Please shed light on OnePlus's offline channel strategy?<\/strong>
OnePlus is still primarily an online brand. And, it has been our business model, globally. However, we started experimenting with a couple of new channel partners late last year. In Europe, we partnered with telecom operators, especially in Nordics. In India, we opened our own experience stores and started selling on Croma. The idea was to better understand the offline dynamics and create a destination where people can come and experience the product since a lot of people are not comfortable buying online.
In long-term, online will be a dominating channel, but to expedite the growth, we also want to be more proactive in creating an offline destination that can lead to the online sales conversion. This year, we decided to open stores in more cities. We have six authorized experience stores in other cities. We have two more coming this month. We will open eight smaller format experience stores.
Our offline shift is driven from an experience perspective. The idea is to cater to users who have not yet heard of the brand, and want to give them experience, which is why we are not going to be present in the multi-brand stores. Croma is an exception because it is the most premium multi-brand electronics chain.
We have four formats - online channel (Amazon and own website), offline - Croma as a multi-brand partner, our experience stores which are large format stores (two of which are live -Bangalore and Chennai). We are setting up additional authorized stores, which are similar to experience but much smaller in size.
We have close to 120 physical touch points, including 100 Croma stores. The idea is to have one experience story in every big city, and authorized can be opened along as it can self-sustainable. We don't want to lose money while running offline stores. We want these stores to be profitable.
We are looking at new cities to decide where we can open new stores. We don't want to open stores directly. We already have 14 smaller kiosk stores in next tier cities, out of which 5 are already live. We will open more in small cities.
What are your plans for the upcoming festive season?
<\/strong>
Diwali is a big opportunity. Last year, we had a good response to OnePlus 5. This year, we will have a lot of plans for the festive season.
What's the update on the manufacturing?<\/strong>
SMT production has started in India. We started manufacturing in 2016 with Foxconn<\/a> in India. Then, we started production with our global partner in Noida. The entire production has now shifted locally. Oppo does production for us globally, and in India as well through their Noida facility.
Would you increase prices due to the ongoing rupee depreciation?
<\/strong>
That has been a great drag for us. For now, we are not looking at changing the pricing. If rupee depreciation persists at these level, in long run, prices will definitely go up because of cost pressure. We always believe in operating in a healthy manner. We would not be absorbing losses. Our contracts are now locked for the next few months. Now, what we are selling is all locked for three months. As of now, cost pressures have not been hit, but going forward, all future supply will come at a higher price.
We have never operated at loss, and have been operating in a healthy manner despite working on a thin margin, which is now under pressure. We are closely monitoring the situation, and some point we may have to increase prices. For now, we have planned for the festive season. Maybe next quarter or next year, it may reflect.
What's the update on your new independent R&D center in India?<\/strong>
We are looking to have a dedicated independent R&D center which will be focusing on India specific product feature developments. The center will initially be focused on India, but in long term, it will support the global product development. There are a lot of Indians working on global products. We already have a pilot team that is working from various business centers. The dedicated facility is expected to go live by end of this year.
OnePlus recently made India its second headquarter after China. What are the changes are being brought under this strategy?<\/strong>
We are looking at opening our own network of service centers. We used to have service partners who were managing our offline service network under an outsourced framework. We are going to open 25 exclusive service centers this year, of which 14 are already live, rest are expected by end of this year. They will guarantee one hour turnaround time.
We are internalizing all process and service delivery. We see service as a long-term customer retention channel.
Any new initiatives?
<\/strong>
In the last quarter, we have moved entire contact center operations in-house. It is now based in Bangalore. We are now bringing global service operations to India. Markets like the US and Europe can be supported from India. We have made India as our new headquarter. China is the primary headquarter, but it caters only to the Chinese market. India has emerged as our next big market. We are experimenting with all these things because globally none of these things have started yet. These learning from India can be replicated to other markets.
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