Xiaomi Shifts Focus to Boost Retail Sales in India
Updated: Jan 8
Xiaomi's India President reveals plans to prioritise brick-and-mortar sales over e-commerce, aiming to regain ground from Samsung as the company faces challenges and seeks growth opportunities in the highly competitive Indian smartphone market.
China's Xiaomi (1810.HK) is set to concentrate on enhancing retail sales in India following years of e-commerce dominance, according to the company's India President. Xiaomi aims to revive its smartphone sales and catch up to South Korea's Samsung (005930.KS), which currently leads the market.
The surge in e-commerce sales via Amazon (AMZN.O) and Walmart's (WMT.N) Flipkart has provided Xiaomi and other companies with significant growth opportunities in India, one of the world's fastest-growing markets with 600 million smartphone users. However, while online sales now account for 44% of smartphone sales in India, Xiaomi believes that the brick-and-mortar segment holds even greater potential for expansion.
In an interview, Muralikrishnan B., Xiaomi's India head, highlighted the company's lower market position in the offline retail sector compared to its dominant online presence. Muralikrishnan stated, "Offline is where you have other competitors who have been executing fairly well and have a larger market share." Data from Hong Kong-based Counterpoint Research reveals that only 34% of Xiaomi's India unit sales this year originated from retail stores, with the majority coming from online platforms. In contrast, Samsung achieves 57% of its sales through physical stores.
Xiaomi intends to broaden its store network, currently comprising 18,000 outlets and forge partnerships with phone vendors to offer additional products like Xiaomi TVs and security cameras. Muralikrishnan highlighted the less intense competition in these product categories. He also mentioned that some partner stores displaying Xiaomi's branding outside were promoting rival brands more prominently inside, indicating a marketing issue that the company aims to address.
The decision to strengthen Xiaomi's offline presence comes after the company conceded its leadership position to Samsung, which boasts a larger portfolio of in-demand premium phones. With a 20% market share, Samsung currently holds the top spot in India, while Xiaomi, historically known for its budget phones, holds 16%.
To support its retail strategy, Xiaomi plans to recruit more store promoters who will engage and entice potential buyers within the outlets. The company aims to triple its current count of 4,000 promoters to 12,000 by the end of next year.
Besides market competition, Xiaomi also faces a significant challenge in India due to a freeze on its bank assets by a federal agency, amounting to $673 million since last year. The agency alleges that Xiaomi made illegal remittances to foreign entities in the name of royalties, a claim the company denies. Muralikrishnan expressed confidence that their position would eventually be vindicated.
Xiaomi shifts focus from e-commerce to retail sales in India to revive smartphone market share.
The surge in e-commerce sales has helped Xiaomi expand, but brick-and-mortar remains a bigger opportunity.
Xiaomi plans to expand its store network and partner with phone vendors to offer additional products.