The same question has crossed everyone’s mind – how can OnePlus manage to sell a device with impeccable specs, great build quality and awesome looks for just $300? Surely, there must be some kind of secret behind it. Either that or every other company is just ripping us off!
The main reason
It turns out it’s completely the opposite. Companies are ripping no one off (at least not as bad). In fact, OnePlus is selling the device for less than it costs to manufacture it. OnePlus CEO Peter Lau has recently revealed that they are selling the device at cost.
“We are selling the phone at cost. We are able to do that by redistributing our costs to better benefit the user.” -Peter Lau
Now, is this the best move for a new company (even if backed by OPPO)? We are no business experts, but it sure sounds like a bad idea. Other companies have been able to take on this approach due to their ability to make money in other ways.
Amazon, for example, sells some Kindle Fire devices at cost, but that’s because they count on users purchasing music, apps, books and more. Likewise, Google makes money off Nexus devices via advertising, media purchases and more. How will OnePlus make money?
Marketing is expensive!
The big manufacturers spend millions upon millions in marketing. This doesn’t come cheap, and it all hast to come out of our pockets. OnePlus is further able to afford giving us this price by getting rid of marketing costs. They solely rely on social media to get the word out.
“Rather than put money towards a large marketing budget, we are focusing on online marketing and community interaction. Rather than working with retail partners, we rely on selling the device online.” -Peter Lau
That’s another important point: OnePlus sells you the phone directly via their website. This means the company doesn’t have to deal with third-party retailers and their fees.
Now, this can also be a bit worrisome. OnePlus was only to ship 100 devices this month, and they weren’t able to do a great job at that. Packaging was horrible and the first customers got no cable, sim card tray opener or even a retail box. They literally could only send the phone and a thank you note.
Sometimes less is more
OnePlus doesn’t need to worry about selling its smartphones right now. The company doesn’t need to keep thousands of smartphones piled up in a warehouse. They are selling these devices as they come out.
Demand is very high and OnePlus’ invite system keeps the money coming in with no delays or discrepancies. This means the company is taking less risks and there is no over-production dangers.
The power of Chinese manufacturing
Even without considering all this, Chinese manufacturers have labor power and affordable manufacturing in hand. There is no need to export, import, or even hire third-party factories sometimes. There’s a reason why other companies come to China for the work, and it’s all about affordability.
We have seen Xiaomi, OnePlus, Oppo, Huawei and many other companies do wonders. Even if the OnePlus continues to be an oddity, these affordable phones with capable performance are not rare in China.
[Via Tech Radar]