Overnight Phenomenon

We are the top-selling premium phone this quarter,” declared an elated Vikas Agrawal, general manager, OnePlus India, in Q1 CY18. The general manager had reason enough to be upbeat. OnePlus has garnered 25% market share in the premium segment (handsets priced more than $400) according to Counterpoint Research. And unlike its Chinese counterparts Oppo and Vivo, OnePlus had done it without draining money on advertising.

Founded by Pete Lau and Carl Pei in Shenzhen, China in November 2013, India was not even on the company’s radar. The duo was looking for opportunities in Europe and the US. “We did not expect the kind of response that we got in India. We had developed a product for $300. In India, people were shy of buying anything above Rs.10,000,” says Agarwal. Yet, India has turned out to be the largest market for OnePlus; three years running. Buoyed by the stupendous response, the phone maker is now contemplating to open its second headquarters outside of China — in Bengaluru.

Community call 

Starting out, OnePlus decided it would sell its model ‘One’ online by invitation as the company had little idea about what the demand would be and didn’t have the bandwidth to experiment with volume. “We didn’t want to overproduce and be left with unwanted inventory. The system helped gauge demand with precision. We could adjust our production schedule accordingly,” Agarwal says.

The move worked. At no point was OnePlus left with excess inventory that it had to clear at a discounted price later. The invite had another benefit that wasn’t bargained for. It helped build exclusivity and an aspirational value around the product. Agarwal says that it accomplished an even greater feat — it helped create a loyal community, which became an advocate of the brand. “The ‘plus’ in our name refers to sharing. Invites helped execute this philosophy. If you bought a model, you could share invites with friends or family.” To make sure the invites were utilised, they came with an expiry period of two days. That made them a coveted commodity, giving rise to a lot of discussion on social media. “The invites not only helped create brand awareness but also built strong brand recognition because everybody was taking personal responsibility while recommending OnePlus,” says Agarwal. The community connect helped OnePlus steer clear of traditional advertising and marketing for the first couple of years. 

Ear to the ground

For the invite route to work, the company needed to get the product right. OnePlus set itself to be a success at the take-off stage by modeling its product based on customer feedback. The first model, OnePlus One, was developed based on the feedback from a forum that Lau and his team created, asking potential users what features they wanted in their smartphones. The model that was created thereafter was loaded with features — 3 GB RAM, 64 GB internal storage and a 5.5-inch screen with full HD Corning Gorilla Glass — all at a competitive price of Rs.21,000 in 2014. The specs were too good for the price point and the model, thus, found early adopters, many of whom still swear by the product. The community, now over 2 million, is so strong that about 25% of new model buyers come from this group of people who want to update to the latest OnePlus offering. 

While Anshul Gupta, research director, Gartner feels a lot of companies take feedback before bringing out models, for OnePlus founders, it’s been more than that. Not only is Lau himself a frequent visitor on the forums, he has admitted to flaws in earlier models to the community. He has even gone to the extent of seeking guidance from Samsung on logistics on a community blog.

Shrenik Gandhi, CEO and co-founder, White Rivers Media, a digital marketing agency, says that OnePlus has been using social media for two-way communication. “When starting out online, you can provide the best technology at a competitive price. But it is always a challenge for any brand because it takes time to get recognition. You have to be transparent with customers and curate a community,” he says. OnePlus has done it all. “The online community is a key priority for us,” Agarwal stresses. It is a fact that most companies do not expose their top management to customers. “Our founders and product managers conduct day-long workshops with followers to discuss the current, previous or upcoming features. The sessions help us understand what the pulse of the market is,” he adds.

For instance, he says, a lot of brands removed the headphone jack two years ago. But OnePlus decided to retain it based on feedback. Similarly, even as Apple and Samsung’s flagship models offered features such as 4k HD display, waterproofing, and wireless charging, OnePlus decided not to add the features needlessly. “These features add on to the cost of the device, but the feedback we got from people was that these did not add to the user experience. We decided not to follow the trend and focused on what was important to the user,” says Agarwal. On the contrary, they recognised that one of the pain points was the battery and, thus, came up with dash charging. Then again, the company introduced a feature to automatically optimise photos as Indian users tend to like filtered photos as opposed to the West, where natural images are desirable. 

When OnePlus 3 was being developed, the community was asked whether they would prefer a thicker battery or a sleek design. The feedback was that a sleek design was better as long as the battery lasts a day — the insight was built into the model. “There are many such instances in our five-year journey ranging eight models so far,” says Agarwal. 

As Gupta says, most smartphone brands build extensive online forums and communities but OnePlus has been able to keep its community close-knit. Gandhi says that word-of-mouth marketing has been a cementing force for the brand. “The community created a strong trust factor, which was very important for an online brand because we didn’t have any physical presence,” adds Agarwal. 

It’s all in the price

OnePlus is also playing its pricing game well. “One important factor that has pulled down the growth in the premium category during past few quarters is pricing. Buyers have started questioning the price of premium models with only incremental feature additions,” says Gupta. Most brands also lower the price of a new model after a few weeks. But OnePlus has kept its pricing stable and affordable. “That keeps the community loyal. It operates on a one-model strategy, unlike others who have 15 phones at a time, and this helps the company give updates on time,” says Gandhi.

The company has also invested in its own service centers. During a founder-CEO meet in Bengaluru, the top management decided to visit a multi-brand service center. It not only took them an hour to reach the place but the wait ran into hours. “We, thus, decided to have our own service centers in high streets or malls, where we can guarantee a one-hour turnaround time. You don’t have to leave the device with us,” says Agarwal. When it came to opening their first experience store, the company zeroed in on central Bengaluru, where there were no mobile stores but it was accessible to all — an input that came from the customer forum.

OnePlus has also made sure that the community is part of new launches. Almost 200 community members participated in the first launch. When OnePlus 2 was launched, the brand had users across geographies and so they decided to go for a VR launch. The launch of its latest flagship model, OnePlus 6, was attended by 1,500 people from London and China including community members.

The Amazon factor

If the community has been the driving force behind OnePlus’ success, so has the world’s biggest marketplace, Amazon. The company has been OnePlus’ exclusive partner globally right from the start. “In the second half of 2014, when we had been in the Indian market for a year, Carl and Pete had a meeting with Amit Jain (Asia Pacific regional general manager, Amazon) in Hong Kong. OnePlus wasn’t big at that time. It had just been launched in China. But the passion for using tech to improve customer experience and customer obsession were common between both the companies,” says Manish Tiwary, vice president, Amazon, recalling the initial days. In 2014, Amazon sold 10x the expected numbers of OnePlus One. “The phone’s rating was 4.3. It generated a lot of good PR for both of us,” adds Tiwary. 

Since OnePlus was an online-only brand with no distribution and reach, they relied heavily on Amazon. “The partnership helped us leverage their distribution reach and customer service. It also helped us attract initial customers,” says Agarwal. In April 2018, OnePlus 6 became the highest ever revenue-grossing phone on Amazon. Units worth Rs.1 billion were sold in just 12 minutes.

Numbers aside, Amazon hasn’t just been a transactional partner — it has helped the start-up with marketing too. In mid-2015, when OnePlus 2 was to be launched, Amazon went ahead and created a campaign for the brand. “We created experiential zones at big airports. These pop-up stores were targeted at people who wanted to experience OnePlus before buying it online. We have worked with them for all the launches in some way or the other,” says Tiwary. Amazon also facilitated the VR launch of OnePlus 3. “More than transactions or pricing, it was about creating a brand together. We continue to have that partnership. We have recently included their products on Souq in the Middle East and Amazon Germany,” says Tiwary. But now, OnePlus is also looking at opportunities outside the Amazon circle of influence.

Aiming for the next level

OnePlus is now tapping offline customers and engaging in traditional advertising to augment its customer base. It dropped its invite-only sales model after OnePlus 2. “We realised we can’t operate as a start-up forever. We have to operate as a brand and be available at all times,” says Agarwal. By then, of course, the company had assessed the demand situation and augmented its supply chain.

In 2017, OnePlus also started using traditional modes of marketing such as having a brand ambassador, print ads, and TVCs to reach more people during launches. Amitabh Bachchan was roped in as the brand ambassador in the same year but the strategy was to not highlight him as the face of the brand. “The product will remain the face of the brand. He is a ‘never-settler’ who has managed to evolve with time. We see a lot of synergies in positioning,” claims Agarwal. The company is also using outdoor marketing, placing ads inside airports to reach its target audience — working professionals. “Around Diwali, we engage in new launches, promotional offers and print ads, but we are not going to do such campaigns to build brand awareness,” clarifies the general manager. Besides advertising, the brand continues to engage with the community for word-of-mouth publicity. During a recent campaign, OnePlus offered Rs.10 million and 6,000 movie tickets to Avengers as prizes.

It has also worked out an offline strategy to reach out to those who aren’t comfortable buying products online. Will this move end up impacting its relationship with Amazon? Tiwary doesn’t think so: “We have renewed the partnership contract with them for three more years. We will continue.” Agarwal, too, opines that OnePlus would largely remain an online brand in the near future. “We are not going into channel distribution. We have opened five exclusive experience stores and are partnering with Croma as we can’t have hundreds of stores of our own,” he says.

 When it comes to demography, a clutch of seven to eight big cities is where OnePlus has found most of its buyers. The strategy is not to look beyond these cities as yet. “Samsung and Apple do have strong presence in other cities as well. If you take cars as a proxy, there is demand for premium products in hinterlands as well. But we want to saturate large cities first. We have started opening physical stores. We will eventually start incubating other cities as well, but the focus will remain on the top cities,” reveals Agarwal.

 Unlike OnePlus’ other markets, the company manufactures products in India. “We have no overheads and production is localised, which provides good room for profits as well,” says Agarwal. The company has been operating with 60 employees so far. That is set to change with India becoming its second headquarters. OnePlus is planning to add an independent product and R&D team as well. 

Driven by a community of followers, OnePlus has efficiently built a base for itself in India. Says Agarwal, “We have had a great head start in India, which gives us room to take bold steps in the future in terms of growth.” Despite the push, Tiwary feels that scaling up operations would be a challenge for OnePlus. “They need to remain like a start-up culturally even when they become big in India.” It remains to be seen what tricks Pei and Lau have up their sleeve to propel the next level of growth.