Gurugram-based Nexxbase Marketing Pvt Ltd, which sells smartwatches and earwears under the Noise brand, is looking to expand local manufacturing in India in partnership with 4-5 equipment manufacturing partners such as Optiemus and Foxconn.
The company started local manufacturing with Optiemus last August and currently makes 25% of its products locally. Nexxbase’s co-founder Amit Khatri told Mint that by the end of this year the share of locally manufactured products will be 50-60%. “The kind of size and scale we are in we need to work with multiple partners,” he added.
Noise shipped approximately 1.4 million wearables including watches and earwears in the first quarter of CY 2022, according to a May report by market researcher International Data Corporation (IDC).
“We are very aggressive about expanding manufacturing in India. The expansion of local manufacturing will enable us to generate employment, bring in efficiencies of scale and price and make that available to our customers,” said Khatri.
Noise is one of the fastest-growing wearable brands in India, according to IDC. In Q1 2022, Noise’s overall wearable shipments grew 150.1% YoY. The company also brought down the average selling price (ASP) of its watches by 31.3% and earwears by 37.2% as compared to the same quarter last year, the IDC report shows.
In Q1 2022, Noise was the second leading brand with a 10.9% market share after boAT which accounted for 22.9% of the wearable shipments. However, as per a May report by Counterpoint, it was the leading brand in smartwatches with a 23% market share.
The growth in demand for wearables, especially after the pandemic has also boosted the company’s bottom line. Khatri said Noise generated Rs 800 crore in revenue last year at 200% YoY growth.
Khatri said most of what is being done in the name of manufacturing is still assembly. Components are imported from Vietnam, Taiwan, China, and Europe and then assembled in India. “All our design has been happening in India for quite some time. Packaging, chargers, and cables are already being made in India,” Khatri added.
Khatri said his company is looking at phased manufacturing. Surface mount technology (SMT) will start and part by part manufacturing of other components will start in India.
Nexxbase’s other major expansion plan for this year is on strengthening its team. The company is planning to double its headcount by next year from the current 275 odd people, which includes around 50 people in the engineering and product teams. Last month, it also launched a tech incubator called Noise Labs that will focus on innovative products.
The company also wants to expand outside India, but not anytime soon. Khatri said India is currently the fastest-growing market and international brands are eager to come to India. “In a year or so we will start expanding to other markets in the APAC region,” he added.
Khatri points out, “we want to grow less, grow deeper in what we do. We are working on 3-4 line-up of strong products this year.” Around one third of Noise’s business comes from tier 2 and 3 cities, and the company is planning to “expand and cover” more of that market.
Most of the Noise’s sales still come from online channels as its core to the company’s B2C strategy. “Our channel will always be online first. Currently, the share for online to offline is 80:20. However, offline has also been growing for us,” said Khatri.
Going forward, Khatri wants to embrace an omnichannel strategy, so customers can experience products in stores and buy offline or vice versa.
For many of the product-centric decisions, the company is constantly speaking to its customers through surveys and focus group calls. Khatri said it helps them understand what next-generation features customers want to see in their products.