Aiming to gain a further foothold in the offline smartphone market as the festive season inches near, Chinese smartphone maker Xiaomi on Thursday unveiled an exclusive ‘Mi Home’ retail store at Ambience Mall, Gurugram.
Xiaomi has primarily been an online-exclusive brand but it aggressively stepped up its offline presence across India this year via its ‘Mi Home’ stores, ‘Mi Preferred Partner’ (PP) stores and ‘Large Format Retailer’ (LFR) partners.
“Till last year, the offline numbers used to be less than 10 per cent. It fell down to about 5 per cent in the beginning of this year with the release of Redmi ‘Note 4’ because it was an online-exclusive model. We then started re-builing our offline journey and for the first time, in July 2017, we crossed 20 per cent,” Jain informed.
According to market research firm International Data Corporation (IDC), Xiaomi now has a 17.9 per cent market share in the Indian smartphone space.
The company’s ‘Redmi Note 4’ has pipped Samsung’s Galaxy J2 as the top shipped smartphone in India in the second quarter with 7.97 per cent market share.
The company is now focusing on expanding ‘Mi ‘Home’ stores and plans to add 100 such stores in the next two years.
Xiaomi now has about 100 ‘Mi Preferred Partners’ or ‘city distributors’ in 11 cities including Kolkata, Kochi, Chennai and Guwahati, among others.
“We have 600 ‘Mi Preferred Partners’ right now and want to take it 20 cities by October. We want to take it to 1,500 stores across 30 cities by the end of this year,” Jain told IANS.
The company’s first ‘Mi Preferred Partner’ store came up in Bengaluru where Xiaomi also opened its first ‘Mi Home’ in May this year.
Xiaomi ruled out the ‘flash sales’ strategy for ‘Mi Homes’. “We would not see shortage of phones in these stores and if a device is out of stock, the buyer can ask for an ‘F-code’ to purchase the device online,” Jain noted.
Xiaomi has also begun carrying out pilot programmes in rural areas that have limited reach and less exposure to e-commerce sites.
Currently, the programme is being tested in Karnataka where the company is working with retailers in a different way.
Xiaomi ships its products to over 14,000 pin codes — close to 40 percent of the country’s total — every single week.
“We are now present in more than 8,500 stores via our innovative offline distribution network. Last year was indeed a great year and we achieved several milestones while building our India story,” Jain had earlier told IANS.
Xiaomi India reached three major milestones in 2016 — it crossed US $1 billion in annual revenue for the first time, secured a spot among the top three smartphone players in the country and, in October, sold a record 1.35 million smartphones.
Xiaomi is stepping on the gas to expand its offline presence, a channel that it expects will contribute to about 30 per cent of its sales in India by the end of the year.
The company, which sells its products through large format stores, multi-brand outlets as well as its own Mi Homes, saw about 20 per cent of its sales in India coming from offline retail during January-June 2017.
“In 2014, online sales of smartphones were about 12 per cent and that has now grown to about 33 per cent. We expect about 30-40 per cent of the smartphone sales in India to be online. That said, offline continues to be a dominant channel and we are expanding our presence there,” Xiaomi India Head Manu Kumar Jain told reporters.
He added that the aim is to take the offline share to about 30 per cent by the end of the year.
“Via our three pronged strategy, we believe we are a truly integrated company when it comes to implementing our O2O strategy (online to offline and vice versa),” Jain said.
The company has seen a 10X growth in offline sales in the first half of this year compared to the same period last year.
Citing data from research firm IDC, Jain said Xiaomi has a 46.9 per cent share of the online smartphone market in India and 17.2 per cent share overall.
Jain said the company has partnered 12 large format retail chains that expanded Xiaomi’s reach to 2,000 points.
“Apart from that, we have a preferred partners programme through which we reach over 600 points in 11 cities. The intent is now to scale that up to over 1,500 across 30 cities,” he said.
Jain added that these points (in multi-brand stores) will be set up across capital cities of various states as well as tier I cities.
“Besides, we are adding more Mi Homes. We had said we want to have 100 Mi Homes in 2 years. We already have 3 in Bengaluru and the next one is coming up in Delhi-NCR,” he said.
A few more Mi Homes will come up in Mumbai, Hyderabad, Chennai and Pune.
Xiaomi, which competes with the likes of Samsung, Lenovo, vivo and Oppo in India, is confident of clocking revenues in excess of US $2 billion (Rs 12,867 crore) from its India operations this year, doubling its top-line over 2016.