Every Indian has a personal audio device in their pockets: Raghav Somani

Headphone Zone’s Raghav Somani says music is a sensory experience. Out of this belief, he built Headphone Zone back in 2011. In a conversation with Retailer, Somani says Headphone Zone is now targeting to grow its business 200% in the next one year and 300% over the next two years.

Edited excerpts:

How potential is the segment you are working in? I understand there is no specialized player like you.

But do you think, this category can turn viable in business terms in say 5 years down the line?

Indians love their music very passionately, and with the smartphone boom, every Indian has a personal audio device in their pockets, transforming the way we consume music, movies and content every day. The only missing link is the headphone.  So in many ways, the market for headphones and earphones has the potential of reaching every smartphone user in India which stands at 300 million active users growing at 27% year-on-year.

Headphone Zone (www.headphonezone.in) is India’s first exclusive online store for headphones, earphones and audiophile devices. A retail concept combining music, electronics and style, Headphone Zone aims to find a niche in the rapidly growing category in India’s e-commerce space. A destination store for discovering the world’s finest headphone brands, Headphone Zone focuses on bringing the best music listening devices from around the world to India’s passionate music listening population.

The Indian e-commerce market is constantly growing. By 2020, India is expected to generate $100 billion online retail revenue and unsurprisingly, consumer electronics and apparel are the biggest categories in terms of sales.

Going forward, we’re currently targeting higher sales but at a slower growth rate. Headphone Zone is targeting to grow its business 200% in the next one year and 300% over the next two years. Headphone Zone remains a nil debt, non¬-borrowing, 100% family equity funded business, so maintaining profitability to reinvest capital in the remains key for now.

How do you map the demand of the market for your products?

There are several macro-trends that are unique to India - its large population. Nearly two decades of steady economic liberalisation and a fast growing middle class. What this essentially translates to is a growing demand from a large population for aspirational products, brands and services. Right from Ferraris and Harleys, to branded shoes, clothes and groceries, the Indian market’s wide base was quickly growing an appetite for all sorts of goods and services.

Perhaps the most appealing aspect of the Indian market is its fast growing adoption of the internet. India is the second largest number of internet users, ahead of even the United States, even though only 15% of the population has access to internet. It also helps that India has amongst the largest English speaking populations in the world, so the vast majority of the content on the internet is consumable by Indians. India has more Facebook users than any other country. Interestingly, the smartphone is the primary browsing device for most Indians.

What are your retailing points?

Headphone Zone maintains a simple online retail business model of procuring products from international brands and manufacturers and fulfilling orders using India’s various logistics and courier solutions. Headphone Zone has partnered with online e-commerce marketplaces including Amazon, Flipkart and Snapdeal to use their platform and reach with moderate success.

Which channel is more viable for you? Is it the online or offline channel?

The online channel is definitely more viable typically because of the nature of the business that we run.

When we first started, I was simply distributing and wholesaling headphones and earphones to organised retail chains in India mushrooming all over India’s malls and high streets. Everyone from Croma, Reliance Retail and Big Bazaar were convinced that the headphones category had a large demand.

But the biggest problem? They were terrible at selling good quality headphones to an average Indian consumer. Most had no idea how to even begin. Lack of information and passion for the product, coupled with the lack of priority for such a low ticket category meant that consumers had a lousy experience in-store and simply bought the cheapest earphone they found. That’s really where the opportunity for Headphone Zone emerged.

The decision to use the internet as a marketing and sales channel for headphones and earphones really came a few years later from the growth of e-commerce in India.  We found that our target audience, passionate music listeners who are interested in high-end headphones and earphones are beyond just Tier I cities like Bangalore, Mumbai, Delhi, & Chennai and include Tier II & III cities like Ghaziabad, Vadodara, and Trivandrum. Traditional brick & mortar stores or existing distribution channels were simply inadequate.

Buying a headphone is a sensory experience, and being able to listen to headphones is certainly extremely important.  Keeping the same in mind, we started our Home Audition Program. The Home Audition Program by Headphone Zone is your chance to try expensive audio gear for 5 days by simply paying a security deposit.

Therefore, with Headphonezone, you can choose from a range of brands, from the comfort of your home, without missing out on the personal listening experience that is offered at a store.

So far, how successful you are in achieving the demand supply gap in this category?

India is the second largest number of internet users and the smartphone is the primary browsing device for most Indians.  With the smartphone boom, every Indian had the means to consume content of all kind - music, movies, TV, all from their pockets. Subsequently, the online streaming platforms grew largely influencing the growth in the demand of earphones and headphones. So far, we have tried our best to tackle and be at par with the market demand but keeping up with the pace of growth will always be a challenge.

From selling just about a 100 units per month to 5000 per month, we have certainly come a long way. But the market opportunity will always remain large and significant because of the demand supply gap.

Do you also manufacture the products that you retail, or you source them? If yes, from where and how?

No, we do not manufacture the products that we retail.

Headphone Zone works with 45 brands directly from all around the world and we source the products from the brands directly or their authorized distributors in India.

Who are the retail partners for your products?

Headphone Zone has partnered with online e-commerce marketplaces including Amazon, Flipkart, Snapdeal and Paytm to use their platform and reach with moderate success.

Do you also have exclusive partnership with any retail channel?

No, our primary retail channel remains our website.

Going forward, what would be your future plans?

Our aim is to take the Headphone Zone experience to the length and breadth of music listeners in India. We plan to remain focused on headphones, earphones and related accessories as a category and maintain its niche while making available several new prominent high-end international headphone brands in India. Building a strong audiophile community in India is key to maintaining an audience for its products and Headphone Connect meet-up events are planned for several small cities and towns where passionate music listeners can experience a wide range of high-end headphones and earphones.

That we’re in the headphones business, will certainly allow us a lot of headroom to continue growing, as India’s appetite for listening to music is virtually unlimited and virtually untapped. The key for me, will be to be able to continue giving our customers the experience they’ve come to expect from us as we scale up.

Going forward, we’re currently targeting higher sales but at a slower growth rate. Headphone Zone is targeting to grow its business 200% in the next one year and 300% over the next two years. Headphone Zone remains a nil debt, non¬-borrowing, 100% family equity funded business, so maintaining profitability to reinvest capital in the remains key for now. Raising capital should probably become a major priority in a few months time as we outgrow our current scale.