Abm Obaidullah is the founder and CEO of Redgreen, a homegrown smartphone brand that aims to become the Xiaomi of Bangladesh. Redgreen started small, selling tablet PCs and hardware tech products direct to customers using digital channels.
Founded in 2016, the company grew quickly and has turned itself into a popular smartphone brand. It also sells a host of smart accessories and gadgets. Today, Redgreen is a team of ten people. The company has launched three models, all of them sold well and is in the process of launching three more models by next month.
Redgreen uses digital channels and ecommerce platforms to sell their products directly to customers. In the process, the company saves cost and pass on the savings to its customers as price benefits. The company says it aims to bring-in high-quality smartphone to customers in Bangladesh at an affordable price. One strategy it applies to ensure price competitiveness is saving distribution cost by using digital direct to customer channels.
Mr. Obaidullah says that the opportunity in the smartphone space is huge. He is right. If you look at the smartphone penetration in Bangladesh it all makes sense. Affordability remains a key challenge to the growth of smartphone in Bangladesh. Redgreen thinks it has cracked the code of offering a better quality affordable smartphone.
We recently caught up with Mr. Obaidullah to discuss his winding path to path to entrepreneurship, how Redgreen came into existence, what inspired him to embark on an entrepreneurial journey, the state of Redgreen’s business today and its ambition going forward, lessons he has learned from his journey so far, why perseverance and working hard is the common thread that connects stories of all entrepreneurs and much more.
Could you please tell us about yourself and your background?
I did my intermediate from Dhaka College in 2002. Completed my Graduation and Post-Graduation from Institute of Social Welfare, Dhaka University. My school was Madanpur Rahmania High School, Madanpur. Narayanganj.
After graduation, I joined Eastern Bank Limited. In between, I also did my MBA from a private University in 2011. While working at Bank, I was up to something else because I always wanted to do something of my own.
In 2014, I left EBL and went to Australia along with my wife for higher studies. I stayed there for two years. I did my post-graduate diploma from Charlie Bell School of Management, Sydney, Australia. At the same time, I worked at McDonald's as a PQM manager.
My wife was a Deputy Director at Bangladesh Bank at the time. While we were in Australia, her grandfather died and we missed his funeral. She was shocked and deeply touched. She decided that she would return to Bangladesh for once and all because she doesn’t want to lose her relatives while staying outside. Eventually, we came back in January 2016.
I had some idea about the growing demand for hardware technology products in Bangladesh. Power bank, earphone, Bluetooth speaker was getting the hype at that time. I used to buy gadgets from eBay while in Australia. When we decided to come back, I said that if I return to Bangladesh, I would start a company.
That’s how Redgreen came into being. We had some savings. We invested that in Redgreen. My early stage and seed round investors were mostly friends and family members.
In the early days, our focus was on affordable quality technology products since Bangladeshi consumers mostly price sensitive. We eventually moved into other low-cost gadgets. We started with the smartphone at the end of 2017.
You started with importing products from China and selling them in Bangladesh using digital channels, How did you set up the entire process?
It was rather the easier part. I spent some time in research and understanding the entire supply chain before returning to Bangladesh.
The real challenge came when I started to look for setting up a formal entity. I stumbled when I went for a trade license. Opening the bank account was not easy either. When I told my bank that I was going to do both the hardware and software business, they became a bit skeptical with the software part at the beginning. It was eventually resolved when I started transactions afterward.
For distributions, I opened a Facebook page called eStore. eStore was the primary sales channel for us in the early days. The page grew fast and we currently have over 200k followers. We are now turning eStore into complete ecommerce operations.
At the same time, we developed some partnerships with companies like Xiaomi and Pickaboo. We were the official distributor of Xiaomi Eco-Product including laptops and routers at the end of 2016.
I got into my first major challenge when BTRC made it mandatory to have NOC (No Objection Certificate) for importing routers. I tried my luck for about six months in and out of BTRC to get a NOC. Finally, when I did manage a NOC and went straight to the port, I came to know that they lost the import documents. It took another three months to get the products out. By the time, I got the products out, the consignment lost fifty percent of its value. The time I placed my order for mi3C and mi3 routers, they were priced at BDT 3000 and 4,000 respectively. When I finally managed to get the products from the port, I sold them at BDT 2,000. I learned my lessons.
Working with Xiaomi and Pickaboo, I learned a lot about products and ecommerce platform. After brief market research, we opted to build a smartphone brand considering the opportunity in price, design and user experience.
Initially, we were looking into manufacturing our products but then we thought if we could bring an international brand that would make a better sense. But we knew that we needed greater control over the brand and all that.
After much work, we found a startup in China, Umidigi, a small but fast-growing smartphone brand. We spoke with them while also speaking with a few other larger brands. We shared our plan with them and they agreed to give us their license for use. Umidigi and Umi trademark belongs to Redgreen in Bangladesh.
We started working on the new business from June 2017. We started recruiting, opened a Facebook community page and then after getting our NOC from BTRC, we launched our product on 26th April 2018. We launched the product on Daraz. The day we launched our product, we sold around 200 products. Daraz was very happy at the time seeing the traction. Umidigi was a new brand. However, we manage to create the hype to attract our potential customers to order through Daraz. That was the beginning of our journey. Later we launched 3 more models in collaboration with Daraz and every time it was a huge hit.
On June 2018, I pitched at Robi. They listened to us. But they were not convinced. They told me to build at least a hundred service centers around the country first. Today, Robi is one of my best partners. Later, when we were doing well through Daraz, Robi found me out and we set up a meeting. They gave me a purchase order and we delivered products amounting to BDT 200 (Approx) million. That's how we started with Robi. We have a USD 2 million purchase order this year and we are getting another big order.
Our target is to do at least a USD 10 million business with Robi this year. Robi is one of my biggest partners. On the other hand, Daraz is also one of my big partners. Our plan with them is to sell a minimum of USD 10 million through Daraz. At the moment, Daraz and Robi are my two biggest partners.
We are a small company today but our ambition is big. We are in the process of closing our Pre-Series A. Our goal with the money is to set up a smartphone factory in Bangladesh. Our initial goal is to put together an assembly line. We are also putting investment into research and development. By next month, hopefully, we will be able to close the round.
By 2023, my dream is to become one of the top three smartphone brands in Bangladesh and #01 Bangladeshi brand and want to operate in all other developing countries. We want to take the brand in the Middle East and Africa as well. At that time, my sales target is to reach USD 400 million. We plan to raise a large Series A round a year from now to set up a complete SMT Factory.
If we continue to grow at the rate we are growing, we hope we will be the top smartphone company in Bangladesh in Sha Allah.
The reason why I took this initiative is that I think smartphone as a product is still expensive for most Bangladeshis. The standard smartphone is priced at USD 150, which is not affordable to 60% of cellphone users in Bangladesh. What I mean by "standard smartphone" it needs to have at least a metal body, shiny look, 6" or 5.5" display, 4G on SIM cards, good camera quality, one-day battery backup, etc. An average price for smartphones is about BDT 12,000, which means 60% of the population cannot afford to have.
There are four latest technologies in the smartphone industry are: 1) Pop-Up camera (Redmi K20, OnePlus 7) 2) punch-hole display (Samsung S10 Plus) 3) On-screen fingerprint and 4) Wireless charging. These are all flagship features. The minimum price for a punch-hold display is USD 600; USD 1,000 for Samsung S10 Plus.
We are the first company in the world to come up with a punch-hole display for USD 150 only; within the average price range. And also on-screen fingerprint, 48MP camera is in the process; all within BDT 7,000-8,000 price range. Our motto is to "bring in a low-cost smartphone with cutting edge technology and compelling design. Our solution is the entry-level, Premium, 4G smartphone at/around $100 with cutting edge technology and compelling design.
We already have a model, Umidigi a3, in the market with a premium 2.5D curved glass built, very much like the iPhone 10. The price is mere $94. If we talk about Xiaomi, they are offering Redmi 6A plastic built, a normal camera, IPS display without fingerprint and charging $111; Symphony is doing the same thing for $117. We are offering the best in terms of every segment; in terms of chipset, built, glass body, Sony camera, fingerprint, 3,300 MHz for $94 only. This is what we do.
We cut down on marketing costs by using social media and online campaigns. In the process, we are eliminating retail distribution cost by partnering up with Robi and Daraz platform. The distribution cost for Daraz and Robi is minimum. It would take around 25% for our competitors to do the same through the existing distribution channel.
Pre-order enables us to fund our manufacturing before delivery. We sell digitally through e-commerce directly to customers. We currently are on ecommerce platforms such as Daraz. We are also working on selling directly to our customers. Existing distribution systems of competitors are costly and labor-intensive none of which we can afford.
Until December 2018, Bangladesh has 150 million active cell phone users. 3G smartphone users are 60 million and the 4G users are 11 million. Budget is the main handicap for 3G users. They use the internet but cannot go to 4G whereas the telecom operators have 91% of 4G coverage. The only reason they are not switching to 4G is that there is no visible upgrade to a 3G smartphone (BDT 6,000) in comparison to a 4G smartphone (BDT 10,000) except for the internet speed.
If we can offer Umidigi a3, it will be the best pick for those 60 million 3G users. We are offering some additional value other than the 4G feature. This is the market gap. It has been 2 years that we have launched 4G, still that 60 million 3G users aren't going anywhere. That means there is some problem. The market size is about USD 20 billion. If we can reach only 5% of this USD 20 billion that will be a very big company.
Our life is changing. We are surrounded by apps like Pathao, Uber, Foodpanda, Handymama, Sheba, Jantrik, Daraz, etc. To properly use these apps, you need a proper 4G device. These services are now available only in Dhaka. They will eventually move outside.
I recently attended a conference in China. All the smartphones brands were there. The main theme was that all the services you design should reach the mobile. Mobile is the best terminal to connect the individuals.
Could you please give us an overview of Redgreen? How big is your team? How does your operation work?
Redgreen is a team of ten people. We have some partner factories in Shenzhen. We design the products and bring them to Bangladesh and deliver them straight to our partners - Robi and Daraz.
Most companies first bring the products, store the products and then start marketing. We do marketing beforehand. Our 80% of sales are pre-sales. This is a very economically viable business model.
We predominantly sell through digital platforms. We don’t have any retail presence. We directly sell to our customers. It allows us to save costs and offer a better deal to our customers.
Currently, we have three models - Umidigi One, Umidigi One Pro, Umi a3 and Umi A5Pro.
We have three more models coming in and we will have new products as Redgreen soon. For accessories, we are co-branding with Remax.
If we go back to 2016, you first brought in was tablet PC. Could you tell us how did you move into a mobile phone?
I intended to bring in devices and accessories which were affordable. I started with researching online. I had some of my friends overseas who helped me. When I saw the Chinese products, I understood that it was going to be popular as no one can think of having a tablet at that price range; in BDT 10,000 - 12,000 at the time.
So I had some funds from my end that I bought from overseas. I also pitched relatives and they agreed to invest. Gradually our sales grew. We successfully delivered and provided 12 months warranty as well. There was less than 2% warranty claim for tablet PC. After that, I moved to more branded accessories.
How did the business got started? How did you market that product?
I started small. First, I brought about a hundred. Once it worked, then I brought in 1,000. I mainly did marketing through Facebook. I also had some corporate clients. I sold some tabs to OnePharmaceuticals, Teletalk, EBL, One Bank and so on.
Most sales came through Facebook. People knocked on facebook. We built a relationship eventually and sales happened.
How big was your team at the time?
At the beginning, we were three people – I, one messenger and an accountant. The messenger delivered the products. I also made deliveries to the Bangladesh Bank and other places.
How did you design the marketing strategy using social media to reach out to thousands of customers?
To begin with, I made a list of my friends and relatives who are influential in their profession. The first thing I did was I tried to sell to them first. For example, I sold to a President of the one student Club at BRAC University. That opened up Brac University for me and I got many orders from there.
I still follow this strategy as it is the most proven in terms of selling a new product. People buy things when they see their friends or people they look up to are using it. You need to make it trendy.
So, you bought the product and what happened then?
I used to bring one sample first. I would post the sample picture on our page and pitch it to different places. Once I have enough orders secured, I would bring the products.
By the time you brought in the products, you had an order for a hundred products?
Before buying a hundred products, I pre-sold more than fifty. I got the money then I bought the product.
Then what happened after that?
I moved to more brand items. I had collaboration with Xiaomi for laptop, router, power bank, earphone, etc. We had an official partnership with them at the time. We are not their partners anymore because we wanted to develop our brand. We still have a professional relationship with them. This is the type of connection that will help you to grow big in the future.
In June 2017, our team started sourcing and planning how we could build a smartphone brand in Bangladesh. At the time, we had 6-7 people in Bangladesh and one team member in China.
How did you order these products?
First, I got a connection through AliExpress and I mailed him. Then he shared his personal WeChat, we talked some more. Then I visited China later.
And this is before bringing in the tabs?
I brought in the first hundred without meeting him. Then I visited China before the big order of thousand pieces.
Over this period from 2016 to June 2017, we sold other branded products as well because I wanted to get some experience in this sector. In June 2017, I decided we would go for our brand and Redgreen will be a startup for the smartphone. Following six to seven months, we collected many samples but we were not satisfied. We also thought about designing it ourselves but that did not work out. Finally, we opened a Facebook page for Umidigi in November 2017.
When I opened an LC for smartphones that was a big experience for me because when you want to import smartphones you need many approvals and documentation. Umidigi was also a startup company. They did not have many documents either. I struggled a lot. Finally, in April 2018, we brought our first consignment into Bangladesh. We had one flash sale with Daraz. The first flash sale was very successful. We never had to look back after that.
How did you find Umidigi?
I spent quite a bit of time in research. After that, I went to Shenzhen. Shenzhen University has an incubation center. I talked with some of my friends there who eventually recommended Umidigi. I asked them if they could name one startup company for smartphone who would become Xiaomi in five to ten years. They gave me two names: ELEPHONE and Umidigi. After much back and forth, we eventually decided to work with Umidigi. Umidigi is a small startup company. Even today their global team is made up of only twenty persons.
Then we bought in the first consignment of nine hundred phones and all of them were sold out within fifteen days. Daraz was very happy with the success and wanted more products. That’s how it all started.
From April 2018 till now, our journey for smartphone is excellent. Next month, we are launching one new series, Umi. It'll be the only smartphone in the world with a price tag of $150 with a punch-hold camera.
How does your collaboration with partners work?
For Daraz, I went on and pitch them. They had some compliance issues and we met them. Initially, we and Daraz were in doubt. Umidigi was a new brand and we were not fully confident that it would work out. After the flash sales, Daraz saw the traction and became happy. We also launched with Robi. I hope a big partnership with Daraz in the future.
Daraz charges you commission?
Distribution cost is only 2%.
Do you think it will increase eventually?
I don't think so. For e-commerce, 2% - 4% is global standard.
Apart from the distribution through the partners, do you plan to get into your distribution?
We are building a system where our partners, retailer, and users would be able to buy straight from our website in different pricing. We are building the system and website, and our apps will be there as well.
What are the things that you think contributed to the first flash sale success?
We had some proven digital marketing plans and strategies which I applied for Umidigi. We used the referral tactic. Started with family, friends, and relatives. These helped a lot.
Could you unbox that strategy?
Before launching a product, we first make a list of emails and phone numbers of about one thousand contacts. We send them samples and ask for reviews. Before launching any product on social media, I do this all the time.
If you could reach fifty people who have a good following on social media, they should be able to help you reach many more people. This works because people trust people. The people you are reaching out, they trust you so they would help promote your product. Similarly, people who follow them trust them and if they review something positively they are likely to believe them. This is the golden strategy.
As I said before, my first funding came from my relatives and a lead from a bank manager. I always try to show them the dream. I did the same with the individual investors I meet. This is the same for customers as well. To me, pitching my team, investors and customers are all the same.
What are the plans going forward?
We are building the Xiaomi of Bangladesh. Our new series Umi and Redgreen will be the real disruption in the smartphone history of Bangladesh. Second, the future of the smartphone is not device alone, it is a device plus services. We aim to build services for our smartphone users through building partnerships as well as building tools for our users.
We are seeing the smartphone as a platform where you could unlock an entire world of opportunities. On the product side, we plan to expand beyond smartphones into smart home appliances. These are some of our plans.
What are some lessons you have learned from your journey as an entrepreneur?
I forgot the last time when I took a weekend off. Entrepreneurship is hard. The only strategy that seems to work is working hard. At six in the morning I wake up, check my emails and start my day. I stay up a little late into the night to study and then I go to sleep. The good part is that I enjoy my work.
Building a business is about teamwork. Your team has to see and believe the vision that you see and believe. One of the most important jobs of a founder thus is telling the story.