How Xiaomi is strengthening its offline presence in India

Xiaomi India, an online-only brand, started building its offline business aggressively from the first quarter of 2017. And it seems the company's 'direct to retail' strategy is working for the brand, as Xiaomi India has witnessed 10X increase in its offline sales lately.  The offline sales now contributes 20 per cent to overall sales of the company in India, which has gone up from less than 10 per cent six months ago. The company now plans to cross 30 per cent by the end of this year.

To increase its offline presence in the country, Xiaomi has adopted a different 'direct to retail' strategy, considering the fact 67 per cent of smart phones are still sold offline. While the traditional offline channel, includes national distributor, regional distributor, city distributor and a retail, before a product reaches a consumer, Xiaomi's 'direct to retail' strategy only includes a distributor and a retailer. Also using traditional channel means increasing the cost by more than double, for which a consumer pays, a cost which is reduced in the company's method. The company also has a 'Mi Home concept' for offline market, where the product directly reaches the consumer.

For reaching out to customers in the offline market, Xiaomi has adopted a three pronged strategy, which includes large format retailers, preferred partners and Mi Home.

Mi Home is a franchise based company store, where consumers can experience all Xiaomi ecosystem products launched in India. Consumers can also buy the products at the Mi Home and to manage the demand, Xiaomi has activated a pre-booking option, where a unit is reserved for the buyer.

The company has already launched three Mi Home stores in Benguluru and is launching its fourth Mi Home at Ambience Mall in Gurugram and plans to have 100 Mi Home in next two years.

"We are focusing on building Mi Homes in metros, tier 1 and tier 2 cities. There are no plans of taking Mi Homes to tier 3 and tier 4 towns but we will be reaching out to our consumers through other means. We are also working on a pilot for rural areas for  tier 5 and tier 6 cities," explains Manu Kumar Jain, Xiaomi India's head.

Currently, Xiaomi has 12 LFR partners including Sangeetha, Poorvika, BigC, Lot, VijaySales, Croma, Hotspot, to name a few. Xiaomi also has over 600 preferred partners in 11 cities and the company aims to take it to 1500+ Mi preferred partners in 30 cities, by the end of this year. Xiaomi's says its preferred partners are the retailers, who sell all bands but also has Xiaomi branding.

Although Xiaomi is expanding its offline presence, there are many brick and mortar stores which have been purchasing Xiaomi products online and selling it at a premium in offline retail.

"Xioami has a dedicated team who are focused towards tracking these scalpers and we take strict action them. When an scalper buys a device online and sells it in offline retail, technically, the consumer does not get product warranty as it is only applicable for first purchase. But we continue to offer service to all our customers as we don't want them to suffer," Jain says.

According to the latest IDC figures, Xiaomi is the number one online smartphone player with  46.9 per cent share and had 17.9 per cent market share in India in Q2 2017. Xiaomi has already sold 5 million units of the Redmi Note 4, which also is the highest shipped phone in any quarter according to IDC.

Along with the retail presence, Xiaomi is also focusing on its service network.

The company has over 500 service centres across the country along with two big warehouses for spare parts, multiple small warehouses, two call centres and three repair factory for motherboards. If the mother board can be repaired, it is refurbished and made into a new motherboard.

Jain claims 95 per cent of devices are repaired in same working day and 86 per cent problems are resolved in four hours itself.

"Our effort is to further improve the timeline."

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