E-commerce sales in India via Amazon and Walmart's Flipkart
have surged in recent years, helping Xiaomi and others expand in one of the
world's fastest-growing markets, with 600 million smartphone users.
But while 44 percent of India's smartphones sales are now
online, the brick-and-mortar segment remains the bigger play 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 have
been executing fairly well and have a larger market share."
Just 34 percent of Xiaomi's India unit sales this year have
come from retail stores, with the rest through websites that have long been its
dominant sales generator, data from Hong Kong-based Counterpoint Research
shows. Samsung, in contrast, gets 57 percent of its sales from stores.
Xiaomi plans to expand its store network beyond the current
18,000 and increasingly partner with phone vendors to offer other products,
such as Xiaomi TVs or security cameras, where Muralikrishnan said competition
is less intense.
He said Xiaomi found some partner stores that put its bright
orange branding outside shops were displaying rival brands more prominently
inside, a marketing issue the company would address.
Xiaomi's offline push comes months after it lost its
leadership position to Samsung, which had a much bigger portfolio of premium
phones now in vogue. The South Korean giant has a 20 percent market share in
India, while Xiaomi, which historically focussed on budget phones, has 16
percent.
"Offline remains a key platform as India embraces the
premiumisation trend," said Counterpoint analyst Tarun Pathak.
"Consumers spending more would like to have the look and feel of the
premium product."
Xiaomi plans to hire more store promoters — salespeople who
lure, pitch and sell phones to prospective buyers inside outlets. It targets
tripling the count to 12,000 promoters by the end of next year from early 2023
levels, Muralikrishnan said.
Another significant India challenge for Xiaomi is a federal
agency's $673 million freeze on its bank assets since last year. The agency
alleges Xiaomi made illegal remittances to foreign entities in the name of
royalties. The company denies wrongdoing.
"We'll continue to be confident... that ultimately our
position will be heard and validated," Muralikrishnan said. © Reuters