Marketing The OnePlus One
TH: Why did you choose the invite system for selling the OnePlus One?
CP: In the beginning, we thought, ‘Wow, we’re going to release hardware, and we’re going to release hardware globally—many countries around the world.’ And then we thought back to different software companies, for instance Facebook. When Facebook started, they launched very limited in Ivy league universities in the US, eventually expanding to all universities around the world, and then eventually to the mainstream. It’s a step-by-step approach. As your company becomes more mature and your product becomes more mature you release it to more people. But then hardware also has another major difference and another major challenge compared to software, and that’s the capital risk. If you make one hundred phones, you have to have a hundred times whatever it costs to make the phone in capital just lying there, without interest and without a loan. So capital risk was very, very important for us, and for our first year the number one priority was to survive. We had no clue how many people would want to buy this phone. So when we announced the phone in April , we saw this huge buzz online and we were like, ‘Ok, I think we miscalculated the demand.’ It took three and a half months to basically catch-up to the demand, because our lead time for the display, which is a bottleneck for the entire production, is over three months. Once we were in April and had figured out that a lot of people wanted this phone, we put in more orders. We had to wait more than three months to get production close to demand. Looking back, we’re actually quite happy that we did an invite system, or else it would just have been out of stock anyway for three months. We figured, if we did an invite system, you don’t have to come back and check all the time. You’re one hundred percent sure when you can actually buy the phone. You don’t have to all come at one specific time and have the server crash, and so that was our solution basically to this risk.
TH: Are you planning on using the invite system again for future devices?
CP: As this product matures and we understand better the demand for this product, we’re going to find other ways of making it more available. For instance, in December—before Christmas and during our one-year anniversary—and then one time before as well, we had pre-orders where you could come and buy the phone. If the phone became out-of-stock, it became a pre-order. So we’re going to continue experimenting with this phone on how to make it more available while still kind of controlling the risk for us. I think in the beginning for our next devices, it’s going to be invite only for a much shorter period than it was for this phone—maybe one-fourth. Then eventually it becomes a pre-order model, once we have the data from the invites to see what the demand is like.
TH: Do you still plan to do direct sales to the customer then at that point?
CP: It depends on the market. For instance, when we entered India in December, we realized that we had major challenges. Payments in India are very complicated. A lot of people actually prefer to pay cash when the courier delivers the products. Logistics are also very, very complicated because there are so many states and it’s such a big country. So we didn’t have a good grasp on the market, which is why we chose to partner with Amazon exclusively in India. So depending on the market, we’ll have a different distribution strategy. But for the US, we’re going to continue with the direct sales to consumers.
TH: You mentioned China. Has that been the biggest market for the OnePlus One?
CP: Actually, at the end of last year the US and China were on the same level, and India in Q4 quickly rose to become number two. But if you look at the overall year, I think it’s US and China first and then UK, Canada, and Western Europe because India was only launched in December. We expect India to be actually number one this year because the traction has been super positive.
TH: Something I’ve noticed here at the show [CES 2015] is the growth in importance of the Chinese and Asian market. As I’ve been meeting with all the different vendors and seeing their new devices, other than the LG G Flex 2, all of the devices launched here for North America have been mid-level or low-end phones, whereas the flagship devices have been Asia only. I think that’s a shift. Usually all the flagships have been North America and the low-end devices have been for China. Now it seems that it’s almost flipping.
CP: That’s pretty interesting. It should be the other way around right, because consumers here have more money to buy more expensive products.
TH: Yeah, I don’t know. Maybe the North American market is saturated, or maybe consumers are holding on to their phones longer.
CP: Maybe they already have established brand preferences in North America, whereas in emerging markets you can still be one of the first companies to enter.