From less than 1% share in sales two years ago, offline segment now contributes over 20%
Chinese consumer electronics company Xiaomi expects the next level of its growth to come from the offline segment as it aims to spread its wings across India’s rural hinterlands.
Xiaomi, which is among the top mobile brands in India, started in India as an online player but has now set its eyes on the offline market as it plans to generate half of its revenues from sales at offline retail points and stores.
“Offline is off to a really incredible start. Two years ago, we had less than 1% market share in the offline segment, now it is more than 20%. Overall, offline is around 65% of the total market share. For the online market at 35%, we already have 50% market share,” Xiaomi India managing director and vice president Manu Jain told DNA Money.
In India, around 400 million people continue to use feature phones and it is estimated that nearly 100 million people use some form of data on their feature phones, which is why we have come up with new entry-level smartphone series Redmi Go for feature phone users, he said.
“Our aim is to ensure that we provide the best product with the best experience and best price and sales will automatically follow… we expect offline to contribute more to our growth, especially in small towns and rural areas,” Jain said.
Faisal Kawoosa, founder, TechArc, says brands are now increasingly realising that it is becoming risky to be an online only or online heavy (retailer), which is why they are investing in offline expansion directly or through partners.
“The main challenge in the online space is still not being able to give potential consumers a pre-buy experience. However, offline will still be the major portion for at least the next 5 years,” he said.
Premium brands like Apple and OnePlus can afford to be online heavy owing to their evolved user base. Other brands need to focus both on entry and mid-level markets.
India boasts of regional dynamics. For instance, in the East, offline dominates, while the South has accepted online. So a proper mix is required to tap all markets fully, Kawoosa said.
In October 2018, Xiaomi opened 500 retail points – Mi stores in a single day in the rural areas – which will cover areas as far as – Moreh, 650 km from Guwahati located on India-Burma border and just 100 meters away from Burma and in Along, Arunachal Pradesh, located on the Indo-China border.
Xiaomi India plans to open 5,000+ Mi Stores all over India by the end of 2019. The new Mi stores will serve as Xiaomi’s prime retail stores situated in several towns ranging from Tier- 3, 4, 5 and below. These stores will sell all products from Xiaomi stable, be it smartphones, TVs and other consumer products.
Xiaomi entered the Indian consumer electronics market in the year 2014 to sell smartphones and has given tough competition to major players like Samsung, dislodging it from the top position.
In 2018, the Chinese consumer electronics firm also launched its Smart TV in India, among other products.
SHOP LEVEL
- 400 mn – Indian consumers who continue to use feature phones
- 100 mn – Consumers who use some form of data on their feature phones
- 500 – Xiaomi retail points in India as on October 2018
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