Xiaomi has been a monstrous success in India and changed the entire Indian smartphone market landscape in a few years. It sold 100 Million phones in just 5 years of launching. And it dethroned Samsung to become the top-selling smartphone brand in India, in Q4 2017, and it hasn’t lost that spot so far.
So what contributed to its success?
Cheap in price but not in quality
India is a very price-sensitive market, where even a 1k difference in price can make or break a sale. Xiaomi realized that right away. So they’ve been very conscious in keeping their prices lower, all the while providing specs matching other big phone makers. The very first flagship phone by Xiaomi, the Mi 3 went on sale for 13k, while other brands with similar specs had prices of around 40k. This changed the perception that Chinese brands are cheap quality at a cheap price.
And they continued to make models, by having specs that are absolutely needed and cutting out on other specs which pushed the price higher. This positioned them as a Value for Money product maker.
Flashy flash sales
Xiaomi didn’t have overreaching sales channels in offline like Samsung, which had stores across India in even smaller towns. So they partnered with e-commerce sites. It was a gamble as online shopping was still in a nascent stage back in 2014, and people didn’t trust it well.
So they employed a fascinating model called a flash sale and pre-registration for entering into the sale. The stock was limited and the sale duration was also limited and started at a specific time. This created artificial demand and also drummed up a lot of interest from people. In the first Flipkart sale, the phone went out of stock in 39 minutes. And all the next sales, the stock lasted for less than just 5 seconds.
Products in every price range
Upon the success of its initial launches, Xiaomi launched a line-up of smartphones to cover each price segment. This was common in the smartphone industry, but Xioami compressed the price range such that all the models are within reach of maximum potential buyers. Samsung had a range of pricing from 10k-50k, while Xioami started at 6k and ended at 20k.
Post Sales Experience
Xiaomi focused on building trust and loyalty at the early stages. They invested in as many as 750 service and repair centers in the very first years. It had trained technicians and readily available spare parts at lower prices and lower overall repair costs.
Most other OEMs have their manufacturing units in China and Vietnam. So they incurred significant import tariffs. Xiaomi started setting up phone assembling units in India to lower the unit costs and keep the prices the same, without hurting their margins.
Instead of spending heavily on marketing in the initial days, they focused on consumer touch points. The launch and sale were marketed on social media and primarily through their only sales channel Flipkart. Everyone who visited Flipkart came in contact with the Xioami product banner on the home page. They also used fan events, community forums, and giveaways through social influencers and it spread like wildfire.
Diversifying sales channels
In the Indian market, 70 % of smartphone sales come Offline. Xiaomi realized they just can’t expand by selling only online. So they started out by launching brand-owned stores in major cities. And slowly expanded to other cities and towns. They also partnered with larger offline retail chains and popular smaller stores to sell their products.
After testing the waters with smartphones, they initially jumped to fitness bands. The very first one sold 1 million units in a few months of lunch. And they expanded the portfolio by launching smart TVs, smartwatches, laptops, and other smartphone accessories like cables, chargers, power banks, and wireless earbuds. And the same pricing strategy has been carried over across the product range.
Manufacturing In India
Most other OEMs have their manufacturing units in China and Vietnam. So they incurred significant import tariffs. Xiaomi started setting up phone assembling units in India to lower the unit costs and keep the prices the same, without hurting their margins. This also came in handy during Make In India movement.