Tuesday, February 27, 2024

Navigating Changing Trends: Insights From Okie On The Consumer Electronics Industry And Market Strategies

By Vaishali Yadav

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In 2011, Okie Ventures started off as importers and factory assemblers of smartphones, feature phones, LED TVs, and sound systems. As the consumer electronics space in India is changing rapidly, EFY’s Vaishali Yadav chatted with the Managing Director of Okie, Mr Jitin Masand, to understand why the company isn’t going online for sales, how it claims to maintain quality with low prices, the emerging market trends, and much more. Read on for the excerpts…

Mr Jitin Masand, Managing Director of Okie

Q. Could you brief me a little bit about Okie and your background?

A. I started a mobile phone business in 2006. Initially, we focused on distribution until 2009 when we began importing mobile phones from China. In 2011, we ventured into creating our own brand called Speed Mobile.

It was an exciting time for the mobile phone industry, with many new brands emerging, such as Micromax and Lava. We had a great experience working with 400 distributors and selling over 4 million phones.

However, in 2017, we realised that the technology landscape was changing, especially with the rise of Chinese brands. We decided to shift our focus and explore the consumer electronics market, particularly LED TVs. In 2018 and 2019, we engaged in trading business and discovered significant opportunities. This led us to establish a proper Indian brand that caters to the market’s needs. Currently, we operate in the entertainment sector, supplying LCD TVs and audio products.

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Q. As it has been more than 16-17 years since you started in this business, how have you seen the trends evolve?

A. Initially, when we started in 2006, mobile phones were considered a necessity for communication. People were amazed by the idea of a device that allowed interaction between individuals. Similarly, TVs were primarily used for broadcasting information without much user interaction. Over the past five to six years, we have witnessed significant changes.

These devices have become more user-friendly, enabling users to not only use them but also interact with them. For instance, Smart TVs have transformed into digital partners for individuals, offering a personalised user experience. Users can switch between applications for entertainment, information, and gaming.

Q. How has the market focus shifted over the years?

A. The market has shifted its focus to screens, as people now prefer using screens for various purposes. Screens are present in restaurants for menu ordering and in commercial offices for information and presentations. Furthermore, Smart TVs have become as capable as smartphones, allowing users to browse the internet, shop, and engage in gamification. We anticipate further advancements in Smart TVs, such as improved video capabilities and AI integration.

Q. How has your company managed to stay afloat amid all the changing trends in the last decade? How do you assess your performance?

A. In the past 10 years, our focus has been on being product-oriented and understanding market demands. We always set our expectations in line with industry leaders. In the TV industry, for example, Samsung and Sony are prominent leaders, and people expect similar quality from other brands. While surpassing their technological innovations is challenging, our goal is to offer comparable features and quality at an affordable price.

Our procurement process is robust, ensuring high-quality components for our products. We strive to match the product quality of LG and Samsung but at a more affordable price point. Additionally, we have a wide reach in tier two and tier three markets, with a presence in 2,500 retail outlets.

Q. How do you manage to achieve this while maintaining similar quality to other brands like Samsung and Sony?

A. Our approach involves procuring spare parts directly from manufacturers without intermediaries, which helps us save on costs. We also keep our profit margins limited compared to giants like Samsung and Sony, allowing us to pass on the benefit to the end consumer. We have healthy margins that don’t significantly inflate our prices. This ensures that our products remain competitive while maintaining quality standards.

Q. Please provide some insights into the advancements happening in the various segments that your company operates in, including sound systems and gaming.

A. In terms of our main product, TVs, we have three categories: basic, regular, and premium. Currently, we specialise in the regular category but are working towards entering the premium category as well. When it comes to premium TVs, we are focusing on 65-inch products with 4K OLED screens.

The latest trend in screens is the introduction of Polaris OLED screens, and the next step will be 8K resolution. We have partnered with LG to obtain licenses for their software and smart remote control. This collaboration allows us to provide customers with the experience of using LG’s international software, which is already familiar to many users. By focusing on software, we ensure that customers have a seamless and user-friendly experience with various apps available on our TVs.

Additionally, we have designed a new line of speakers specifically for TVs above 55 inches. These speakers provide a surround sound experience, eliminating the need for additional soundbars or speakers in smaller houses. Design-wise, we aim to make our products look premium, using high-quality panels to deliver top-class visual quality. The four main elements we focus on in our TVs are design, panel quality, speakers, and software.

Moving beyond TVs, in the complete entertainment zone, we offer three categories of music systems. We continue to improve the quality of our products and plan to enter the laptop category, targeting tier two and tier three markets. These laptops will be designed for entertainment purposes. We are planning to launch our laptops in the next quarter.

Q. Could you briefly explain the steps involved in the manufacturing and assembling process at Okie?

A. Certainly. When it comes to mobile phones, for example, there are around 40 parts involved. We work with about eight to nine suppliers to procure these parts. The manufacturing ecosystem in India has improved significantly, and we have identified a smooth supply chain system. We procure the materials, check their quality, and bring them to our factory. Then, there are around 20 steps involved in the assembly process. These steps include assembling various parts such as the panel, chipset, electronics, body, speaker system, wiring, and more. Currently, around 50% of the materials used in the manufacturing process are sourced from India, while the remaining 50% is imported.

The goal is to further increase the local manufacturing of components and reduce dependency on imports. India has been progressing in this regard, with more parts being manufactured within the country. Although there is still some dependency on imports, the focus is on establishing factories and plastic extrusion facilities in India. This way, we can rely on local production and gradually reduce the need for imports.

Q. How significant would it be if semiconductor manufacturing started in India?

A. While it may not immediately lead to an increase in the quantity of electronics manufacturing, it would greatly reduce dependency on other countries for semiconductors. This would be a crucial step towards self-reliance and ensure that the remaining electronic components are sourced from within India.

Q. Are you present on online platforms like Flipkart and Amazon?

A. No, we primarily focus on offline distribution. We are building a strong network of over 15,000 retailers in the consumer electronics business. Our aim is to provide a physical demonstration of our products through these retailers. However, we do have listings on e-commerce platforms, but we do not sell directly through them.

Q. Do you have any plans to expand your presence on online channels in the future?

A. While we acknowledge the growing popularity of e-commerce platforms, currently, a significant portion of our sales, around 70%, comes from offline channels. We may consider expanding our presence on online platforms in the future, but it is not an immediate priority. We want to establish a strong offline presence and ensure customers have the opportunity to experience our products firsthand before exploring online channels.

Q. Why is your presence more prominent in the southern part of India compared to the northern part?

A. Our company is based in Bangalore, Karnataka, which has been one of our top markets. We initially focused on building a strong distribution network in South India, where we found the market dynamics and network to be more favourable. However, we have recently expanded our presence to Maharashtra as well. While we may eventually focus on expanding to other parts of India, for now, we are concentrating on consolidating our position in South India.

Q. Are there any plans to export your products internationally?

A. Yes, we have plans to export our products. We have ongoing discussions with potential partners in Saudi Arabia, and there is interest in exporting our products to African countries as well.

Q. What kind of partnerships do you seek in the Indian market to expand your customer base?

A. We believe that partnering with large-format retail (LFR) stores like Reliance Digital and local brands such as Reliance and Chroma can help us reach a wider customer base. These stores provide a good retail base for displaying our products.

Additionally, we are planning to collaborate with Google for the development of Google TV, which is a globally recognised technology. The association with Google for Google TV is already in place.

Q. How did the COVID-19 pandemic affect consumer electronic players like your company?

A. Fortunately, when the COVID-19 pandemic hit, we were well-prepared. We had established our supply chain and marketing plans just before the pandemic began. Despite the challenges, we managed to continue supplying our products and even expanded our market presence in Tamil Nadu by covering 100 stores in just three months.

The pandemic presented a unique opportunity for the consumer electronics industry, particularly in the LED TV segment, as people started realising the importance of having multiple TVs at home.

Q. As you have independent intellectual property rights (IPR), can you tell us more about your research and development (R&D) activities?

A. Our R&D focus primarily lies in the gaming domain. In the consumer electronics field, we are particularly working on enhancing sound quality, specifically in speakers. Additionally, we conduct quality research to ensure that the products we supply meet the market’s expectations. Our main R&D hub is located at Kundli in Sonipat, Haryana.

Q. How is AI impacting your business and customer experience?

A. AI plays a significant role in enhancing the user experience and convenience, especially in the fields of social media, digital media, and e-commerce algorithms. In the TV industry, AI is expected to improve the user experience for our customers, making it more convenient.

Q. What are some use cases of AI in the consumer electronics domain?

A. For instance, imagine watching a movie on Netflix where the hero is eating pizza. With AI integration, a bar window could appear on the TV screen, displaying nearby pizza places connected with food delivery platforms like Swiggy and Zomato, allowing customers to order pizza directly from the TV. AI will make the user’s decision-making process easier and enhance convenience across various sectors, including shopping for furniture through TVs and other such applications.

AI can enhance the shopping experience by automatically searching and recommending products based on user preferences. It can also play a role in digital learning through interactive panels and smart TVs, allowing for more engaging and in-depth explanations.

Q. Is virtual reality (VR) expected to have a significant impact on the consumer electronics market?

A. There is scepticism about the potential of VR in the consumer electronics market. It is seen as a niche product rather than a mass-market technology, and there is limited demand and interest from both businesses and consumers.

Q. Going forward, what are the challenges in the consumer electronics domain?

A. Price competition is a persistent challenge, with some companies offering cheaper alternatives that may compromise quality and after-sales service. To stand out, companies need to build trust and ensure product quality. Additionally, keeping up with evolving technology and meeting consumer expectations are ongoing challenges.

Q. Can India become a global leader in the consumer electronics industry?

A. India is on its way to becoming a global leader in the consumer electronics industry. We have already made significant progress, particularly in the mobile phone business. With government initiatives and a growing pool of skilled engineers, India’s potential as a global leader is promising.

Q. Does India have enough skilled engineers in the consumer electronics field?

A. Yes, India has a sufficient number of skilled engineers in the consumer electronics field. Various states have established polytechnic and engineering colleges, and the new generation is eager to contribute to the industry. While there may be a gap between theoretical knowledge and practical experience, with time and training, fresh graduates can acquire the necessary skills.

Q. How is sustainability being incorporated in the consumer electronics domain?

A. Companies in the consumer electronics domain in India follow government guidelines and policies for sustainability. These include procurement planning and disposal planning to ensure products meet standards and follow sustainable practices, minimising environmental impact.

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