boAt: First Indian D2C brand to IPO
boAt: First Indian D2C brand to IPO
The popularity of this brand forced global brands to lower down their prices
5 years and 8 million customers later, boAt is all ready to launch an IPO this year. They are profitable, they are fashionable and they have dominated the audio and wearable space globally.
Let’s get into the A2Z of a brand this week that is proudly made in India.
The perfect recipe for the electronic space
Both the founders had seen the electronics market very closely.
After being involved in the family business of trading electronics, Aman Gupta went on to graduate from ISB. He then worked with Advanced Telemedia to bring global electronic brands like Beats, Sennheiser, Telex, and others into the Indian market. Intrigued by this space, he wrote to HARMAN international (JBL) and expressed his wish to work with them. For two years, he was in charge of sales and product management at JBL.
Before boAt, Sameer was already an entrepreneur, running Redwood Interactive. He was involved in the distribution of gaming hardware.
In 2014, they decided to join hands and start Imagine Marketing to distribute the global audio brand - House of Marley in India. During those two years, they were also constantly ideating about building their own brand.
Banks didn’t believe in their story, investors didn’t lend and consumers didn’t know what boAt was
In 2016, they finally launched boAt with an Apple charging cable on Amazon. They had heard from several customers that the original wire had a lot of frequent wear and tear. boAt stood out with the message - ‘Switch to indestructible cable’, and it resonated well with the value-conscious Indian consumers.
They wanted to secure funds to place bulk production orders but banks and investors didn’t believe there was a need for another brand in the heavily commoditized electronics accessories market.
Aman and Sameer didn’t deter, bootstrapped their company by personally investing 15 lakhs each, and launched boAt.
From charging cord manufacturers to the biggest wearable brand
The charging cable became the highest-selling product on Amazon. Since the beginning of Imagine Marketing, they had their eyes on the earphones market.
boAt found a gap in the market that was created by 2 key events in 2016,
The introduction of Jio made smartphones cheaper and thus earphones a necessity.
The launch of Airpods made Bluetooth earphones the standard
The hearables market was ready to explode and boAt was right in time with their second product launch: an audio range that included an interesting take on earphones.
Indians love bass, which was a key consumer insight that helped them differentiate. “Around 90% of Indians love loud bass. It is in our culture, such as tabla and dhol.” They even called their first earphones - BassHeads.
They spent time analyzing consumer reviews and feedback on competitors' products and produced sweatproof and water-resistant products as a result.
Unlike others, they didn’t want to import ready electronics from China without IP and just sell it here. They got directly involved with the manufacturers in developing the products.
“I spent a lot of time in China, sitting in the factories to get the product right,” says Gupta.
Profitable from year 1 and a staggering YOY growth
Within the first two years, boAt managed sales worth coveted 100 crores. They were also surprisingly profitable even in year 1.
“While others have burn rate, we have earn rate.”
They had managed the pricing very cautiously where they wanted to be an aspirational brand but also affordable for millennials to give them a shot.
“We are like the Zara of electronics. We are not highly-priced, like some luxury brands, and neither low priced, like Chinese electronics.”
They managed these growth numbers without any heavy funding through the years.
Not an electronic brand, but a lifestyle brand obsessed with their customers
The working population of India constitutes about 51% of the population and boAt wanted to target them. They were building a brand for the Indian youth: they wanted to be fun, fashionable, affordable, durable, and overall aspirational.
They developed the word "boAtheads" to describe their customers, making them feel like they were part of a community. When they didn't have the funds to spend on marketing at first, they created in-house creatives to run social media advertising and employed millennials to create relevant content.
“Our marketing & advertising is never centered around the product but the community and aspiration that we’re trying to create”
They wanted to establish themselves as a lifestyle brand and not a utility brand and to expand further, boAt leveraged India’s two most favorite things: Bollywood and Cricket, and bagged Hardik Pandya, Kiara Advani, Diljeet Dosanjh as their brand ambassadors. They understood their target audience and thus spent most of their marketing budget on social media campaigns and influencer marketing and stayed away from the conventional newspaper and television.
“We want to be wherever the youth is, when we started our CMO was 20 years old and he told me how the youth is moving to Instagram from Facebook and we started putting effort there”
The strategy of targeting was further emphasized with their participation in Lakme fashion Week and recent collaboration with Bira for limited edition designer earphones and headphones.
Channel of distribution does not matter
boAt makes most of its revenue from marketplaces mainly Amazon and Flipkart.
“Throughout our journey, we have been focusing more on product and marketing, and not particularly on distribution and logistics. We found this experience much better on the marketplaces. So we kept our focus in building our product and the brand,” Aman says.
He believes that once a brand becomes popular, the channel of distribution doesn’t matter. After being online-centric, boAt eventually entered the offline space through Croma and Reliance digital and now 10%-15% of their sales are through offline channels.
For the coming years, they are strategizing their focus on reaching the customers directly.
Largest in India, fifth-largest in the world in five years
In the earwear & smartwatch space, boAt is the largest in India and the fifth-largest in the world right now. They are adding one boAthead every 3 minutes into their family.
Where’s boAt floating to next
boAt has been on a shopping spree to expand its offerings. They acquired Delhi-based competitor Tagg Digital (2021) and Singapore-based smart wearables IoT start-up Clove IoT (2022). These will enhance the development of boAt’s products.
The wearable market in India is heavily dependent on China for imports and hence Chinese brands will always pose a threat. This happened in the smartphone market with Xiaomi and OnePlus against Micromax and Lava. To de-risk themselves, boAt has thus also started working closely with manufacturers in Vietnam, Malaysia, and Singapore.
“We are a young brand; we cannot make mistakes. The brand must outlive its founders. I am now creating all business functions such as marketing, sales, and finance. I need to prepare the business for scale for the next four years. Only after that will I think of manufacturing within India and also opening brand stores
With the $500 Mn IPO raise, boAt will be well-capitalized to take its online market dominance offline.