There’s a complaint that’s common amongst the smartphone and audio wearables sellers that dot the buzzing market bylanes of South Delhi’s Green Park neighbourhood. It’s about the “cheap” prices that consumer electronics brand boAt offers online. One seller adds that the company never reaches out to offline dealers like him. Another complains that they don’t get wholesale prices.
Even salespeople at premium electronic retail chains such as Vijay Sales and Croma seem reluctant to promote products from the five-year-old company. Instead, they point The Ken towards other brands such as JBL or Sony even when asked about boAt.
The brand’s simple strategy—keep prices down while driving demand online—has paid dividends offline. Rising demand has forced small retailers, who depend on the razor-thin margins these products bring, to stock up. For instance, a pair of headphones from JBL, retailing at Rs 1500 ($20), would bring about 40% in gross margin for offline retailers and distributors. A similarly priced pair of headphones from boAt, however, would fetch just 10-15% in gross margins, especially with boAt selling the same product online at a cheaper price point.
This strategy has been boAt’s bread and butter, with the brand nearly tripling its operational revenue between 2019 and 2020. It went from making Rs 239.5 crore ($33 million) for the year ended March 2019 to Rs 700.44 crore ($96 million) for the year ended March 2020. The company also made a profit of Rs 48.85 crore ($6.7 million) in 2020 compared to Rs 8.73 crore ($1.2 million) the previous year.
Fresh off those numbers, boAt has also had a spectacular 2020, boosted by the extended pandemic-induced work-from-home situation. An executive from a competing audio brand, who didn’t want to be seen publicly commenting on boAt, said the brand saw a monthly run rate of Rs 70-80 crore ($9.6-$11 million) in 2020. boAt’s co-founder Aman Gupta declined to share exact numbers, but he confirmed that the company had crossed its projections of Rs 1,000 crore ($138 million) annual run rate for the year ending March 2021.
But boAt seems to have bigger plans. Recently, it raised $100 million in fresh funding, led by US-based private equity firm Warburg Pincus LLC. The funding round values the company at around $300 million. boAt also got itself a new chief executive officer—Vivek Gambhir, the former CEO and managing director of Godrej Consumer Products (GCPL), replaced Gupta, who is now the chief marketing officer.
Both moves are significant. We’ve previously written previously written The Ken Smooth sailing so far; could pricing rock the boAt? Read more about boAt’s need to go beyond the humdrum of pricing wars in India’s notoriously price-sensitive markets.