Hammer Lost 30% of its Annual Revenue During April Lockdown Alone
The pandemic has affected both big and small players but it has been much more challenging for those with limited resources. Hammer, the homegrown hardware startup, explains the impact of COVID-19 and road ahead.
On Thursday, Vivo joined a growing number of tech companies to introduce true wireless earbuds in the country. Vivo joined other Chinese brands such as Xiaomi, Realme and Oppo to offer true wireless earbuds in the country. There is a lot of data to back this entry of major brands in this segment. According to Canalys, India was the second biggest market for smart personal audio in Asia Pacific during the first quarter. With 3.7 million units shipped during Q1 2020, it was second only to South Korea with shipments of 4.3 million units.
India is no longer the battlefield for smartphone makers alone. In fact, Canalys Analyst Madhumita Chaudhary explains that smartphone vendors are shifting to the true wireless earbuds market. The category hit 20 percent of the overall smart personal audio market during the first quarter. This is before the pandemic really hit the country and the second quarter could be much more challenging for these companies. However, what really stands out is how Indian companies are beating incumbents as well as established players in this segment.
Impact of COVID-19 on audio market
boAt, the company which promises to bring Nirvana through its devices, leads the market with 20 percent market share. It is followed by Samsung and Realme with a market share of 19 percent and 10 percent respectively. Sony and Xiaomi complete the top five list with a market share of 6 percent each. With an annual growth of 168 percent, boAt has been a stellar performer but it is not the only Indian company looking to build itself in the personal audio market. Back in April, Aman Gupta, Co-founder of boAt Lifestyle, told BGR India that the company has shifted focus to 2021 to weather off the impact caused by the pandemic.
Gupta said that the company lost revenue due to closure in April and had supply issues during the first quarter. Rohit Nandwani, Chief Operating Officer of Hammer, echoed similar sentiment while speaking to BGR India. During the first quarter of this year, Nandwani said that manufacturing of its products stopped in China due to the pandemic. He explained that this made it impossible for the rest of the world to import their stock. “We faced supply constraints due to lockdown in China during the first quarter,” Nandwani told me.
While the company was unable to get products delivered during the first quarter, the real jolt came when the Indian government announced lockdown on March 24, 2020. For Hammer, a startup in the hardware, it was a tough one. Nandwani estimates losing revenue of around Rs 1.2 crore during the month of April. He adds that the number is equivalent to 30 percent of its annual revenue. During the lockdown, Hammer says it saw its inventories pile from from countries like Vietnam and Estonia but not particularly from China.
Surge in sales from green and orange zone
However, as soon as the government lifted restrictions on non-essential goods in May, the company said it saw a rebound in sales. Nandwani confirmed that 90 percent of the orders initially came from orange and green zones even after courier or delivery started across the country. The company says that 1,350 orders out of 1,500 were from green and orange zones. “People have become more alert and are avoiding going out to buy consumer goods leading them to switch to ordering online,” Nandwani told BGR India. He further added that the company saw 65 percent growth in order compared to the same period last year.
Hammer claims to have a market share of 1.7 percent in the personal audio market. The company is now planning to double its market share by the end of this year. Hammer is particularly looking to reach 5 percent market share by the end of this year. It has selected true wireless earbuds as the growth vertical and Nandwani says the company has new models ready for the market. As Gupta explained, the fourth quarter has been a bright spot for the audio market but this year could be subdued in comparison to preview growth years.
India is going through a painful economic recovery and ICRA sees GDP contract by double digit in FY21. Nandwani says this could affect the audio market where consumers might restrict their unnecessary buying in the face of the pandemic. But there is a possibility for the audio market to supplement the increasing need for devices to keep people entertained while they stay at home. This is a market full of metaphors and it is not clear whether consumers will be willing to spend once again. Hammer says it is prepared for either scenario.
Uncertainty caused by the shrinking economy
While boAt, the benchmark company in this segment, recently entered the fitness segment, Hammer has been selling fitness bands for sometime now. Nandwani says the pandemic did not result in slowdown in sales of fitness wearables. “We have witnessed that the sales of fitness bands have increased during this time,” Nandwani told me. He attributes this growth to people opting for indoor workout, enrolling in live yoga sessions and performing in house even when they cannot go to gym. Nandwani says both the personal audio and fitness wearables market are poised for further growth but there might be a small blemish due to this pandemic.
He unequivocally told me that the audio market’s future is around true wireless earbuds. He says smartphone makers getting rid of headphone jack was the first sign and when they stopped bundling headphones in the box, consumers fully embraced wireless headphones. While wired headphones will be around, he sees their market share to shrink considerably. Nandwani did not share details about funding but he told that the company is well-positioned to manage the uncertainty caused by this pandemic. The pandemic has impacted both big and small players but established brands have much more leverage to rise up from this situation. Nandwani says Hammer remains focused on launching new TWS earbuds and expanding its market share and thus establish a firm footing in India’s growing audio market.
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