D2C Startup WatchOut Wearables Banks On Affordability To Take On Giants In The Smartwatch Market

Watches can tell the time, but smartwatches tell us a lot more, thanks to their cutting-edge health, fitness and well-being features that keep us informed and alert round the clock. This used to be a niche segment halfway through the 2010s, and most of the tech communities (and consumers) were about to write it off as ‘superfluous’. At the time, they were mimicking too many gadgets and their functionalities instead of sticking to a core regime. But a new wave of smart wearables has taken over since as technology and creativity have been wedded to bring out personalised solutions, keeping in mind a holistic outcome. In India, too, new-age smartwatches are making waves among consumers.

The country has been home to a slew of smartwatch players, right from tech behemoths like Apple, Samsung and Google-acquired Fitbit to startups such as GOQii, Noise, boAt and WatchOut Wearables. In fact, with the homegrown market also innovating and primed to scale as validated by the recent uptick in demand, entering the smartwatch segment is getting increasingly lucrative.

The smartwatch segment in the country clocked a year-over-year growth of 139.3% with 2.6 Mn shipments in 2020. The October-December quarter (2020) also saw smartwatch shipments cross the 1 Mn mark for the first time as vendors shipped a total of 1.3 Mn units. This jump in demand is considered a tipping point compared to the year-ago number of 0.3 Mn units.

Mumbai-based Watchout Wearables launched in 2018 by Abhisek and Noopur B. is looking to tap into this rising market opportunity. The startup makes smartwatches with high-end features like gesture control, multiple biometric sensors including SpO2 and more. The company is selling over 300 units each month. 

Inside The Workings Of WatchOut Wearables

A gold medalist chemical engineer and an MBA, Abhisek saw an opportunity in the smartwatch segment when he noticed that people in India did not have too many options. They can either purchase cheap Chinese knock-offs or buy expensive global brands, which few can afford. The market lacked mid-range products with good features based on everyday use cases.

“Our story began in 2018 when we wanted to bring wearables powered by new-age technology to India and fill the ubiquitous need to stay connected. With WatchOut Wearables, we aimed to build for the new, on-the-go generation and help them stay connected using advanced wearable tech,” says Abhisek, cofounder and director of the company.

The company imports chipsets from Taiwan-based Mediatek, sources most other parts locally and also does the assembling. It also experiments with innovative and up-and-coming tech features and implements the same in its smartwatches, available in the mid-to-premium price range. It also claims to have launched India’s first smartwatch with Bluetooth-calling facility in 2018. 

Like many other ecommerce brands, the smartwatch startup offers high-end tech devices at a lower price range by taking the D2C route and streamlining the supply chain to increase margins. The average ticket size is INR 4,500, which is significantly lower than its big brand competitors. For WatchOut, the focus is on functionality and the primary differentiator happens to be a wide range of features, including IoT, gesture control, Google (voice) Assistant, SpO2 sensors for health monitoring and exercise assessment. The startup also provides maintenance and repair services.

As of now, WatchOut is selling 300 units a month and clocked a revenue of INR 1 Cr in FY21. It also claims a year-over-year growth of 135%. According to Abhisek, the next step for the company will be end-to-end manufacturing for sustainable growth. 

WatchOut’s D2C Journey

The direct-to-consumer (D2C) model is still a nascent practice in the digital commerce space, but for most brands, the journey has been a learning experience filled with challenges. However, for an early-stage startup like WatchOut Wearables, this journey has been more harrowing than most.

One of the critical issues that the startup faced was a resource crunch when it approached different platforms for greater customer reach and better sales. This essentially involved inventory stocking and all-out marketing. But the bootstrapped company could not scale up its manufacturing or increase its promotional expenses at the time. Therefore, it could not build its presence across multiple platforms to reach a wider consumer base. 

To replenish its dwindling resources, WatchOut took the crowdfunding route in October 2020 and gave people the option to pre-book smartwatches two months in advance. It was able to raise INR 16 Lakh. Besides the much-needed financial boost, it had also helped the brand’s marketing through word-of-mouth promotion. The company mostly used the funds to expand its presence across major ecommerce marketplaces such as Amazon and Flipkart and also sold its products through offline retailers like Croma, Zimson and Shoppers Stop.

But the challenges in a startup’s journey are not always operational. At times, roadblocks will pop up due to the lack of in-depth industry knowledge or zero experience in handling investors. Again, early-stage companies may not be aware of how to build brand identity or work out long-term strategies for scaling and expansion. These challenges require different solutions through hand-holding and guidance from industry veterans and institutional support from experienced players across the ecosystem. 

For WatchOut Wearables, the problem involved a deeper understanding of the D2C ecosystem for sustainable growth. More importantly, the startup was not adept at approaching investors for fundraising. The startup decided to join Rocketfuel accelerator programme of Delhi-based logistics startup Shiprocket which helped the startup in aspects such as marketing, creating brand awareness, preparation for funding rounds and equity management. 

Abhisek tells Inc42 that the WatchOut could learn and improve on many aspects such as revamping company websites, creating story decks for brand narratives, chalking out expansion strategies and more. Better still, the team managed to overcome its fear of pitching to investors with the help of mock sessions during the programme.

“It was a great learning experience. An accelerator programme helps you gear up for the world by setting your expectations right and hand-holding you in front of industry veterans and investors,” says Abhisek.

The smartwatch market of India is an emerging segment that is growing at a healthy rate. The market recorded a revenue of $226 Mn in FY20 and is expected to grow to $531 Mn by FY25 at a CAGR of 18.63%. Brands focussed in the segment have been attracting the investor for a while with startups such as GOQii and Actofit raising $50 Mn and  $1.1 Mn in multiple funding rounds. The regular flow of funding shows the confidence of investors in this up-and-coming wearable tech.

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