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Xiaomi Doubles Down on Offline Strategy, to Open First Mi Home Store in Delhi NCR This Week

Xiaomi Doubles Down on Offline Strategy, to Open First Mi Home Store in Delhi-NCR This Week

By Manish Singh | Updated: 17 August 2017 18:14 IST

Highlights

Xiaomi is doubling down on its offline strategy in India
More physical stores will offer Xiaomi's smartphones later this year
The company is also planning to set up more Mi Home flagship stores

A physical Xiaomi store is coming to a mall near you. The Chinese smartphone maker says it will nearly triple the number of brick and mortar stores that offer its high-end, low-cost smartphones in the country by the end of the year. In addition, the company is also planning to setup its flagship stores at many more cities in India.

Xiaomi, which set up the first Mi Home, its own retail store in May this year in Bengaluru, said it is opening another Mi Home in Ambience Mall, Gurugram on August 19. It is the fourth retail store that Xiaomi would open in India, and first outside Bengaluru. It is also its largest to date in the country.

The expansion of Mi Home should ring alarm bells at the headquarters of smartphone makers Samsung and Micromax, both of which have a vast offline presence in India and are losing market share to Xiaomi and other Chinese smartphone companies.

According to the most recent data from marketing research firm IDC, Xiaomi captured 46.9 percent market share among online smartphone brands, and was second only to Samsung with 17 percent in the overall market (online as well as offline).

But for Xiaomi, which entered India only three years ago, making its smartphones available through offline retail stores isn't enough. The company is topping that with matching the online prices of products at its physical stores as well. At Mi Home stores, where the company also sells other Xiaomi-made products such as the Mi Air Purifier and accessories, a Redmi Note 4 unit, for instance, will cost the same as it does on Flipkart or Amazon India, Xiaomi India's managing director Manu Kumar Jain said.

Speaking to Gadgets 360, Jain said the company will continue to offer products at the same price as it does through Flipkart, Amazon India and Mi.com in the future as well. Going forward, Xiaomi plans to set up more Mi Home stores in Delhi, Hyderabad, Chandigarh, Mumbai, and Jaipur. Roughly eight out of 10 smartphones are still sold through physical brick and mortar stores in India, according to analysts.

More exciting to customers will be the surge in physical stores that offer Xiaomi's products. Jain said the company, through its new and existing retail chain partners such as Croma, Vijay Sales, and Sangeetha, the company aims to bring Xiaomi's smartphones to 1,500 retail stores in 30 cities by end of the year.

At present, Xiaomi's smartphones are available through more than 600 retail stores in 11 tier 1 and tier 2 cities. Jain said the company plans to keep the prices of the products it sells through such stores as low as possible. For now, most of the smartphones are being sold at the same online sticker price, but in some cases, the price differs by a "few hundred rupees," he said.

An analyst commended Xiaomi's strategy with its offline expansion. "Xiaomi has built its business on four key pillars - selling high-end smartphones at low-cost, staying online-only in its initial years, using learnings from its China business, and building a fan base," Jayanth Kolla, co-founder of the consultancy Convergence Catalyst said. "If they want to grow their business in India, [entering the] offline [space], is something they had to do," he added.

"As Xiaomi expands to the offline space, attempting to appeal to the wider population, it is taking a slow and measured approach," Kolla said, adding that by maintaining uniform pricing across different channels, Xiaomi is able to create brand awareness and lure customers. "They can afford it," he said.

At present, Xiaomi has partnered with the second-largest group of retail chains such as Sangeetha, Lot, Big C, eZone, and Hotspot. This not only will allow Xiaomi to get its smartphones to smaller cities and towns, but also help it use its market influence to negotiate better deals with retailers, Kolla said. Jain said the company was in talks with Reliance Digital, one of the largest retail chain houses in India, with a presence in over 600 cities.

There is another side to it, Jain said. It is already the biggest client in terms of sales for nearly all its retail partners, he claimed. Xiaomi's smartphones are seeing two times traction than phones from any other company, he added.

But despite all the inventories Xiaomi is moving, it says it hasn't compromised its original mission. "Reinvent everything." For its offline partnerships, Jain said the company reduced much of the overhead expenditures -- forming one distribution model that eliminates the need of too many hands -- national distributors, regional distributors, and city distributors. The company has made "a lot of investments" in identifying and utilising micro-distribution houses, IT system and man power, he said, without sharing more details.

The company's efforts are already being evaluated by customers. Even as Xiaomi expands its business in India, many customers continue to complain about limited stock of its phones. "Three years ago, we used to celebrate such milestones, now we hate when that happens," Jain said, adding the company has increased the production several fold in India this year.

On top of this, to ensure customers are able to get their hands on the Xiaomi smartphones in a timely fashion, Jain said its Mi Home will always have enough inventories. "People can pre-book the device and we will ensure 100 percent that they get the uniton the day they want it."

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