal