Xiaomi’s growth path includes three main factors. Today the “Mi Home” is the example how the company evolved its business model integrating New Retail
Since the launch of its first smartphone in 2011, Xiaomi has grown very fast in the first few years and became China’s top smartphone companies in 2014 and 2015. And the company has maintained a surprising growth rate. In 2014, over 61 million of Xiaomi’s smartphones were sold that year. Today, China based smartphone maker has expanded into Asia, Africa and parts of Europe.
However, its sales for smartphones dropped massively in 2016. Company’s over-reliance on online sales and fierce competition from other Chinese smartphone companies – like Vivo and Oppo – pressed Xiaomi to change its business model and go offline, develop a New Retail format, seamlessly integrating its online and offline channels.
©Sohu.com. Last year in May, In May of this year, Xiaomi officially entered the French market and opened the first “Mi store” authorized store in France
In 2017, Xiaomi has incorporated New Retail strategies to its “Triathlon business model”, which Xiaomi started to place great emphasis on interconnecting its online and offline channels. Since then, the company has enjoyed an unprecedented turnaround. As stated by Lei Jun, Xiaomi’s CEO, “Xiaomi is a new brand that was born in the process of China’s economic transformation and upgrading. It is a mobile phone company, mobile Internet company and a New Retail company”. And in the strict sense, Xiaomi is a retail company
The result is the “Mi Home” store (小米之家), an offline store that allows Chinese consumers to experience Xiaomi mobile phones, but also a range of other related products, like speakers, headphones, laptops, TVs, and other mobile devices.
The hi-tech company opened its first physical store “Mi Home” in Beijing, which marked Xiaomi’s official debut in the offline retail market. Three years after, more than 400 Mi home stores were established in the country, covering more than 50 cities in China. According to Xiaomi, the number of Mi Home stores is expected to reach 1,000 by 2019-2020 and achieve total revenue of 70 billion yuan in five years.
The success of Xiaomi includes three main factors: its powerful business ecosystem, “killer products” and strong “Mi Fans” culture.
What makes unique Xiaomi is its business model known as “The triathlon model” that now entails three components: the “Hardware”, “Internet Services” and “New Retail”. As we know New Retail means the integration of online and offline channels, thus the essence of Xiaomi’s new retail strategies is to provide users with omni-channel shopping experience and through highly efficient store operations, with optimal rent- to-revenue ratio.
Major online channels include Xiaomi’s direct online retail store “Mi Store” (available in mobile app and Mi.com), Xiaomi’s self-operated boutique-style e-commerce marketplace “Xiaomi Youpin”, and its flagship store on Tmall. Nowadays, new retail is a core component of Xiaomi’s growth strategy, allowing the company to operate efficiently while simultaneously extending the customer reach and enhancing customer experience.
©Xiaomitoday.com. The Chinese brand Xiaomi launched its flagship smartphone Mi 9 in February, the first consumer smartphone capable of using 5G networks.
According to Lei Jun Xiaomi “strived to offer ‘killer products’ about high quality, high performance, well-designed and honestly priced”. The company has maintained a unique principle of “satisfying 80% needs of 80% of the market”.
Recently Xiaomi aims to offer high-end products to the mass market – allow high-tech, trendy, and well-designed products at price points that are accessible to the widest and largest user base. Thus, the company would offer mass products that are of high quality in order to meet the needs of the post-80s and post-90s generations who want a higher quality of life.
This is directly connected with its “Mi fans”. Xiaomi’s success is also largely built upon its strong fans culture. During the years, the company has cultivated close interactions and direct relationships with its fans. Xiaomi’s ‘ killers products’ such as relatively inexpensive products with good design or intelligent functions have continued to win and accumulate massive global community of “Mi Fans”.
©Xiaomitoday.com Xiaomi named its unique business model as “The triathlon model”. Now entails three components – the “Hardware”, “Internet Services” and “New Retail”.
Today passionate users who are intensely loyal to Xiaomi brand. There are even“Mi Fans Clubs”, not only in China, that are active interactions within Xiaomi’s platform for fans to provide feedback and ideas on product development, product testing, advertising and marketing.
Xiaomi has regularly launched a number of promotional campaigns such as “Mi Fans Festival”, “Mi Pop” events, games, and contests to boost sales and engage with their fans.
Xiaomi definitely changed its business philosophy. The company moved from a Chinese mobile and technology company to a lifestyle and retail company. And it worked. Xiaomi already replaced domestic rival Vivo to occupy the spot of the world’s fifth-largest smartphone maker after its smartphone shipment rocketed 74.5% to 92.4 million units
Currently, Xiaomi is the world’s fourth-largest smartphone company, achieving over 100 billion yuan in annual revenue and has nearly 20,000 employees. On 3 May, 2018, Xiaomi Group officially submitted an IPO application to the Hong Kong Stock Exchange, aiming to raise US$10 billion.
MORE ON THIS TOPIC