Monday, July 11, 2016

Xiaomi ropes in two companies to push offline sales

Xiaomi made a strong push to sell its devices offline, roping in Just Buy Live and Foxconn unit InnoConn as two new distributors who will help the Chinese smartphone maker reach out to customers in smaller cities and towns.
The new partners will implement Xiaomi's direct-to-retail (DTR) model - developed specially for the Indian market - where they will buy from Xiaomi and supply directly to retail stores who may place orders as per demand. This aims to cut out multiple layers of middlemen and allow Xiaomi to expand presence while keeping costs under check.

With the new partners on board, Xiaomi will have access to 5,000 stores immediately, and is planning to reach 10,000 offline stores within a few months, 10 times more than its present reach that is restricted to south India with its partnership with Redington, Manu Jain "We're making it comfortable for people in smaller cities, tier 2-3 towns, where internet infrastructure is not developed, to purchase our smartphones," Jain added.

The strategy to increase offline penetration in India is different from China where Xiaomi partners with retail chains and telecom companies, such as its latest partner Unicom.

In China, 30 per cent of the company's sales come from brick-and-mortar stores, which that is 10 per cent in India at present.  "If we can achieve the same level (of offline presence) in India (as in China), it would be a great success for us," Jain said, when asked about the offline contribution within a year's time.

Xiaomi, the No 2 smartphone brand online in India, was among the top five smartphone players through its online only flash sale model.  However, the Indian handset landscape has become far more competitive since with the entry of Chinese rivals Vivo, Oppo, LeEco and others, who started with online and have quickly expanded their offline presence as well, with an eye on volume sales.

Oppo and LeEco, like Xiaomi, have even applied for single brand retail permissions to set up their own branded stores. With internet penetration limited in semi urban and rural areas, India's large number of brick-and-mortar stores offer massive lure for handset makers to sell their products.

Offline stores are also preferred by customers in these areas for purchasing goods as usage of smartphones rises.

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