Xiaomi, the second largest smartphone maker in India, aims to expand its offline share to 50 percent of sales this year. Xiaomi is the largest smartphone brand in the online space, but it is yet to replicate its online success in the offline retail space. In an interview with Economic Times, the company CEO Lei Jun said that his company aims to fix the supply demand challenge in order to grow further in the world's second largest smartphone market.
In 2016, Xiaomi clocked $1 billion in sales in India and it now expects to hit $15 billion global revenue this year. Jun says Xiaomi wants to replicate its India success in other markets like Indonesia, Russia, Ukraine and Vietnam before launching its products in the US. "Our biggest challenge has been supply and manufacturing. In our latest Redmi 4A sale, we sold 250,000 phones in just 4 minutes… This also means a lot of users who want to buy our products could not get our products and had a bad experience," Jun told ET.
Xiaomi recently started its second manufacturing plant in India to supplement the growing demand. At the launch of Redmi 4A, Xiaomi VP Manu Jain said that the company is producing one smartphone every second and 95 percent of its India sales are coming from its local manufacturing plant. However, Jun added that even with the second plant, the company is falling short on supply.
Xiaomi recently introduced the Redmi Note 4 in the offline channel and its CEO Lei Jun notes that it is difficult to replicate the online retail model in offline channels. "If we look at overall market, online is a small piece. Our business model is all about efficiency so it’s rather depended on how many people adopt the internet. In China after we have achieved such scale, the challenge is how we can achieve the same in offline with efficiency. In India, after we achieve more than 50% market-share in online space, the question is how to do the same in offline," Jun added.
Xiaomi is struggling to compete against rivals Oppo, Huawei and Vivo in China. The company has already dropped out of the top three in the Chinese smartphone market and is now looking to continue its growth trajectory in India. Jun also added that his company achieved growth in 2016 and has lot of cash for the year ahead.