New Delhi: After dominating the online sales channel, India’s largest smartphone brand Xiaomi Corp. has realized that further growth will come from physical stores. The Chinese firm is now aiming to garner half of its overall revenue from offline sales.
Xiaomi entered the Indian market, its biggest outside China, in July 2014 to sell smartphones through e-commerce platforms. Xiaomi sold the highest number of smartphones by any company in India in the past six quarters. Its offline journey, however, began in 2017, which the company believes will be crucial to retain its top spot.
“Two years ago, we realized that Xiaomi’s share in online (smartphone sales) was 50% and in offline less than 1%...which was concerning to us for two reasons. Why were people not buying Xiaomi phones offline if they were buying our phones online. And we realized holding on to 50% (online market share) is a tough task... Hence for us growth can no longer come from online...the only way for us to grow is offline," Manu Jain, vice-president, Xiaomi, and managing director, Xiaomi India, told reporters.
India is still a predominantly offline sales market given the low levels of internet penetration and with a subscriber base of just over 500 million people. In terms of overall smartphone sales, 35% of phones are sold online and 65% offline in the country.
“When we started our offline journey, the first six months were a disaster. We tried multiple things and we failed. We were trying to copy what other brands do. But nobody would sell our phones offline... And then, we decided (that at) every location, we will work with only one partner or two and that’s how we decided to come up with Mi Preferred Partners," Jain said.
Mi Preferred Partners are multi-brand stores focused on Xiaomi products. After this initiative, Xiaomi launched Mi Homes in urban areas and late last year also announced the launch of franchisee-owned and franchisee-operated Mi Stores to boost sales in Tier-III and Tier-IV cities.
At present, the company works with 5,000 Mi Preferred Partners. It has 75 Mi Homes in the country and is on track to hit 100 this year. Xiaomi has 1,500 Mi Stores at present.
And now, it has decided to add a fourth pillar to its offline sales strategy, announcing a new retail concept called Mi Studio, spanning 400-600 sq. ft, which would cater to urban regions such as Gurugram, Kanpur and Allahabad.
“We thought of Mi Studio as Mi Homes take a lot of time to come up as it needs big spaces for which the company needs to wait. Mi Studio will be a smaller version of Mi Homes and hence scalable," he said.
Mi Studio will also be franchisee-owned and franchisee-operated and the company plans to open 200 such outlets by the end of this year.
“With all this, we are targeting that 50% of our business will come from offline channels by the end of this year which is pretty massive for us," Jain said.
Xiaomi aims to sell products through a total of 10,000 retail touch-points by the end of this year. Apart from the smartphone category where Xiaomi is the most popular, its growth is also increasingly coming from three other segments—internet business where it has Mi Video, Mi Pay and Mi Music; retail business where it sells through offline stores as well as e-commerce platform Mi.com; and Internet of Things (IoT) devices such as fitness bands, Mi TVs and air purifiers.