XTouch, a Dubai-headquartered consumer electronics brand, has launched the wireless charging XTouch X. Released first in the UAE, the budget flagship smartphone is available in gift and standard package options. The Dh819 gift package includes the XTouch X smartphone, wireless sports earphones and a wireless powerbank charger. The standard package, which doesn’t include a wireless powerbank, retails for Dh699.
The company has also launched an e-commerce platform which provides special offers, including a free shipping and repair service and – in a first for the mobile category – the ability to pay in instalments to targeted customers, facilitated directly by the company through its new portal, Xtouchdevice.com. Students and people earning less than Dh5,000 are eligible for XTouch’s new instalment plan, which allows them to pay 50 per cent upfront and the balance over three EMIs. Unlike other instalment schemes, which tend to apply to large purchases over Dh1,000, this one requires no credit card details or other collateral, just a copy of the purchaser’s student ID, Emirates ID and/or payslips.
The 5.8-inch XTouch X has 2.8D curved edges on a slim bezel and metal frame. Its IPS HD+ 18:9 aspect ratio display, with a rear fingerprint sensor unlocking the device in 0.3 seconds. The 8MP back camera features a built-in Sony chipset for shooting in a variety of lighting conditions.
The device runs on Android 7.0 OS and is powered by a MediaTek MT6737T quad-core chipset. It has 2GB of RAM and 16GB of storage, expandable up to 128GB via microSD. The XTouch X is a dual-sim device.
Tim Chen, Founder and Managing Director of XTouch, and Sandeep Agrawal, Executive Director, answered questions from the press following this announcement. The below transcript has been edited for clarity.
Given that no credit card details or other collateral is required, what guarantee will you get to ensure you’ll receive the 50 per cent balance payment after delivering the device to a buyer?
Agrawal: “The customer is secure. Just by providing their identity documents when the delivery comes to his/her doorstep, he/she pays 50 per cent as cash and balance 50 per cent is supposed to be paid as EMIs over three months. If he/she doesn’t pay, they are safe. In terms of how the company is securing its payments, I can say that we have done some research and, in line with Dubai’s high trust index ranking, it strongly indicates that for our target customer – primarily students – a Dh40/80 EMI default rate is negligible. That’s one of the first things we observed and we are basing our decisions on this research.
“That said, we do have their ID copies with us and we will contact them and follow up in the case of missed payments, though I don’t think we will fall into that situation. Over the past one and a half months, we’ve run a pilot. Just to share some data with you, we’ve got more than 100 students on board, as well as a sizeable number of low-income customers. Some of them have even paid their first instalment, which became due last week. We strongly believe that in this economy, our target customer for a Dh41 or Dh83 EMI is not going to run away. We do not need any collateral from our target customers.”
Chen: “I’d just like to add to Sandeep’s answer that, traditionally, people were only able to get EMIs, loans or instalment plans on high-value items such as cars or houses. However, providers aren’t interested in small EMIs because they don’t have the platform for these. Big data and the technology we have today has enabled us to make things separate and small. This has opened another door for the kind of microlending we are talking about for our consumers. This is a pain point for them, that they cannot enjoy this kind of service. It’s a value we believe we can add to the market.”
Agrawal: “To begin with we are launching this service in the UAE but we eventually want to bring it to the rest of the world, although this is easier said than done. It will require a huge investment from the company’s side as well. This is an experiment we’ll be doing in the UAE to begin with. Once we stabilise this market and become successful in this, we plan to expand our footprint – of e-commerce as well – in other markets.”
What is the potential in the market for this device in 2018?
Agrawal: “To answer your question, we have set ourselves a very modest target. We just want to double our footprint in the region for this year. We are targeting 100 per cent growth. We believe that over the next three to four years, we are definitely vying to become a billion-dollar enterprise coming out of this region.”
For the XTouch X, why did you opt to invest in wireless technology as opposed to other features such as waterproofing, a better camera or larger battery. What did you find in your research that led you to believe low- and mid-income consumers in the UAE would prefer that?
Agrawal: “Two things. First, the technology is there. We are talking of smartphones, and I’ve seen videos where I can see billionaires who have smartphones. So the ideal of technology is when it becomes affordable. There is always a sweet point in time when it becomes affordable and available to the common man. Sitting in a tech company, the thought that we have is that we want to make the technology available today and as affordable as possible. Why should a customer who can afford a Dh3,000 phone be the only one who can enjoy that technology?
“Point number two: When we look at a customer-centric approach, we are answering a question for a customer who has a pain point. What is it? Our product is not just a wireless charging smartphone – that’s just one part of the solution. We are actually launching a three-in-one product today, one that makes you truly wireless. If I am travelling – and I usually do across the Middle East on business trips – I find it very inconvenient to carry a lot of wires and chargers. If I’m going for a couple of days, I may not need to carry any with this solution. It’s a wireless charging phone that comes with an 8,000mAh power bank wireless charger inside the box, so I don’t need to carry any wire. It’s charging wirelessly and the powerbank is there in my hand.
“The third thing is the headset, which is also wireless. I don’t need to carry any wires, which may get spoilt, damaged or missed out. It’s always there in my hand. We’ve found that it’s not just the low-income category that is our customer. We have customers right from you and me, because we may carry a flagship but we always need a second or third device. This is a second phone to everyone that provides a solution. If I have a wireless charging powerbank and headset, I can carry two or three devices and don’t need to carry too many chargers. I’m giving you a solution for all your pain points – that’s the whole idea.
Chen: “XTouch basically is a technology company. It’s very important for us to go ahead of the market and other competitors to give the latest technology at an affordable price to the market. That is always our main stream [of business]. We believe this is also connected to customer demand and the R&D strength that we have.”
Just to verify, this phone is 2GB RAM and 16GB ROM. Looking at XTouch on Souq.com, you’ve already launched a product – the Unix Pro dual-sim – at a similar price range. It’s got 64GB of storage and 6GB of RAM. From an accessories point of view, a wireless headset and charger are fine. But when it comes to the specs, don’t you think that 2GB of RAM and 16GB ROM are too low?
Agrawal: “Good question. Again, it boils down to the same thing that Tim answered. Two years back, all the brands were chasing each other and were trying to outdo each other. What was the way of doing that? By bringing better, higher specs. But is that giving a solution to my customer? No. So while there’s a race going on between brands, nobody is looking at the customer. If I look at my target customer, for them 2GB of RAM is good enough because they need 1) a good browsing experience and 2) a good social media interaction. For YouTube, Snapchat, Instagram, this is more than sufficient. In fact, 1GB would be more than sufficient for web browsing needs today.
“What we’re providing is a very stable platform. In terms of the ROM that you mentioned, that 16GB is expandable to 32, 64 or 128GB. I’ve used a 256GB iPhone and never filled more than 60GB, personally speaking. The customer choice is there.”
What’s the marketing roadmap for informing students and others in your target market about your instalment plan?
Agrawal: “That’s always the million-dollar question. The good thing is we have Tim’s China experience in the internet world. If I recall some figures, internet penetration is about 97.5 per cent in a country like the UAE, which is good news for us. So the marketing strategy is not very complicated. There will be a mix of offline and online. In terms of activities, we have already initiated some where our brand ambassadors will approach schools to talk to students directly. In fact, there is a still-to-be-confirmed pilot plan we are working on. In three months’ time, we want to involve the students as one part to educate the lower income groups – one group educates the other and helps bring them on the platform. The second thing. If you browse our website, you are looking at three principles. You browse, you select, you buy. We are making it very simple. We got feedback from the pilot programme.
“A taxi driver in Ras Al Khaimah called us and said he wants to buy. He said he didn’t have an email ID and couldn’t login. He didn’t know how to do it and wanted help. This got us thinking. Over the past three months, this is the research that has helped us over the past three months. I don’t need this person’s data, but I do need his loyalty. Let us make it simple. Let us remove his pain point. There are very simple pain points that you’ll find among our target consumers where they’re hesitating to come on an e-commerce platform. They want to – there is a latent need – but nobody’s fulfilling that need so we’re not providing them solutions or tools. This is an attempt to provide them those solutions or tools. Make it simple. I can just come in and place an order within two clicks to get delivery on my doorstep. If there’s a problem, will I get help? Yes. And if we can provide that one-stop shop end-to-end service, right from the factory, where the technology is, to the [customer] doorstep.”
Chen: “This is what we call customer-centric. Nowadays, in developed countries, it has become quite expensive to acquire a customer online. So offline has become a main stream to acquire customers to do the marketing. So our strategy in the UAE is to go offline/online together. This is also the best way to approach our customer feedback and their demand.”
Regarding the student and low-income customer scheme, is it only available online or will you be utilising your retail outlets for the same? What’s the verification process for students and lower income customers?
Agrawal: “It is our own initiative so it will only be available on our e-commerce platform and not offline. Every retail partner is free to devise their own strategies.
“The process of verification is simple. Every student has a student ID and every resident has an Emirates ID and labour card. So we are collecting payslips or some form of proof of income. We’ve kept it very simple. The documentation is very simple, it’s not very complicated. A person is advised in advance by a call centre that delivery will happen at a certain time, according to their convenience, and the documents that need to be prepared. We’ll just take a copy of that. It’s also possible for the documents to be uploaded online, but we want to keep it simple for most of our customers, who do not understand how to do so.”
Tim, can you tell us a bit more about your experience at Tencent? It’s a massive organisation now that most people in this room would have heard something about. What was your role there?
Chen: “My experience at TC was phenomenal and almost changed my entire life. I joined a department called CDC, which is the customer research and user experience design centre. I worked there as an interactive designer, before I became a product director. TC nowadays is the largest instant messaging company in China, and the largest gaming company in the world. It’s listed in Hong Kong and its market cap is higher than any other company in Asia at the moment.
“The experience was of great value to me in terms of several points. Number one is that TC is riding the trend for internet growth in China and worldwide. It’s fast-growing, so I could learn a lot from there. Number two, it’s a very low profile, low key company. People have heard about Ali Baba but not heard about TenCent, because it’s very down-to-Earth but still drives things forward. I think this affected me a lot, shaping the way I’m doing this business – not only in talking but also in doing business, which is the core value TC delivered to me. Number three: TC is nominated as having some of the top talent in China. They are very keen to move to TC. A lot of great entrepreneurs came from there so we have a community of more than 10,000 people from TC who became entrepreneurs. They’re helping each other, creating a network and developing the latest technology worldwide. I’m learning a lot from the people around me. Sometimes the environment is so important. At the end of the day, it’s not about how much money you earn but all about the people who surround you. That was my experience at TC.”
What parallels can you see between the UAE’s e-commerce space and China’s?
Chen: “First is the target audience. I believe that e-commerce for people on medium and low incomes is now more meaningful, and it’s the same in China. Seventy per cent of the population lives in the countryside – they don’t even know how to access the internet. But those internet and e-commerce companies in China focus on fulfilling demand – Alibaba, JD.com and Tencent as well – so when they provide a service and focus on those middle- and low-income customers, that is the most common thing I see in both UAE and China, as well as around the world. As I mentioned before, for people on low incomes, e-commerce is more like a main course, but for people on higher incomes, it’s more like a dessert. If we can drive in this direction, I believe that it’s not only huge potential but also that we can add value by doing something meaningful. This is my point of view about the common thing here.
“Another thing common between China and the UAE’s e-commerce sectors is that the penetration will be higher and higher because the internet companies always focus on the customer experience. China has 17 per cent e-commerce penetration currently and it is said and reported by industry groups that this figure will grow to 30 per cent over the next five years, which is phenomenal. The trend can’t be stopped, and that’s another common factor I see between the UAE and China: future growth.”
The scheme that you’re currently operating is kind of a micro credit programme. In your research have you seen any parallel systems running anywhere in the world, either successfully or unsuccessfully – what are the hiccups that the unsuccessful ones have? Please share some thoughts on what you’ve seen around the world in relation to online micro finance…
Chen: “Fintech is one of the main streams of business online, both in China and the US. It enables very easy access to credit for a consumer. One successful example I can give you is a Chinese company called LexinFintech, which was founded three years ago by one of my best friends, Jay Wenjie Xiao. It was listed on Nasdaq in December and I was there with the founder. It’s quite interesting that when he started the company, it was also from a pain point. Three years ago, students in China wanted to experience good phones but were unable to pay for them. They call these people HENRYs – high earning but not yet rich. They’re secure, but traditional lenders are not able to provide for them. Lexin saw this pain point and provides these kind of services for them – and it’s been a great success. Last year, the platform’s revenue was about $6.5 billion (Dh23.9 billion) for micro lending, micro loans and instalment-based e-commerce. I believe that today’s young generation is more common all over the world. They are technology chasing, and it’s a great opportunity for us as well. I can see several cases that have been a great success in China, including Lexin, QD (listed on the New York Stock Exchange)… Another company I visited a few months ago is called SoFine. It also provides these kinds of instalments for students.
“Globally, this has become mainstream for financial technology. I believe that we can bring not only a product to the Middle East but also new business models. There’s new technology we can bring from China and the US to the Middle East.”