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Xiaomi sees strong growth in offline sales in India

Although, Xiaomi is posting record growth one quarter after another, its competitors are coming after it with full force.

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Xiaomi can’t afford to slow down.

With rivals such as Samsung, Vivo, and Oppo’s offshoot brand RealMe chasing it up close, the Chinese smartphone maker is going all out with all guns blazing in the India market.

The company has recorded a 70% hike year-on-year in its offline sales in the country during the recently concluded festive season, while on a monthly scale its brick-and-mortar business grew by 50%, local media Economic Times reported.

Offline sales was “the fastest-growing channel for Xiaomi this Diwali festive season,” Xiaomi India’s director (offline sales) Sunil Baby wrote in an internal letter, the media report said. Baby added that while the overall business grew by 40%, offline sales saw a growth of 70%. The festive season period that Xiaomi is referring to was between September 28 to October 29.

On October 30, the company had claimed to have sold over 12 million devices in Diwali sales during the above mentioned period, including 8.5 million phones, 600,000 Mi TVs, and 3 million ecosystem devices such as Mi bands, air purifiers, and power banks.

The offline channel has been the stronghold for rivals Samsung, Oppo, and Vivo, which grew on the back of their expansive network of distributors in the country. Xioami, on the other hand, after entering India market in 2014 focused on online-only strategy and with no intention of getting into offline sales. It was only in early 2017, with the intention to capture the mass market comprising 70% of the overall market, it launched its products in retail stores. The offline strategy worked well for Xiaomi, which had already captured the online demand for smartphones.

In the fourth quarter of 2017, it toppled Samsung and has reigned the smartphone market ever since.

Within two years, Xiaomi has expanded its footprints in over 790 Indian cities with 80 Mi Home stores, 2000 Mi Stores, and 5000 Mi Preferred Partners.

For the quarter ended September, Xiaomi witnessed “highest ever smartphone shipments” with 12.6 million units, and grew 8.5% over the corresponding period previous year, as per a report by research firm IDC. Xiaomi was the top smartphone seller in India with a 27.1% share in the overall smartphone market. Samsung lagged with an 18.9% market share, followed by Vivo and RealMe at 15.2% and 14.3%, respectively.

One eye on the rear view mirror

Although, Xiaomi is posting record growth one quarter after another, its competitors are coming after it with full force.

A recent report by CyberMedia Research (CMR), said if the market share of BBK Group’s all four brands–OPPO, Vivo, RealMe, and OnePlus–are combined they’d capture 42% market share in the third quarter ended September 2019, registering a 23% Year-on-Year (YoY) growth.

On a YoY basis, RealMe grew “an incredible 511%, while Vivo recorded 87% growth,” the CMR report said. In comparison, Xiaomi saw its growth fall by 2% YoY, although it maintained its lead “with one in four users buying” its smartphones.

“The major highlight for the quarter is the sheer dominance of the BBK Group, which now accounts for a bulk of the play in the smartphone market across price tiers through clever market segmentation strategy aimed at varied consumer personas,” said Prabhu Ram, head, Industry Intelligence Group (IIG), CMR.

Good news for Xiaomi is that it is still witnessing robust demand from its brick-and-mortar stores, despite a 2.6% overall decline that smartphone industry saw in offline channel sales during Q3, 2019.

“The unabated aggression of the online players will continue to be a challenge for the offline channel, which remains the largest channel for smartphones in India,” Navkendar Singh, research director, Client Devices & IPDS, IDC India, said in the report.