By Aditya Kalra
NEW DELHI (Reuters) – China’s Xiaomi will focus on boosting its sales in India at retail outlets after years of big e-commerce bets, its Indian chairman said, as the company seeks to boost smartphone sales after falling behind South Korea’s Samsung.
India’s e-commerce sales through Amazon and Walmart’s Flipkart have grown in recent years, helping Xiaomi and others expand into one of the world’s fastest growing markets with 600 million users. of smartphones.
But while 44% of smartphone sales in India are now online, the brick-and-mortar segment remains the biggest game and Xiaomi expects it to continue to grow.
“Our position in the offline market is significantly lower than it is online,” Xiaomi’s Indian director Muralikrishnan B. said in an interview on Friday. “Offline is where you have other competitors that do quite well and have a bigger market share.”
Only 34% of Xiaomi’s unit sales in India this year came from retail stores, with the rest via websites that have long been its main sales driver, according to data from Hong Kong-based Counterpoint Research. Samsung, on the other hand, makes 57% of its sales in 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 the competition is less intense.
He said Xiaomi had discovered that some partner stores that put its bright orange branding outside stores displayed 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 larger portfolio of now-in-vogue premium phones. The South Korean giant has a 20% market share in India, while Xiaomi, which historically focused on budget phones, has 16%.
“Offline remains a key platform as India embraces the premiumization trend,” said Counterpoint analyst Tarun Pathak. “Consumers who spend more would like the look and feel of the premium product.”
Xiaomi plans to hire more store promoters – salespeople who attract, present and sell phones to potential buyers at retail outlets. It aims to triple the number of developers to 12,000 by the end of next year from levels at the start of 2023, Muralikrishnan said.
Another significant India challenge for Xiaomi is a federal agency freezing $673 million of its bank assets since last year. The agency alleges that Xiaomi made illegal payments to foreign entities in the name of royalties. The company denies any wrongdoing.
“We will continue to be confident…that ultimately our position will be heard and validated,” Muralikrishnan said.
(Reporting by Aditya Kalra; Additional reporting by Munsif Vengattil; Editing by William Mallard)