OnePlus: The Smartphone Industry Disrupter

Oppo is a well respected company. It has had a reputation for making quality (albeit overpriced for some) Blueray players, TVs, and smartphones. However, despite the fact Oppo has established itself as a credible smartphone manufacturer, it still has a subsidiary phone company onto itself. Oneplus was founded just last year by a former member of Oppo. And this new company has a radical idea: the best possible phone, at the lowest possible price. This is music to anyone’s ears - tech geek or not. However, the business model that allow Oneplus to still turn a profit on these razor thin margins is very unique indeed.

While behemoths like Samsung or Apple spend billions each year on marketing campaigns and manufacturing, Oneplus does not. It cuts out the marketing, instead relying on word of mouth in order to gain new customers. And it utilizes a special “invite-only” system where each person who buys a phone has 10 “invites” for others to buy the phone with. Finally, Oneplus only carries one phone: the Oneplus One (Yes, it is an odd name for a phone given the company title.). As a result, many logistics costs are eliminated entirely. Bottlenecking the supply chain ensures no write offs on inventory (I’m looking at you, Amazon Fire Phone). Every phone someone orders means that only one phone will be created to fill that order. The lack of marketing works in a similar fashion to cut costs. After all, if only a certain amount of customers have the “invite” to buy the phone, it makes no sense to advertise to the general public anyway. The entire system is quite efficient. But as with all startups, it’s not perfect.

First off, there’s the glaring issue of supply and demand. Anyone with a cursory knowledge of economics will understand that Oneplus is artificially creating a deficit in the supply chain. This might work well to conserve money, but it comes at the risk of turning customers off and right into the arms of another waiting competitor. The lack of marketing only magnifies consumer opinions. There has been overwhelmingly positive reviews of the phone, but the company has suffered for its system. Aside from the fact the vast majority of prospective buyers can’t even buy the phone, those who do have been subjected to long wait times. And there was also a massively failed attempt at a social media advertising campaign that lead many to publicly swear off the companies’ future products.

Regardless Oneplus’ missteps, the company is learning. And more importantly, it’s product is very, very much in demand. That may be all that matters.