realme has just completed two years of operations on May 4 in India. It is an equally loved and famous brand among buyers for its wide range of product portfolio that suits all pockets. The number speaks for the disruptive brand in all quarters since then as it has consistently been among top five mobile brands in India. The 14 per cent market share in Q1 2020 to become the fourth largest mobile brand testifies its acceptance. Madhav Sheth, Vice President, realme and CEO, realme India, is leading the brand since its inception in 2018 and has successfully steered it from nowhere to everywhere but, the COVID-19 and continuous lockdown makes him think too about the future and strategies. He had shared his thoughts with Haider Ali Khan. Edited Excerpts:
What has been the impact of lockdown on the business?
Due to the extended lockdown, there are many challenges faced by businesses with huge impact from sales, manufacturing and cost.
There was a complete suspension on sales and manufacturing since the lockdown. As per the Government directives, our Greater Noida facility in Uttar Pradesh was suspended since 21st March, 2020 along with sales being a halt. We also postponed our Narzo series launch event and a few AIoT products that were scheduled for April till today.
Secondly on cost factors. The outbreak of COVID-19 has also influenced countries like China, Korea, U.S., Japan, where most of the upstream component suppliers of smartphones are located. However, the demand on the sales side also got reduced due to the lockdown as most brands couldn’t operate their business and had to delay product plans. In the future, the disturbance of manufacturing along with the new surge of demand post lock-down might have further impacts on the price of components, which eventually influences smartphone selling price.
Amid the lockdown, manpower disruption was also seen. The migrant workers, truckers and helpers have gone back to their hometown. It will take 2 to 4 weeks to revamp the entire production cycle even after we got the permit to reopen our factory. We are aiming to open 25% of normal production, so there might be some shortage of stocks in the upcoming one month due to the surge of demand post lock-down and new product launches.
Another uncertainty comes on the demand side. Due to the nation’s economy slowdown and people’s income loss, we could expect around overall 10% sales drop in 2020’s overall smartphone market according to Counterpoint. However, we are still confident that realme could sustain our sales target and recover faster than other due to our strong presence on e-commerce, faster offline expansion and product advantages across mid-range and budget segment.
You have just launched another series, Narzo. What makes it special from the rest?
Narzo is a performance oriented series that we build for all young players in India.
Narzo products will be performance-oriented. realme started the journey with “Power Meets Style”, and now realme has grown into a tech trendsetter, bringing some latest technologies for Indian consumers, such as India’ first 64mp camera, India’s fastest charging technology, India’s first 5G, etc. As a mainstream smartphone brand, realme’s pursuit of technology is comprehensive, you now cannot conclude it with “PowerMeetsStyle” anymore. That is why we will use Narzo to continue our advantage in “Power” to the extreme. Narzo is a performance phone for young players, with the best processor in its segment.
After the pandemic, everyone’s demand for budget and mid-range products will be more vigorous and diversified. We need to meet these different needs. Some people like to take pictures but never play games, and some people like games but never take selfies. These diverse needs have never been met. Our release of the Narzo series is an attempt to meet the needs of game enthusiasts and performance seekers. So demand is there first, product is thereafter.
Will the lockdown hits the overall growth of realme in India?
Yes it has slowed our growth as of now, but it will not if you look at 2020 as a whole.
realme grew 119% Y-o-Y in Q1 2020 due to our aggressive product strategies and focusing on “performance, design, and quality”.
However, the situation has gone down badly since the beginning of Q2. There has been a complete suspension on sales and manufacturing since the lockdown began. So basically we have lost 2 months already, so 2020 for business has 10 months at its best now.
Post lockdown, we will focus on building up our online and offline sales. We will be engaging with our customers through our online and digital channels along with the e-commerce partners like Flipkart and others. Our target for offline sales is to contribute over 40% of overall sales. To achieve that, we are expanding distribution channels to even tire-4 and tire-5 towns, aiming to cover 35k+ mobile stores pan India. The development of realme at offline has helped realme to reach No.3 Market Share in the month Feb.
Due to the impact on the economic growth and increased GST, more than ever, customers will tend to buy budget to mid-range smartphones, while again this is the advantage of realme’s product portfolio. So I believe the growth of realme post lockdown will be faster than any other smartphone brand in India.
How is realme planning to start production post lockdown?
We have received the required permissions from the UP government to reopen our production facility in Greater Noida. We are resuming our operations with 25% of our production capacity, and are bringing back close to 2,000 employees at the facility. To ensure the health and safety of our workforce, we have arranged for transportation to bring back our outstation employees, and have also made accommodation provisions. We will also ensure that the employees maintain distance at the workstations and common area, while working in plants with adequate safety measures and sanitization. However, it will take around 2 to 4 weeks to revamp the production back to normal.
We are conducting Covid-19 tests and workers proven negative only will be allowed to enter the factory.
What are the safety measures realme is taking while home delivering the products?
realme.com and our e-commerce partners will ensure strict social distancing precautions, all the delivery team is wearing masks and conduct frequent body temperature and report back, we are even maintaining social distancing for cash on delivery transactions. Contactless delivery and online payment is what we have been suggesting to customers. Moreover, realme has also procured necessary permissions for the vehicles to pick up goods to ensure proper supply to its customers.
realme TV was said to launch in Q2 2020. Any update on that? Will it be delayed due to the lockdown?
realme TV is in the pipeline and you will hear from us very soon. We have been running a social media campaign for two months collecting consumer feedback, and I can confirm that some core features will be as the features consumers voted. Our first smart TV that is just customized for Indian consumers.
We are also expanding our product roadmaps quickly into a AIOT ecosystem, including smart watches, TVs, audio speakers, travel gadgets, headphones, etc. In the year 2020, we are determined to become not just the World’s Fastest-Growing Smartphone Brand but also the most popular Tech-Lifestyle brand setting a new trend for our fans in India.
How is realme India planning to get back the growth trajectory?
To conclude, realme has its new triangle strategy “Smartphone + AIoT + Software” in years to come.
Following that, in the rest of 2020, our first priority was to launch the Narzo series, and resume the sales of our current models, including the recently launched realme 6 Series. realme has been established across price segments from budget phones to 30k+ flagship. Our remaining task is to strengthen such presence and adjust our product portfolio based on demand scenario post lock-down. Due to the impact on the economic growth and increased GST, more than ever, customers are more likely to buy budget or mid-range smartphones, which is the advantage of realme’s product portfolio. So I believe the growth of realme post lockdown will be faster than any other smartphone brand in India.
On the AIoT front, we are about to launch realme TV and realme Smartwatch. They are the first products from realme in the categories, and we have built them based on the needs of Indian consumers.
In February 2020, realme is No.3 Smartphone Brand overall, No.2 Online and No.5 from Offline. So the key is to strengthen our offline presence. We aim offline to contribute more than 40% of overall Smartphone sales in 2020. To achieve that, we are expanding distribution channels to tier-4 and tier-5 towns, aiming to have 400+ DB on board to cover 35k+ mobile stores pan India. The investment from the brand is at par to amplify this process, we will be having 5000+ promoters and a solid investment in their training, store branding, and mass media marketing. We have also planned to have exclusive showrooms in mega cities, adding many more exclusive service centers pan India.