In a major shift from its online-only strategy, Xiaomi is entering into a tie-up with Redington BSE 2.80 % to distribute its smartphones in brick-and-mortar stores in the offline retail dominated Indian market. The Chinese smartphone maker's move would make its smartphones available to a much wider consumer base, underlining the importance of the South Asian nation which has become its largest market outside home.
The program will begin on a pilot basis from 10-15 top cities over the next one to two months, starting next week. The model will then be perfected before scaling up to cover all major cities.
"We would be starting a new channel of sales in unorganized retail market in India by partnering with Redington," Manu Jain, head of India operations confirmed the development. "Over next few months, we may add one or two more partners," he added.
Jain expects offline sales to be one-fourth or one-third of its total sales within a year, up from 10% at present. The contribution will be similar to trend in China, where 30% of its sales come from the operator bundling and offline retail sales.
Xiaomi has prepared inventory to meet the demand which it expects to surge as a result of selling through physical stores for its value-for-money smartphones offline, but will begin with smaller quantities while keeping prices same across all online and offline retail channels.
Its four models - Redmi 2, Mi 4, Mi 4i and Mi Pad - will be sold at Rs 5,999, Rs 14,999, Rs 12,999 and Rs 12,999 prices, respectively, across all channels.
Analysts say that while Xiaomi's move into offline space would benefit them immensely, lack of control on margins given to distributors could threaten the competitive advantage it enjoys right now by selling through multiple online channels and limited retail stores.
Jain however differed. "We will have to give out margins but the business also expects return on investment. But if you can predict demand more accurately, then the same money can generate much higher sales, profit and return on investment (ROI), rather than using it for blocking inventory," he said. Our effort will be to get partners to have much higher ROI while maintaining supply chain, margin and price parity across channels.
The Lei Jun-founded company which is valued at over $45 billion has taken the top spot in its home market of China on the back of online-exclusive flash sales. Xiaomi entered into the India market in July last year and till June end, has sold over 2.8 million units.
It tested the offline waters earlier this year by partnering with Airtel where it made its Redmi Note 4G available in the telco's retail outlets. Soon afterwards, it tied up with largest retail chain The Mobile Store for selling its smartphones.
It initially partnered with online retailer Flipkart for flash sales with low phone quantities but soon increased the number of devices put on sale. This year it made its products available on rivals Amazon and Snapdeal as well as its own India website.