Transcription
A lot of consumers today repeatedly say that, "I'm proud of owning an Atumbuk fan." All said and done, we have sold around 10 million fans, and so we're present in almost around 78 million homes in India. You have to communicate the value and also deliver the value. You get 1,500 rupees saving every year. So the fan basically pays for itself in 2 and 1/2 years. The way to reduce cost, possibly how we think of reducing our service cost, is reduce the failures. Today it is 2%; why can't we bring it down to 2%? He himself would have told more than 100 people about the product. He set us a corporate stall where he was working that resulted in 200-300 fans selling out in a single stall. Your existing consumers, if you solve their problems very well. No one does better marketing than what these people would do.
Super excited to have uh Arindam with us today on the first check show. Uh Renam is a founding team member and chief business officer of Adamberg. Uh we like to call Adamberg the Dyson of India, but some people know Adamberg as a fan company. Uh he spent the best of the last decade building Adamberg as a brand. Uh thank you for taking the time to be here today. We have lots to unpack together. Uh but just maybe start with a little bit of an introduction from yourself on Adamberg and what you do today.
Well, thank you for having me here; it's a big pleasure to be here, and Jungle has been a big partner for us in the growth journey. So, pleasure to be here. So, if you introduction, so I'm originally from Gojhati. So, did my schooling there and then traveled the country. So, did my graduation from Surat, my MBA from Indore, and then I was working as a consultant for about 18 months. And when I was working as a consultant, I realized that somehow doing gives me more of a bigger high than advising because there you are not seeing the results of your efforts. So it was very clear that this is not something that I want to do for the rest of my life. And I think at that point Shiva and Manoj were also just starting off. They just built the first prototype of the first fan. The production wasn't happening at that point. When they—when Shivan reached out, he said, "We're doing something." What year was this? This was 2015. Okay. Yeah. This was mid-2015. Exactly 10 years back. So amazing. And so he said, "We we just have a prototype, but I think this can become big." And so at that point I didn't understand anything about the product or marketing or this thing. But I just knew—I knew them. So I knew the people and I thought, "At worst, what will happen? We'll have fun for some few months, and then we'll go back to our ways. At best, we could build something really great," and for like we happen to get lucky, and so I think that's that's there at when when I started there were nothing right, so I was possibly the first person to be there other than—and there were a couple of people who were like there doing production and all at that point of time. So in fact, the first week that I joined I was on the shop floor; I was manufacturing the fans myself. So because there were no—there were some seven or eight people who were there, and our manufacturing setup was a small 3BHK type setup like converted into an assembly line. This was in Navi Mumbai, and so it was a full circle. So first you do some manufacturing, then you figure out where do you sell it? So then you start figuring out who all can buy it. So we did a lot of B2B sales at that point of time. Reached out to lots of schools, colleges, hospitals, etc. And and then once you sell, you also figure out how to do the collection. So lots of stories there like how like how do you get the collection, get the money from those people.
Yeah. So the first one and a half years the brand was mostly focused around B2B sales. We did a lot of schools, colleges, hospitals. In fact, we found our earliest product-market fit in the ceramic industry, which—because these industries were using a lot of fans, like thousands of fans in each of their factories, and for them electricity was their biggest raw material cost, and because our fans happen to save a lot of electricity, like they could understand the value of the product more than anyone else. What we did smartly at that point of time was we—we didn't try to do too many things; we figured out, "Okay, this is one market who who likes our product; let's get deeper into that." So in fact, I spent a lot of time in those days in Sorastra because most of the cluster is there. So I think for the first one and a half to two years we did this, then e-com was just taking off at that point of time, 2015-16, so we listed our products on Amazon, Flipkart because I think those were fairly even level playing fields for everyone, so we did that for about like two or three years, and then like 2018 onwards we started expanding offline, so built out the entire—had distribution brick by brick, counter by counter, city by city. Today we're present in 35,000 plus counters, and simultaneously also the brand-building journey also started like around the same time, 2018-19, like we built a lot of expertise in building a brand using digital as the first media; like we we have always been a digital-first brand. So leverage the power of digital not just to increase sales from the D2C website or sales from the marketplace but actually leverage the power of digital to build a really like sizable brand which is actually influencing offline demand as well. So I think yeah, broadly that's been the—that's been the journey. Over the course of then the last couple of years we expanded into other categories; mixed the second category which has picked up some traction in the last few months. Yeah. And the intention is to build more and more categories in the near future and build a company that Indians are really proud of. I think in consumer durables, I—I don't see people are generally proud of their consumer durable that they own. But a lot of consumers today repeatedly say that, "I I'm proud of owning an atom fan." And I think if you can replicate the same thing across categories, I think that will be something like worthwhile.
And and tell me like, you know, you said people are proud of owning an atom fan. I want to talk about that brand-building journey you talked about. What was the difference pre-2018 when you really went offline, when you weren't offline in your distribution, and after you went offline in that brand building? You didn't talk much about it before; B2B sales sounds like the logical approach to take for the type of product that we have.
Yeah. Yeah. Uh but how are those two different?
Yeah. So I think see, most importantly, right, so in in today's world we live in, right, so one channel influences the other. So before we are offline and why we went offline, I think there's a story behind it. In fact, at that point, a lot of the investors that we were meeting or anyone that we were like who was advising us, the only advice was, "Don't go offline, you will"—because no one has—no new-age brand has been able to build a very strong distribution setup offline, like very, very few examples. If you look at the last 10, 15 years, and and they were right. I think it was not easy. But why it was important for us was because a lot of consumers were saying, "I really liked your product. I saw your ad. I liked your product. I came to your website. But for buying something like this, I have my preferred set of counters because—who—because they give me the assurance what kind of service you would get and all of those, right? If I buy online, what happens if service doesn't like happen?" And I think in 2018, getting this feedback again and again. The second thing was you also need to understand what the consumer journey is. So only about 10% of the people at that point of time were actually researching online or looking online when they're thinking to buy a fan. And typically what is happening is if you want to buy a fan, you would go to a shop directly. You'll go to an electrical shop. So if you're not present in an electrical shop, you are not even in the consideration set for for purchase, right? So naturally, if we didn't go offline, it would have limited our TAM. So I think that was one of the reasons why—why we went offline, and the big difference was we started seeing the synergies, saying by present—by being present in so many counters it solved for trust. It also solved for reassurance for the consumer. So when the consumer gets to know from the retailer—when the retailer says—so that solves for everything. No amount of ads can solve for it. I think ads can generate a lot of excitement, saying, "Okay, this is a very good feature; this is a very good benefit; this this is exciting; let me understand more about it," but that—solving for trust, that solving for reassurance from known people like electricians, retailers, etc. We also have had a very strong electrician program running since 2018-19. So I think all of those like really helped us, and that is when you see the power that 1 + 1 is equal to three, where the synergies kick in, where your online is generating your offline demand, your offline is solving for trust. So your actual conversion—say, for example, previously 100 people would have seen your ad, maybe two people are purchasing; maybe today, between both the channels, four of them are purchasing, right, just by like being the—by being available at the right set of counters.
Yes. Yes. What is the electrician program? I'm curious to learn more about that.
Yeah. So again, when we expanded offline, right, so the first set of people who were very cynical were electricians because they had not seen this technology, so their first response, "I don't know about this," and that was creating a lot of doubts in consumers, right, and so we started speaking to these electricians and and all of those. So most companies run electrician programs wherein they just incentivize electricians, saying, "If you like sell this wire or this switch, you get some 5 rupees, 10 rupees, whatever." But when we spoke slightly deeper with electricians, there's a very strong insight that electricians consider themselves as engineers, right? They do not consider themselves as a repairman—as a repairman or so—if you generally—if you club them with a carpenter or something, they'll feel very unhappy about it, and that was our core insight, and we said, "Okay, let's build on it; let's start educating them about BLC, about how it is the future, like what it does," and they started taking a lot of interest. So we do these nukar mates wherein normally nukar mates what they do is they would just give one samosa, chai, and then some gifts and say, "You go and sell our product in our event." We actually open up the motor, show them the motor, how the motor works and all of that, created a lot of excitement amongst the community because for the first time there's a brand which was actually treating them as engineers, like was actually respecting them, and very soon in the next like two, three, four years, I think they became advocates of the brand; I think despite we don't—we hardly have any incentives or this thing, but they became advocates, saying, "It is a very good brand," and also they also started seeing the brand more and more among their consumers and all, so the reassurance when consumers started getting from electricians. I think that helped a lot in again in conversions and making marketing more effective in general.
Amazing electrician program. I never thought you guys had—had built a platform strategy around that, but you know you said something earlier around a consumer being proud of having an atom fan, right? Like—like how did—how did we get to a point where a utility appliance like this in the house—like what were you able to do from a product or brand creation perspective to where that nuance came into the consumer's mind that, "I want a particular fan that has—that is more automated, that has a remote, that saves electricity"—like when did this happen? Is this a function of time and brand and product, or is it—is it one more than the other, or what are your thoughts on that?
No, I think most importantly what was happening was before Adamberg the fan industry had not seen any innovation for decades. For the last 40-50 years, the industry didn't see any kind of innovation. So all you had the same form factor; everything was the same for the last 40 years. What innovation has there been in the fan industry, like would you say prior to you guys coming in? Was it nothing?
No, nothing much; no, even remotes were not mainstream. So I think maybe some—some ad hoc parts like here and there, but no one—it wasn't mainstream.
Yeah. And so I think the only innovation that had come in the industry in the last 10-15 years before Adamberg was—was not an innovation of the fan industry, but it was actually innovation of the paint industry, and they were marketing as anti-dust fans.
Okay. So it's very unfortunate and like—so one of the categories had not seen any innovation, and the moment we—we came up with a design that actually spoke to the modern consumer—like if you look at our form factor, the compact motor—so in fact, our fans are the world's most compact motor—when we launched NSI in 2018, I think that was the—that was the world's most compact motor fan; it completely reimagines how a fan looks like, and the moment you do that, right, that becomes a talkable thing that generates—it's conversations. You go to someone's home, you were sitting in his drawing room, and you see a fan that doesn't look like a fan. You see the fan which is controlled by a remote, and it generates conversation, saying, "What—where did you get this? Where did you get this?" And that's when our—our consumers got a chance to boast about the product, saying, "This is what—this is a new thing," and they were early adopters generally and like they also started speaking about the fan saves a lot of electricity, which actually does—which is the main—which is a rational reason for for a purchase, right, but because of the design, because of the entire UX, like this thing, and also the after-sale service that we give—so in electronics any—again, 2-3% people have failure, but we have always treated like after-sale services very, very core to us to ensure that our problems get solved in 24 hours, 48 hours, even if it means a lot of cost at our end. We've always looked at it as a marketing cost. So overall things, right, the design, the UX of using a remote, the UX of using an app, very, very unique-looking products which seamlessly blends with your interior, with your modern interiors and all of those. So that is what actually makes a lot of consumers say, "We are really proud of owning—owning this product." Like you say that you are proud of owning many things, right? For example, a phone, iPhone, or or many of those things. So I think—so I think that's—that's—that's what has worked.
And was it—was it a challenge to be at a slightly more premium price point as a result of the technology and the energy efficacy that you brought?
Of course, it was very challenging, and and how do you—how do you get across that hump? So the only thing was again a big realization, and I've been speaking about this for the last four or five years, that the Indian consumer is not price-conscious but value-conscious. So you have to communicate the value and also deliver the value, and I think we're able to do both of that fairly well. So I think through our communication, whether it's digital ads or anything that we do, I think we're able to communicate—what would you get in return of paying 3,500 for a fan? You get 1,500 rupees saving every year. So the fan basically pays for itself in two and a half years, right? You get a remote control which gives a lot of convenience; you get designs which makes people go wow, and when you combine each of these three things, I think it becomes a fairly strong proposition, and one thing is communicating, the other is delivering; people are actually—the people who have installed four or five fans in their homes, they could see 500 rupees reduction in their electricity bills every month, so the moment that happens, when value is communicated well, value is delivered on point. I think that's when price becomes slightly less of a factor. Of course, it's still a factor. If not for price, maybe would have been 3x the size today if we were operating at all price points. But I think because we want to stand for something, I think that's something that we cannot do.
Yeah. Yeah. And you said something around uh customer service and support being more of a marketing channel.
Yes. Yes. Is that like—when did that happen? Was that always from the beginning?
That was always—that was always from the very beginning. And it's a very interesting story how it started. So in the—in the initial days when you just launched a D2C website in 201—like 16, I think early 2016, there was one gentleman who ordered two fans from us, and because it's very early days of a beta product, like the product failed. So the product didn't work as expected. So we sent him a replacement; that also failed. So after that, what happened was our engineers actually went from Mumbai to Bangalore. So he was an engineer—to make—to understand what was happening, changed everything that was needed to change, and that person became a proponent of our product, and he himself would have like told more than 100 people about the product. He set us a corporate stall where he was working that resulted in 200-300 fans selling out in a single stall, and that gave us—that gave us the pointer, saying, "Your existing consumers, if you solve their problems very well, no—no one does better marketing than what these people would do."
Yeah. And also because historically these people have been cheated by a lot of legacy brands wherein everyone says the customer is a king, but in India, unfortunately, the customer is the king until—until—until and unless the money changes hands. The moment your money changes hands and no one cares about the consumer—more—at least most brands don't—like and they think of it as a cost center and try and optimize cost as much as possible. So I think that was a big learning, and then it became institutionalized, saying, "Key, the benefit of the doubt always has to go to the consumer; the consumer's problems have to be solved in the best possible way in the lowest possible turnaround time, and even if it means it incurs slightly higher cost, that's fine; the way to reduce cost, possibly how we think of reducing our service cost, is reduce the failures; today it is 2%; why can't we bring it down to 2%?"
M. So that's the way to—instead of saying today you are spending—if you reduce your fulfillment from 24 hours to 48 hours, of course, that will help you in reduction of cost because you don't need the same kind of supply to ensure a 48-hour TAT, but we would never do that; we would instead say, "Let me give the service in 24 hours," and the way to reduce the cost would be by improving the quality even further so that the—we don't need so many—so many service calls.
Yeah. Yeah. And do you see that now that you have gone from not only selling fans but into other home appliances, do you see, you know, the returns on that investment in terms of thinking of customer support as absolutely 100%? You're seeing a lot of your customers cross-sell into—
Absolutely. Absolutely. So any new category that we—we haven't launched a lot of categories, but mixer—say, for example, 80% of them are fan users, so like—so the brand is introduced through fans; they get a wow experience with our fans, both through product as well as service, and that is what is going to drive a lot of the other categories because all said and done, we have sold around like 10 million fans, and so we're present in almost around 78 million homes in India, so which are again the most—most of the top-tier homes like which would be there, so of course that helps, and you know the second biggest uh category for us is the—the blenders, mixer grinders—mix grinder—uh, what can you talk a little bit about the journey to product-market fit in that category versus the first one with the fans from a time perspective, from what worked, what didn't work?
Again, it's still under process, so I don't think we have ever—like we have still crossed the—crossed that stage where we can say it has been a like a big success and and this thing. I think it's still early days, but I think couple of learnings: the first learning was like every category will have its own 0 to 1 journey. So you cannot underestimate it, and you cannot underindex management bandwidth. I think that's a mistake that we had made when we launched the mixer grinder, and there was some issues with the product. Then again, we had to take it off and do a complete relaunch. So that took us around one and a half years, and again that—the biggest learning was it's 0 to 1; you cannot—you cannot like dilute the focus; you just because it is 1% of your revenue, it doesn't mean that it will be only 10% of your bandwidth, right? So there will be disproportionate bandwidth needed to—to drive—to drive any of the new categories. So I think that—that was a big learning. The second, of course, was you need to solve a consumer problem, and I think—which—which I think which the learning we had gotten from the fans and—we have taken it here, and again because here also we are challenging established category codes; in fans we have challenged established category codes. Whenever you challenge established category codes, it takes time because here we are challenging—people historically have bought mixer grinders in India on the basis of wattage. Panso wattage to sat—whatever; more wattage means more premium, which is absolutely stupid in—because it depends on the output parameter. What is the input parameter? So because we have a more efficient motor, so we are able to deliver a higher output at a much lower wattage, right? So that itself became a barrier because you have—but we are trying to change the category codes because again, mixers have always been sold on wattage. We said, "Key, ultimately we're making food, right, and what's important—most important thing in food is taste. The thing that affects taste the most is texture, and texture is what we can provide the best." In addition to texture, the entire UX of safety, the looks—is the one of the most compact mixer grinders like that you would find, the interfaces that you see, how you use it, all of those things. I think when you combine all of those together, I think that becomes a good—good proposition. So I think the broad learning is again when you're challenging category codes, I think we've seen in Fan, it takes time. So fan also we—our inflection point came five years after we launched. So in fact, I still remember pre-COVID we used to do 5 crores a month. So March 2020 our revenue was 5 crores a month, and in three years we had 100 crores a month. So amazing, but it doesn't mean all the effort has—like work happened in the three years, but the work was always happening. So I think same for mixers as well. I think a lot of work has happened in the last two or three years. Now we understand the category a lot more deeply. The product innovations are coming out are like lot more deeper—solves deeper consumer problems, and the portfolio will come—we still have a single product—with a single product we have like managed a single SKU; we have managed a fairly decent scale; it's there among the top 10 products on Amazon already, like despite selling at again a very high premium compared to the category; it's again indexed to a 2x premium to the—to the category, very similar to fans, so—so I think yeah, broadly—broadly that's been the journey with mixers and broader differences with—with how—the only benefit that we are getting is when we started fans at—
Unknown brand. Right. So that makes like life slightly easier with our like trade partners, with our ecom partners, with with demand genen, because here you only have to sell the product; the brand—a lot of people are already aware of the brand. When you're selling fans, you have to sell both the fra product as well as the brand.
Yeah. Here the trust deficiency is not not so high. I think yeah, broadly, broadly that's—and you know you put out some you put out some content uh a couple of months ago talking about, you know, it was I think it was you were talking about product market fit, but you were really trying to steer the conversation more towards a price and a channel, right—market fit, right—and and as you reflect on the Adamberg journey, right, can you talk about that price channel market fit for Adamberg online and offline, right, right—and and how that mix shift is changing as you're moving into new appliances?
Yeah. Yeah. So again, because of India, right, again there are three aspects: price, channel, and market. So say for example you talk about market, right? At very very strong product market fit in Kerala, we have 30% market share there; in some states in north we still have 2% market share. M, it's the same country, like very similar GDP per capita like states when I'm talking about, but it's also because what appeals to a lot of people, right? So what is important you need to understand like what what kind of product designs people are liking; people's aesthetic choices are very different, as you—so the first part is the market part, right? Second, again is price. So price is something that we test out; say for example, it's unbelievable—for example, something will not sell at 7,500, but the moment you make it 69, it starts selling. The conversion rate impact that you see the moment you reduce price by 400, 500 rupees is huge. So, we also, whenever you launch any product, we'll do a lot of testing, price testing online to figure out what is the right price at which my acquisition costs make sense. Sometimes you're able to reduce your CAG by 1,000 rupees by reducing your price by 300 rupees. So or or vice versa, right, in in in fans as well. So you are able to, by reducing your price by 100 rupees, you're reducing your CAG by again 100 rupees. So so you need to figure out what at what price the product has a market fit. Of course the markets are also different in India. I think that's also a challenge. And the third, of course, is the channel. So like our entry-level fans do a lot better online. Our most premium fans do a lot better offline. It's also because, for example, most of the fans, the our fans which are prices around the 78,000 rupees, why they sell offline is these are very architect and interdriven fans, and no architecture interior designer wants to select a fan without actually seeing the fan in person or how it looks like and and and all of those, and they also have their preferred set of retailers to buy from.
Mhm. So that's a case of a channel product channel fit. So the first was a product market fit. The second was a product price fit, and this was a product channel fit. So you have to like, similarly, if you launch a very expensive product online and you say it's not selling and you decide the product product is a failure, that's stupid to to do that, right? So so I actually coined this term called product price market channel fit, and we we do this like a lot. Say for example, whenever we launch launch a product online. So our like northstar metrics are that conversion rates after a point of time needs to keep improving. Organic discoverability of the product on the platform needs to increase beyond a certain threshold, and ratings and reviews need to be beyond over a certain certain threshold. Only if all these three gets hit that means the product has a PMF at least on online.
Mhm. And same for offline as well. So in offline what we'll do is we'll we'll launch the product in a set of counters. Say for example, I launch in 100 counters. We have our benchmark saying after a month so many counters should buy again from me. That means the offtake is happening, right? So say for example my benchmark would be say 40% repeats in month one, 70% repeats in month three. and and and um you know what what advice would you give early stage D2C founders in that 0ero to 1 journey trying to build a brand at the same time and on the path to finding early product market fit, resource constraint—you're operating in an environment where you're you're trying to optimize your acquisition cost for a customer; it's getting more and more competitive—any tips, hacks, things that have worked or things to avoid based on your experience? I know a bunch of these guys come to you for advice, follow you on LinkedIn. So I thought let's try to distill some of those while we have you. So like two three things, right? So one is always overindex on product. I see a lot of people who are more worried about distribution, marketing and all of those things. But all of this doesn't matter if you have a product that people don't like or they don't need or they don't want. M, so I think that's the first and the foremost that you should have a product that that does something and people who are using the product are are liking the product. So I think that overindexation on product is something which is extremely critical whether you are building a chocolate or you're building a chocolate—you need to make the best possible chocolate which is best tasting chocolate or whatever, right? Then you can figure out everything else on top of it. So you're making a fan, you need to make the best possible fan and then over and above that everything else works. In today's world where there is no information asymmetry, you cannot build a large brand by selling a mediocre product. Maybe you can do it only if you're playing in opening price points. So say for example, you sell sell a fan at $9.99 and it runs for say 2 3 years. Maybe that maybe that works. But again that's something that I have not done and I don't think any new age brands try to do that anyways, right? So they always come to try and do in a different aspire for a differentiated play with again because most of the profit pools always lie in in the upper higher higher price point products, so I think that is the first thing because because of there's no in information asymmetry—the ratings and reviews are there, social media is there, word of mouth is there—word spreads along saying this is a mediocre product and this is a good product, so you need to have a great product and I think that's the number one advice. The number two thing is till the time you need to be very honest with yourself whether you have PMF or not for a certain price and a certain channel, and if you do not have PMF, do not go further—come back to the drawing board, figure out the tweaks that you need in your proposition, price. Yeah. Get to PMF and only then scale. The third would be not to do too many things too soon. Say for example, say mixers for example. For us it would be very very easy because we have a fan distribution. We are present in all cities. It would be extremely easy for us sitting here today that we we have 400 distributors in fans. I can easily build them each 100 mixers each—get to a huge revenue spike in 2 3 months.
Sure. But that doesn't solve anything because till the time I understand how strong my my PMF is in each of these channels, each of these markets and till the time I have a demand generation plan for that market for the micro market, it is absolutely pointless for you to expand and just show revenue for a few months because all of this is supposed is will crash, and we have seen this multiple times with multiple brand that this happens and this is very painful if it happens. M, so while expanding offline, while expanding channels, you should be very very careful saying like now is the right time because it's easy to open a channel, it's easy to open geographies, but it's very very difficult to scale them profitably, so so I think yeah, broadly I think these three—and some of these we have learned the hard way—for example like we opened our north market before we are ready, and even today in—what do you mean before you're—M, because we didn't have a demand generation plan there. So what happened was we opened the market, we found subpar distributors because we are not ready, the brand was not known enough in that market, the subart—we we put our fans in few retails counters, the sellout didn't happen in the market, people thought this was four or five years back, but still that lingering impact stills there and it sets you back by few years every time you do that.
M, so you had to kind of reverse that.
Yeah. Absolutely. When you went back into the market and that was much more difficult than if you would have started with a fresh territory.
Right. So and in offline it's very very critical to not launch till the time you have a proper scale up plan. Yeah. And the resources to to do it. Many people do this, right? So they would do random ATL campaigns. You will do a 5 crore campaign this year, and of course it will not happen because you have to sustain it. Yeah. If you do not have the budgets to sustain it for 3 years, four years, do not do it. Instead, spend it on something where you'll get immediate results.
Yeah. No, amazing. This was a lot of fun. Thank you so much for uh taking out the time to do this. I think a lot of the early stage founders uh that we meet who are doing anything on the consumer side always look up to you guys. I think you've uh crafted your own way uh you know whether it's the sophisticated product and technology or the brand reach. And it's just incredible that uh you've been able to you know distill some of the last 10 years for us in this session. So thank you so much for doing this.
Thank you for having me. I love really enjoyed the conversation.
Yes. Thanks a lot.