This pilot and his cousin sell Rs 25Cr worth Bluetooth earphones, consumer electronics every month
Not long after Gaurav Khatri completed his commercial pilot training in the Philippines, he decided he wanted to become an entrepreneur instead. The year was 2014 - when the consumer electronics segments for smartphones, smartphone cases, Bluetooth earphones, etc was exploding onand Amazon India.
Smartphones were becoming one of the fastest-selling products on these ecommerce platforms. The two ecommerce marketplaces boasted large sums of foreign investments and could afford to sell smartphones at heavily discounted prices, even if it meant selling at a loss.
Alongside the smartphone segment blossomed a market for smartphone accessories like cases and covers. This was the segment Gurugram-based Gaurav wanted to venture into.
“There was an opportunity to invest in the smartphone cases and covers segment, and it seemed like a good bet. When I expressed interest in this, my cousin Amit reached out to me,” Gaurav, 30, tells SMBStory.
A fashion management professional, Amit, 38, was in business - he was a supply chain partner for international fashion brands. Although Gaurav and Amit did not grow up together, they were close during their youth, and felt there would be synergy in starting a business together.
The cousins invested their savings of Rs 7.18 crore ($1 million) to startin 2014.
Noise founders Gaurav Khatri (left) and Amit Khatri (right)
The Noise model
Gaurav and Amit tied up with Chinese manufacturers to make the smartphone covers, and sold them in India.
Riding on the wave of skyrocketing smartphone sales on ecommerce platforms was a good idea, at least at first. Gaurav claims Noise became one of the best sellers in the mobile accessories category in the first few years.
But Noise was not alone in the segment. The mobile accessories segment saw the influx of several small and unorganised players, effectively flooding the market and forcing brands to participate in competitive pricing.
“The smartphone accessories segment was a low barrier market. Due to the presence of unorganised players and low brand awareness, the pricing of products in the whole category was going down, including ours. We were starting to see this affect our final profit and loss numbers,” Gaurav says.
But the Noise founders did not want to wait around for their numbers to tank before intervening. They had begun research into smart wearables and Bluetooth earphones, and were looking to include these products in their portfolio.
By 2018, Noise launched both products. The strategy was to sell good quality smart wearables and Bluetooth earphones that were high on features at a value-for-money price.
Noise worked alongside its exclusive and large-scale original design manufacturers (ODMs) in China to bring down the cost of production. It worked with Chinese factories that boasted huge production capacities, efficient raw material procurement processes, and stringent quality checks.
“Our ODM partners have decades of experience in developing and delivering quality products for world renowned brands. We work together with our ODMs to provide the best features possible across price points for our products. This way of working backwards played a vital role in keeping costs down,” Gaurav explains.
Noise has in-house R&D and design teams working with the ODMs to finalise the products. After the product is made, it is then shipped to India. When the products reach India, Noise cuts its margins and sells them at prices relatively lower than what other brands charge for devices with similar features.
The Noise Shots XO
Providing customers with a better experience is the brand’s core value. By cutting its margins to some extent, Noise does not have to compromise on the quality of packaging, customer support, etc.
Well-known names like JBL, Jabra, Sennheiser, Sony, Realme, and Amazefit are competitors. Gaurav notes that Noise is staying ahead of the competition by implementing customer feedback in new products, launching a new product almost every month, and also upgrading existing offerings.
He claims Noise was one of the earliest brands in India to launch ‘truly wireless Bluetooth earphones,’ in 2018.
“Bose, Apple, and Jabra were present in the truly wireless Bluetooth earphones market before we entered, but their products were too expensive. We were offering a better value proposition to our customers with value for money products,” Gaurav says.
Noise doesn’t believe in discounting its products as it feels this might deteriorate the products’ value. But it does make an exception for slow-moving models. Its products are priced between Rs 2,000 and Rs 7,000; the bestselling products for the company come in the range of Rs 3,000-Rs 5,000.
Working with large Chinese ODMs, focussing on innovation, and cutting its margins seems to be working for Noise. Gaurav says that these factors have helped its sales volumes go up and make the company profitable.
Noise has a one-million customer base so far, with four products being ordered every minute.
“We have become a leading brand in the truly wireless Bluetooth earphones and smart wearables segments. We are clocking a GMV of Rs 25 crore per month,” Gaurav says.
A year ago, noting high returns on a certain product, Noise incorporated online payments and halted production of the product. The brand then collected feedback from customers and went back to implement the changes in the product.
“The number of returns went down. We saw a 10 percent to 15 percent reduction in the percentage of returned products,” Gaurav explains.
Noise targets millennials between the ages of 18 and 35 living in metro cities as they are early adopters of technology. The brand is slowly moving to Tier II and Tier III markets through offline selling in small-scale shops and stores.
“We have received a good response to our offline retail strategy. In just seven months of starting offline selling, the segment is contributing 10 percent to our overall sales. We now look forward to expanding this reach in various parts of India,” Gaurav says.
The brand will eventually tie up with large-format retail stores to boost its presence. It is also planning aggressive marketing campaigns in both online and offline markets. By 2022, Noise wants to reach Rs 500 crore annual net sales.
(Edited by Evelyn Ratnakumar)