Building a brand online is comparatively easy as compared to building a physical presence as building infrastructure requires a lot more time, effort, and investment. The story was no different for Xiaomi.
However, Xiaomi, which started as an online-only brand, has successfully carved a space for itself in the offline retail business as well.
“For the initial 6 months, we had to struggle a lot as we were trying to do what others were already doing and it did not work well for us. So, we decided that if we have to succeed in offline business, we have to do something different. We cut down all the costs and decided to be efficient. We decided to use the technology to ensure maximum rotation with a lesser inventory. We leveraged a lot of our online learning to expand our offline presence. Today, we have 3,000+ exclusive stores,” shares Manu Kumar Jain, Global Vice President, Xiaomi.
Now, the brand is planning to double the number of Mi stores in Indian in the next two years by investing Rs 100 crore.
Offline Store: Working Out Economics
Generally, when brands start expanding, they look out for franchise partners who are big investors. However, Manu Jain is of the opinion that such people are not passionate enough, whereas franchise partners from the lower middle class or middle class are always ready to put in their sweat and blood.
“All the 3,000 franchise partners that we are working with, had very little or no knowledge of smartphones or retail. We collaborated with MI fans who wanted to be an entrepreneur. We ensure that all our stores turn profitable because if as a company we are making money, but if stores are not making money, then this business will eventually not succeed,” he states.
More than 95 percent of Xiaomi stores start generating profit within 3 months of operation and the rest 5 percent take a longer time.
To expand its reach further, the company opened experience stores offering Mi TV, earphones, Bluetooth speakers, Mi Notebooks, and laptops along with smartphones.
Pre-pandemic, the company opened 3 such stores in 3 different cities – Bengaluru, Delhi, and Chennai.
" At present, we have put the expansion plans on hold. As soon as the situation improves, we would be open to launch more products and showcase those not available in India to the Indian MI fans. It is an excellent deal for us to collect feedback because it helps decide what product to launch and not to launch,” he says.
However, all the products are available at the online store along with more than 100 company-operated stores across the country.
Innovating by Investing in Startups
From the umbrella of 100 products that Xiaomi offers, only 4-5 – smartphones, smart TVs, laptops, routers, and smartwatches - are designed end-to-end in-house by Xiaomi.
The company has invested in close to 400 companies across the world, 10-15 startups in India. Out of these, 280 companies are considered ecosystem or IOD companies.
“These are companies that we have incubated, or we found somebody very young, and they designed these products along with us. In the future, if any startup wants to work with us as hardware or software startups, we would love to work with them,” he concludes.