New Delhi: China’s Xiaomi Corp., the biggest smartphone seller in India, is planning to increase offline sales channels and introduce a new line of franchised outlets called Mi Stores in tier-III and tier-IV cities as part of its plan to get almost half of its revenue from offline sales.

The consumer electronics company, which sells products ranging from smartphones to televisions in India, currently gets 70% revenue from online sales and the rest through offline channels such as Mi Homes and Mi Preferred Partners.

“Mi Stores will be an extension of our retail business. We started evaluating possibilities in rural markets a year ago and tried to understand the expectations of a rural customer. We realised that other brands present in rural areas don’t focus on user experience, don’t stock the full range of products and the distribution cost is really high," Manu Jain, vice-president, Xiaomi, and managing director, Xiaomi India, said on Tuesday.

After testing in states such as Telangana and Karnataka, the company last month opened 500 Mi Stores across 470 villages in 14 states. “While the element of seasonality in sales is higher in rural areas, we saw that there is demand for even mid-premium devices in rural areas and there is a huge demand for TVs. Hence, we plan to grow this number to 5,000 Mi Stores by the end of 2019," Jain said.

The rural handset market has undergone a sea change with Reliance Jio last year introducing a cheap 4G handset JioPhone with a refundable deposit of 1,500 and later announcing cheap tariff plans offering free voice calls and unlimited data for as low as 49 a month. In July, the telecom company said that it had already sold 25 million handsets and also announced another device Jio Phone 2 at an introductory price of 2,999 with an option to exchange an old feature phone for a new Jio Phone by paying just 501.

Xiaomi, however, sees the presence of Jio in rural markets as a growth enabler and it eventually expects users to upgrade to smartphones.

Local entrepreneurs can apply to open Xiaomi’s Mi Stores and will be responsible for the physical infrastructure and real estate, while Xiaomi will look at the branding of the store. The company declined to give further details.

“We won’t have more than 1-2 stores in a village and these would cover an average 300 sq. ft in size, and will house all the latest products in the Xiaomi portfolio from phones, TVs, power banks, and even backpacks and suitcases," he said. Apart from the new sales strategy, the company would also expand its existing physical retail channels by increasing the number of Mi Homes to 100 from the current 50 and also taking Mi Preferred Partners stores to 100 cities from the current 50 within the next one year.

“All of this should increase our offline sales and account for 50% of the company’s revenue by the end of next year," Jain said.

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