Chinese smartphone maker and online retailer Xiaomi Inc. says it sold 23.16 million mobile phones in the second quarter. That’s a quarterly record and 70% more than it sold during the same quarter a year ago.
“Except Xiaomi, few smartphone makers can recover after falling sales,” founder and CEO Lei Jun said at a recent press conference.
Xiaomi is No. 3 in the Internet Retailer 2016 China 500 and No. 4 in the Internet Retailer 2017 Global 1000. The Beijing-based company grew sales from zero in 2011 to $10 billion in just five years by relying on its internet-centric marketing philosophy, such as updating its mobile operating system based on suggestions from online users, according to Lei.
However, Xiaomi’s sales slowed in the past two years as the China market matured and new competitors emerged. Such Chinese smartphone makers as Huawei Technologies Co. and ZTE Corp., inspired by Xiaomi’s success, used online channels to introduce their own sub-brands aimed at younger consumers. Also, brands like Vivo and Oppo gained ground by selling phones through many bricks-and-mortar stores, especially in small cities.
Xiaomi’s recovery stems in part from its opening physical stores as well as selling online. In less than two years, Xiaomi has opened 149 stores in about 40 cities, and says it expect to operate 1,000 stores within three years.
“Our store on average can generate $3,000 in sales per square foot in a year, which is a very efficient level compared to other consumer brands.” Lei says, “Consumers are very confident shopping in our stores, where they can find good products and enjoy the same prices as online. Also, shopping mall operators very much welcome us because Xiaomi is a popular shopping destination in the mall.”
Besides selling on its own e-commerce site, Mi.com, the company also expand its online sales on popular online marketplaces in China, such as JD.com and the Tmall shopping portal operated by Alibaba Group Holding Ltd. “The online channel continues to be a key route to market for Xiaomi and this quarter saw it take the lead in the 618 online sales events across online retail platforms, such as JD.com and Tmall,” said Canalys Research Analyst Lucio Chen. JD.com is No. 1 in the China 500.
Xiaomi also successfully expanded to other countries, including India, Russia and Indonesia.
Xiaomi sold out 4 million smartphones in India in the first quarter, taking 14% of the market, according to Singapore research firm Canalys International. Xiaomi also was among the top three brands in terms of sales, in Ukraine, Indonesia and Myanmar.
Although the company expects its smartphone shipments to reach 100 million units in 2018, Xiaomi is no longer just a smartphone maker. Through a series of acquisitions in the past several years, Xiaomi has expanded into selling a wide variety of consumer electronics, including web-connected wristbands, electric scooters, air purifiers and robotic vacuums, selling both online and offline.
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