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By: Karissa Chua

As discussed in a previous article, audio quality in portable wireless speakers is a top purchasing criterion for consumers. The majority of consumers who purchase one frequently use it. Compared to smartphones, which appeal to a diverse audience, the potential consumer base for portable wireless speakers is very much targeted at millennials. To cater to this burgeoning group of technology savvy hyperconnected consumers, internet retailing is expected to become an increasingly important channel.

Internet retailing is the new standard

Audio devices such as portable wireless speakers and headphones are traditionally bought from electronics and appliance specialist retailers. Retail stores are important for consumers to physically experience the audio quality before purchasing. However, what was interesting from the Analyst Pulse survey results was just as many respondents (47%) were willing to purchase their portable wireless speakers from online retailers as compared to purchasing from electronics and appliance specialist retailers (49%).

The change in consumers’ attitudes towards purchasing portable wireless speakers online suggests a need for manufacturers to develop a robust online strategy. While going online essentially exposes branded manufacturers to greater competition from the low-cost manufacturers, it is not necessarily a bane for branded manufacturers.

Routes to Purchase

routes to purchase

Source: Euromonitor International Survey – Analyst Pulse, March 2016

Purchasing habits in developed versus emerging markets

A deeper dive into the results indicated that those who head to store-based retailers are primarily from emerging markets. This can largely be attributed to the lower internet penetration rates in these markets, where it makes more sense to head to the bricks-and-mortar stores.

When it comes to the preferred device when purchasing from online retailers, it was interesting to see a difference in consumption habits – 53% of respondents who preferred to purchase portable wireless speakers via a PC/laptop came from developed markets. In contrast, respondents from developed markets made up 47% of those who would like to purchase them via a smartphone. Consumers in developed markets could have security and privacy concerns about mobile commerce or feel that PCs/laptops provide a better shopping experience due to the larger screen size. However, in emerging markets, more often than not, smartphones are the first and primary computing device for consumers. Thus, they are likely to be more reliant on and receptive towards purchasing via mobile. Manufacturers and retailers should take this into consideration to optimise the online shopping experience for consumers in developed and emerging markets based on their preferred medium.

Routes to Purchase by Demographics

routes to purchase by demographics

Source: Euromonitor International Survey – Analyst Pulse, March 2016

What going online means for manufacturers

In markets where manufacturers do not have a strong physical retail presence, internet retailing will open doors without high overhead costs. The challenge will be for manufacturers to demonstrate the audio quality of their speakers (a top consideration for consumers) online. Global brands such as JBL, Bose and Ultimate Ears tend to have an edge over low-cost options due to brand loyalty and consumers’ trust in the audio quality of their products. Working with online retailers to offer recommendations and support to consumers during pre- and post-sales will also be important in creating clearer distinctions and differentiating themselves in the sea of low-cost options. Manufacturers will also need to be selective about the online retailers they are partnering with and how they are working with them in order to strengthen their brand image as a credible company that prides itself on high-audio-quality products.

Aspiring companies looking to enter the portable wireless speakers market will need to build up their credibility by working with established technology partners such as DTS or Dhoby Laboratories to provide a more premium audio quality. A good example of this would be Huawei’s recent partnership with premium camera manufacturer, Leica Camera. The partnership will boost Huawei’s brand image and credibility in the high-end camera phones market by leveraging on the quality of Leica’s camera lens to place it in a better position to compete with the likes of Samsung and Apple.

Branded manufacturers stand to gain

The growing preference for portable wireless speakers with higher audio quality would likely lead to greater consolidation in the highly fragmented market and change the tides in favour of the branded manufacturers. However, branded manufacturers will need to adapt to a shift in the way consumers are shopping for portable wireless speakers, particularly with the growth of internet retailing, to properly exploit the growth opportunity.

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