Xiaomi plans to boost smartphone sales in India as Samsung struggles
China’s Xiaomi will focus on boosting sales through physical stores in India after years of focusing on e-commerce, the Indian president said, as the company aims to revive smartphone sales after lagging behind South Korea’s Samsung.
E-commerce sales in India through Amazon and Walmart’s Flipkart have skyrocketed in recent years, helping Xiaomi and others expand into one of the world’s fastest-growing markets, with 600 million smartphone users.
While 44 percent of smartphones in India are now sold online, the brick-and-mortar segment is still the most important segment and Xiaomi expects it to grow further.
“Our market position in offline is substantially lower than what it is online,” Xiaomi’s India head, Muralikrishnan B, said in an interview on Friday. “Offline is where you have other competitors who are doing quite well and have a bigger market share.”
Only 34 percent of Xiaomi’s sales in India this year came from stores, with the rest coming through websites that have long been its main sales generator, according to data from Hong Kong-based Counterpoint Research. Samsung, by contrast, gets 57 percent of its sales from stores.
Xiaomi plans to expand its store network beyond the current 18,000 stores and increasingly partner with phone vendors to offer other products, such as Xiaomi TVs or security cameras. According to Muralikrishnan, competition is less intense in these locations.
He said Xiaomi had discovered that some partner stores that placed their bright orange branding outside the stores were displaying competitors’ brands more prominently inside, a move the company said was addressing a marketing issue.
Xiaomi’s offline push comes months after it lost its leading position to Samsung, which had a much larger portfolio of premium phones that are now in vogue. The South Korean giant has a 20 percent market share in India, while Xiaomi, which has historically focused on budget phones, has 16 percent.
“Offline will continue to be a key platform as India embraces the premiumisation trend,” said Counterpoint analyst Tarun Pathak. “Consumers who spend more want the look and feel of the premium product.”
Xiaomi plans to hire more store promoters — salespeople who lure, pitch and sell phones to potential buyers at outlets. The company aims to triple the number to 12,000 promoters by the end of next year, from early 2023 levels, Muralikrishnan said.
Another major challenge for Xiaomi in India is the freezing of $673 million (nearly Rs. 5,500 crore) of its bank accounts by a federal agency since last year. The agency alleges that Xiaomi made illegal transfers to foreign entities in the name of royalties. The company denies wrongdoing.
“We remain confident that our position will ultimately be heard and validated,” Muralikrishnan said.
© Thomson Reuters 2023
