Skullcandy, which recently released Method ANC, its first wireless earbuds with active noise cancellation technology, is excited about the Indian market. Smartphone sales are going up and so is consumption of content on streaming apps such as Netflix and Amazon Prime—which will create demand for quality audio accessories. The industry in India, expected to get a boost from the advent of technologies like 5G, is expected to register an 8.7% compound annual growth rate from 2018 to 2023, according to a report by Ken Research.
Skullcandy products sell in India in the ₹2,000-₹25,000 price range. Amlan Bhattacharjya, founder and CEO of Brand Eyes, the official distributor of the Utah-based brand in India and other regions in South Asia, spoke to Fortune India about market trends, innovations such as active noise cancellation, and the threat from counterfeit products.
How is the Indian market different from the rest?
The Indian customer is very well researched and more demanding than other customers. They are very empowered in terms of what their rights are as consumers. So, after-sales service is a huge focus for us. For Skullcandy now India is a very important market globally. Over the last five years or so there has been a lot of discussion to figure out what the Indian market needs, what’s the promise of the Indian market. One of our well-received products, Indy, was named so because of our discussions with Skullcandy saying we needed a price point, a product that was the right fit for the Indian market when they were developing their truly wireless category. It was named Indy because it was inspired by what we had to offer to the product. The Indian market is looking for a superior band, offering a great product at a price point that is affordable to most people who would like to buy a product from a brand like this. Let me add that Skullcandy as a brand globally does not make products for specific markets unlike a lot of other brands.
How do you get the balance between price and build right without compromising on quality?
It’s always a battle. Truly wireless [products] is about two years old now globally. Even highly successful brands have struggled to address this category. Apple has a patented technology. Outside that, everyone has been trying to figure out how to get the pricing right, the audio quality right, the build quality right. There are connectivity problems every once in a while. But I think the category overall is struggling with bigger problems. We’re super-excited about the truly wireless category. We’re the last of the significant brands to enter it. The reason we did that is I think we took advantage of the fact that while others were learning, we were learning along with them without making mistakes ourselves. I think that has helped us. For Bose, it’s easier for it to push products at a higher price point. But if you look at Bose, Sony, Jabra—given that we were late entrants—I think we are getting better traction than they are. We have been in the truly wireless market now for 9-10 months and have already introduced the products. All in sub-10K price point. We hit a sweet spot in terms of pricing and product profile.
Has the slowdown affected you?
I have my own version of what’s affected by the slowdown. Smartphone sales have gone up. But instead of 10% growth, it saw an 8% growth. I think 8% quarter-on-quarter is not bad growth. The branded personal audio category continues to grow with the smartphone category. Sentiments aside, that’s what drives the market down when you’re that dependent on this handheld thing. You need better audio. There was a time when people would get earphones with the box. That doesn't happen anymore because smartphone makers have realised it’s a complete waste of money as no one’s going to use them.
Can you point out some of the upcoming trends in the industry?
Active noise cancellation is going to become very big. We have Netflix, Apple TV, etc. and the space is constantly transforming. All of that content is coming to smartphones. What do you do with your audio? You’re always on the move. Because of all these developments, the consumers are running out of patience. You have to react fast to it. The next set of expectations is popping up. In terms of sports, active lifestyle is a growing trend but having said that in our country most of our active lifestyle is turning out to be mostly indoors, and that’s a bit of a roadblock for the category. We are a young action-lifestyle brand. If you go back about three years ago, people said that Skullcandy is a youth brand. So we took a conscious decision and targeted people who were in college then and are now working. So there was an initiative to push it to that age group. Millennials have grown up. Their expectations have grown.
One problem that is rampant in the South Asian market is counterfeit products. How do you deal with that?
Let me put the good side of it first. The good part is that as this technology is getting more concentrated, counterfeiters are finding it more and more difficult to catch up. There is no way of stopping it from wherever it’s been made. There have been a number of seizures in the last couple of years of counterfeit products of our brand here. The customs authority has worked with us. Hundreds of raids have been conducted. There’s no mitigation as such. You have all the legal protection on paper. It used to be a bigger nuisance for us earlier because we used to detect a lot of these when they used to come back for warranty claims. That’s one of the evaluations of how big the threat is or continues to be. The good thing is that it’s a lot lower than it used to be.