S M D T E C H N O LO G I E S
SMD TECHNOLOGIES
SMD Innovation Sparks Another Year of
Double-Digit Growth PRODUCTION: Manelesi Dumasi
Leading personal and commercial electronics brand developer, SMD Technologies, is growing its product range, expanding its international reach, and increasing its presence as a trusted value for money electronics supplier. Managing Director, Avi Mishan tells Enterprise Africa that he is extremely positive about the future for this quickly growing business. 2 / www.enterprise-africa.net
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The growth of the consumer electronics industry over the past three years has been exceptional. Globally, market conditions have been unpredictable and various factors have caused uncertainty. The ever-changing nature of the retail industry has also created challenging conditions. But, the Consumer Electronics Association (CEA) said in January 2018 that global retail revenue for consumer electronics would be $351 billion, a 3.9% increase over 2017. In July 2018, the figure was revised to $377 billion. In South Africa, consumer electronics spending grew at a compounded annual average growth rate of 7.3% to reach $10.6 billion in 2018. This remarkable growth is great news for companies involved. Globally, the likes of Apple, Samsung, LG, Fitbit, Sony are all noted as top-tier, highly priced brands that move millions of units every year. But, if you look at the secondtier, where value for money without
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// THE BRAND OFFERS GREAT VALUE FOR MONEY AND CREATES REPEAT BUSINESS AS CUSTOMERS KNOW THEY GET GOOD VALUE AND A GOOD USER EXPERIENCE – THAT IS A CORE PRINCIPLE ON WHAT SMD TECHNOLOGIES IS BUILT ON // compromising on quality is the driver behind the purchase, you find that there are not too many recognised brand names. Enter South Africa’s SMD Technologies. The Johannesburgbased company, founded in 2005 by entrepreneur business partners Avi Mishan and Simca Diskin, has grown to become the supplier of choice for retailers around the country, and increasingly around the world, who are looking to offer their customers true value for money consumer electronics. At its core, SMD Technologies is a personal and commercial electronics
brand developer. “We are the fastest growing brand originator and distributor of high-quality consumer electronics, audio products and commercial electronics globally,” the company claims. Home to well-known brands including Amplify, Bounce, Connex, Rocka, Travelwize, VX Gaming and WizeKids, SMD Technologies also has the regional partner licenses for brands including Disney, Marvel, DC, and many more major global trademarks. But the flagship brand for SMD is Volkano. One of the fastest growing consumer electronic brands
SMD TECHNOLOGIES
worldwide, you can find a whole host of products under the Volkano stable. High-tech Bluetooth wireless devices, headphones, earphones, speakers, power banks, phone accessories, computer peripherals and more are all offered at affordable prices. The brand is designed to be durable, aesthetically pleasing, and always high-quality. VOLCANIC GROWTH Managing Director, Avi Mishan explains more about expansion of the popular Volkano brand. “Whatever price point our products are in, we always want them to be the best value for money. That is what Volkano stands for,” he tells Enterprise Africa. “Volkano is without doubt our biggest brand,” he adds. “You can ask any person on the street in South Africa if they have heard of Volkano and they will say yes. It’s become a household brand in the South African market; with headphones and earphones, we sold eight million units last year. The brand offers great value for money and creates repeat business as customers know they get good value and a good user experience – that is a core principle on what SMD Technologies is built on.” Staying abreast of international trends, the company is venturing into wearable technology – described by some commentators as the biggest new tech innovation since the smartphone. This category includes all connected wrist, head and body-worn tech devices. “A big focus for us is Volkano Active where we have launched a whole range of wearables – that’s products with heart monitors and GPS capability,” says Mishan. “We are launching with some of the big retailers and we are getting involved with the growing health and fitness trend. We also have launched wearable accessories which are compatible with Apple Watches,
Fitbits, Garmin watches and similar products. Straps, screens, and a whole range of compatible accessories. We see these industries as growing in Africa and we want to be a part of it. Our wearables range will be launched in May and we will be going around all of the major sporting events in the country to showcase the range.” The target for the company is to position the range as the preferred value for money brand and an alternative to the expensive international market players. “I don’t think it will be a hard sell as it comes under the Volkano brand which people already know and trust. The only big brands in the market right now are the international brands – Fitbit, Apple, Garmin and Tom Tom. There is no second-tier brand which is trusted in the market and that is
where we want to be,” says Mishan. Innovation has been one of the keys to unlocking growth in the industry and the movement into wearables is proof that SMD is keen to advance its portfolio with inventive ideas. “We are always trying to be innovative,” admits Mishan. “We have launched a new range of headphones with voice recognition that works with Siri and Google Assistant; we have launched a range of noise cancelling headphones; we launched a range with two drivers so there is double the bass and much improved sound.” CONNEX VALUE In South Africa alone, there are 26 public universities and more than 50 higher education and training colleges. The student population
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numbers around two million people. Traditionally, students have turned to cheap laptops to fulfil their need for connection with the university. Communicating with tutors, completing assignments, conducting research – all of these and more are vital in student life but often laptops are expensive and out of the reach of much of the population. “For the African market specifically, laptop penetration is very low, only around 16.2% - that is extremely low compared to First World countries. The biggest barrier for African people is the price point,” explains Mishan.
// AS A BRAND, WE’VE HAD A GREAT RESPONSE. TO HAVE 5% OF THE MARKET, AS A NEW BRAND, IS VERY GOOD // 6 / www.enterprise-africa.net
SMD Technologies, through its Connex brand, has launched a new range of laptops designed to fill the void left by international brands. “We have managed to bring laptops into the South African market at a really affordable price with the hope of increasing the penetration rate. “They are perfect for assignments at university or other studies. They offer great value for money. We are one of only a few Microsoft partners and an Intel partners in South Africa, and that brings extra quality to the package. “We saw it as a trend in China, with entry-level laptops that are great value for money that have Microsoft operating systems, and are affordable. We are making them available through non-traditional retailers including fashion retailers, like the Foschini Group, and furniture retailers. These retailers have been doing very well selling our laptops. They are aimed at the lower end of the market with entry level pricing and we have done extremely well, claiming 5% of the
market. Connex only does laptops at the moment. As a brand, we’ve had a great response. To have 5% of the market, as a new brand, is very good,” details Mishan. Much-discussed in recent years, student finances in South Africa have been under the spotlight and anything that can help young learners to achieve their goals is welcomed with open arms. The Connex brand will be utilised by SMD in the future to further its innovation programme, welcoming more new products to the market, specifically in the growing Internet of Things (IoT) category. “We have developed a whole new IoT range called Connex Connect. We are planning a big launch into the market in June after the products hit the shelves in May. We have developed a whole range of home products and an app, and the idea is again to offer the best value for money in the market. This will be a big focus for us and we see huge potential
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in the market. Everything will be smart in the future and we think we can add to that,” states Mishan. GLOBAL BUSINESS After major success in its home market, SMD Technologies has set its sights on growth in new geographies. With offices in China, London and the US, global expansion is already well under way. Key in its international strategy is the US market, where the company has already started gaining significant traction. What started out at a conference in Chicago, where buyers and sellers and matched up, US business now represents a significant part of SMD’s offering. “We officially opened in March 2018 in the USA,” details Mishan. “We are already dealing with a number of big retailers there including Office Depot, Forever 21, QVC shopping channel, Amazon, Citi Trends and many more retailers. We’ve had great traction; we’ve only been in the market for a year and the uptake has been unbelievable. What we need there now is more good people. Our future pipeline in the US is great and we are very excited about what will happen next. We have products from across the board; from car cradles, headphones, bags, and much more; but our biggest success has come with the Volkano brand which is our most comprehensive brand.” In the UK, SMD was supplying products into a major high-street retailer but has since withdrawn from the arrangement to focus on different customers. Mishan says that the future is exciting as the operation in London is only small, offering plenty of room for expansion. He also hints at a potential deal with a new retailer that has sites in every town and city in the UK. Focus on the UK market will come after the US operation is running seamlessly. A major coup for the SMD business in South Africa relates to its work with US brands – Disney,
// THERE IS NO SECOND-TIER BRAND WHICH IS TRUSTED IN THE MARKET AND THAT IS WHERE WE WANT TO BE //
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Marvel and DC. The mega-popular entertainment brands are worldwide phenomenon, and gaining the exclusive rights to manufacture branded electronic goods for the SA market has significantly boosted SMD’s position. “We won Disney partner of the Year in our first year, and Best Product of the Year in our second year,” exudes Mishan. “Across 22 countries in Africa, we are the only company that manufactures, under license, electronics including headphones, speakers, mice etc. We have just received the license for a host of new products and that will be revealed soon, but it is a very important part of
// EVERYTHING WILL BE SMART IN THE FUTURE AND WE THINK WE CAN ADD TO THAT // 8 / www.enterprise-africa.net
our business. We also have the rights for Marvel and DC and we have done some beautiful ranges across these three areas. “We have added Israel to our Disney license and have already supplied containers into Israel. We are adding Turkey and the Philippines to our license, so the Disney product range is certainly something we will be expanding.” MARKET LACKING SPARK? While the economic climate in South Africa has left a lot to be desired for many companies hunting for growth, SMD Technologies has been thriving. While some have failed to adapt and allowed changing consumer habits to overtake, SMD has been innovating and working hard to ensure its products and brands are delivering what is needed. “The economy is tough,” admits Mishan. “There is political instability and volatility in our exchange rate,” he
says. “Luckily, we have been blessed to get into an industry with lots of growth. We always keep going, we always look for new ideas, and the type of products we work with are things that people need and want. Most importantly, we are about value for money and when the economy suffers, people have limited money to spend and that means they like to spend their money where they know they can get great value for money, like Volkano, rather than going for a big brand where they know they are paying for a name. As the economy gets more challenging, our brands can become more attractive.” Consumer electronics is a growing sector, and for South Africa there remains much more room for development, especially with the advent of the Fourth Industrial Revolution. While this is the case, SMD will be at the market’s forefront. “We are lucky to be in the right industry at the right time. The pie is
SMD TECHNOLOGIES
// WE ARE GROWING AND AS LONG AS WE ARE GROWING, WE ARE HAPPY // growing,” says Mishan. “A lot of people in Africa are still using feature phones and as they switch from feature phones to smart phones, they start needing all of the products we have. Whether it’s headphones or power banks or speakers, the market is growing. We were one of the first to get into most of these categories in South Africa and the combined market growth and us creating a market has helped us to achieve success. Some of the retailers we are working with were never in these categories before and we helped them move into consumer electronics. They stuck with us and it’s been great growth for everyone.” Typically positive, when asked about the future in South Africa,
Mishan – a Chartered Accountant by training – claims the feeling within SMD is nothing but upbeat and encouraging. “I’m very optimistic,” he says. “I think things in the economy will change. It won’t happen overnight but we must be a part of the change as entrepreneurs and companies that employ people. We must do all we can do to help the economy but I do feel optimistic.” Currently, SMD Technologies employs around 350 people and all of these people will help push the company forward, in new areas, with new products, and new partners. “We have a big pipeline of new ideas. Our future goal is to become an internationally recognised brand with offices in more different nations around the world. Our US business will be a very important part of that. Success in the USA is crucial if we are to expand further internationally. We will always be first to market in our
categories and we want to be a onestop solution for our retailers across the world. We certainly see a lot of expansion, both geographically and in terms of product range,” says Mishan. It has been quite the journey for a business which started 14 years ago with one partner selling scientific accounting calculators and the other importing electronics as a side project. The consumer electronics market is growing, there is a clear space for a trusted, value for money supplier, and SMD has positioned itself perfectly. “We are growing and as long as we are growing, we are happy. We see a good runway for the next couple of years, and it’s fantastic to be in an industry which has that positivity,” Mishan concludes.
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ENTERPRISE AFRICA
MAY 2019