From April to June, 1.47 million wearable devices were sold in the country; wireless headphones showed the greatest growth compared to the same period in 2022, with an increase of 32.5%
In the second quarter of 2023, 1,467,506 units of wearable devices were sold in Brazil, an increase of 6.4% compared to the same period of the previous year. The result reflects a recovery in the segment and was mainly stimulated by the reduction in average product prices and a significant increase in the volume of products originating from the gray market. Despite the good sales results, total revenue in the period was 19.1% lower than in the second quarter of 2022, reaching R$ 969.1 million. The data is part of the study IDC Tracker Brazil Wearables Q2 2023, conducted by IDC Brasil, a leader in market intelligence, consulting services and conferences for the Information Technology and Telecommunications industries.
Andréia Chopra, Consumer Devices Research and Consulting analyst at IDC Brasil, warns that, even given the optimistic scenario, it is necessary to be aware of the strong presence of the parallel market, which threatens the commercialization of official products. “We can see an increase in consumer interest and greater willingness to purchase wearable accessories when compared to last year. However, unfair competition from the trade of products without legitimate origin is worrying, which presents risks associated with warranty, technical support and information security and privacy”.
Of the units sold, 612,362, or 41.7%, were sold via the gray market. In the period, the gray market showed an increase of 20.7% in relation to the 2nd quarter of 2022, with emphasis on categories that have the best value average ticket, such as wrist band and basic smartwatch.
When analyzing total sales by type of product, the IDC study reveals that 97,792 were sold advanced smartwatches, 127.320 basic smartwatches, 303.460 headphones truly wireless with some internet connection or smart function, 174,145 basic earwears, 205.065 over ears, 366.135 tethered and 193,589 wrist bands. With the exception of advanced smartwatches, which fell 46.8% and over ears which showed a small drop of 0.3%, the other devices saw an increase in sales compared to the same period last year, with a growth of 32.5% in headphones truly wireless, 20.6% in wrist bands, 13.2% in tethered, 10% in basic earwears and 7.7% in basic smartwatches. In comparison to the first quarter of 2023, all categories showed better results.
Another point of analysis, the average ticket in the official market was also greatly impacted by the current situation of greater presence of the unofficial market, as highlighted by Andréia Chopra: “Faced with unfair competition with the gray market during 2Q23, manufacturers adopted strategies that included reducing prices and expanding the distribution of products with more simplified specifications within their respective portfolios.” During the period, the average tickets per category in the official market was R$ 3,912.77 for advanced smartwatches, R$ 1,563.54 for basic smartwatches, R$ 639.17 for the headphones truly wireless with some internet connection or smart function, R$ 444.74 for basic earwears, R$ 1,088.56 for over ears, R$ 429.74 for tethered and R$ 282.20 for wrist bands.
Already in gray market the average tickets were: R$ 3,855.98 in advanced smartwatches, R$ 1,394.45 in basic smartwatches, R$ 621.78 in headphones truly wireless, R$ 450.93 in basic earwears, R$ 1,206.90 in over ears, R$ 537.89 in tethered and R$ 289.36 in wrist bands.
According to the IDC analyst, significant gray market growth was noticed in practically all wearable categories when compared with the 1st trimester dthis year. “Sales of truly wireless headphones, in particular, grew by 117% in the gray market compared to the previous quarter. In other categories, parallel trade remained robust. Wrist bands, which had been losing strength in the formal market, were revitalized by the gray market. Basic smartwatches have gained space in the gray market due to the reduction in prices for models with more basic functions”, highlights Andréia. “Considering the low cost and ease of entry of these products into the Brazilian market, it is expected that the gray market will gain an even more significant share in the wearables sector, negatively impacting official sales.”
Projections for the remainder of the year
For IDC Brasil, the second quarter results indicate optimism for the wearables market until the end of the year. Andréia Chopra notes that commemorative and discount dates, such as Christmas and Black Friday, will be great opportunities to boost the sector through launches and premium products. “There is an expectation that year-end sales will perform better than last year. This is mainly due to the intention of many users to replace their current devices and the interest of new consumers entering the market based on the characteristic offers of this period.”
Outlook for 2024
According to IDC Brasil, there is a growth trend for the wearables segment in 2024 for the same reasons that should boost year-end sales: replacing devices with more technological models and the arrival of new consumers. However, if not stopped, the gray market should continue to have a strong presence in the sector. “In 2024, the gray market should have an even more comprehensive participation, since there are loopholes in inspection that make it possible for these products to enter Brazil. It is up to manufacturers to highlight the importance of the official wearables market, reinforcing not only the authenticity and benefits of purchasing through official means, but the integrity and reliability of their products”, concludes the analyst.
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