We want to become an Indian company, build an R&D team and manufacture phones in India, Manu Jain tells Sonali Chowdhury
Xiaomi made its way to the top of the smartphone heap by perfecting the flash sales model on the internet. Yes, such flash sales cut down on marketing and distribution costs, but they also create dissatisfaction among consumers. How are you addressing such concerns?
In our experience, flash sales are necessary for us to manage the demand-and-supply disparity. For example, we had only 10,000 units of Mi 3 available during our first sale in July 2014. However more than 200,000 people turned up for that sale. Similarly during the first sale of the recently launched Mi 4i, we had only 30,000 units available, but more than 3,50,000 people registered for the sale. Whenever we see demand-supply equilibrium, we move to open sales. Most of our products are now available on open sales across various online platforms, except for the recently launched Mi 4i and Mi Band.
We faced a technical glitch only once and that was during the first flash sale for Mi 3. We opened up for sales on July 22 and more than 2,50,000 people registered but there were only 10,000 units. It was such a rage that our e-commerce partner Flipkart's website crashed for a short period of time due to heavy traffic. We learnt the hard way and from there on worked with Flipkart team to build a robust system to handle this. In exactly a week's time we had another successful flash sale, which was a sell- out in two seconds flat. We are working to increase our product supply to match customer demand and expectations. In 2014, we sold 61.1 million smartphones globally, more than three times the 18.7 smartphones we sold in 2013.
Now you are testing yet another model - selling refurbished and unboxed units in India. Do you see Indian consumers reacting positively to refurbished models, given their aversion to buying second-hand/used goods?
Since March we are selling refurbished and unboxed units via our partners Overcart and Greendust. To clarify, unboxed units are the same as regular new units with no defects that were returned by the buyers after opening the box. Refurbished units, on the other hand, are those that have been returned owing to either a software or hardware fault, which are then repaired and re-sold by our vendors. Currently, we are offering unboxed and refurbished units of the Mi 3, Redmi 1S, and Redmi Note 4G. For example, unboxed and refurbished units of Redmi 1S are being sold for Rs 4,999 and Rs 4,499 respectively, whereas the original selling price of the device was Rs 5,999. So it's economical for consumers and if a product is brought from an authorised channel, we also offer sales service warranty support.
You are now pushing for a store presence. What are the things you need to put in place before you do that?
In China and many other markets, online sales account for 70-75 per cent of our sales, while the rest comes from offline business channels. In India, we are exploring all possible options. Currently, we are running an offline pilot programme, where we have tied up with The Mobile Store and Airtel to sell our devices. Each of these stores has a Mi Zone, where a consumer can touch and feel and experience our product before buying. Currently, a majority of our sales in India come from our online partners, and we will continue to focus on e-commerce. We have recently enabled sales through our own online platform, Mi.com, an online marketplace for Mi products, where authorised partners can sell their products.
You really need a strong selling pitch in India since you are a late entrant in an already crowded market? What is the product plus?
We don't want to just sell phones. We are a mobile internet company and working to build a host of internet services. For example, Xiaomi has its own OS, MiUi, which can be installed on most Android smartphones and has a massive fan community that continuously adds custom localised features. In India, we are building an R&D centre, which will focus on India-specific product features. We will focus on localisation, themes and India-specific features to cater to local requirements here. Through our active engagement with our community, we have been able to customise OS MiUi in six India languages like Hindi, Tamil, Telugu, Kannada, Malayalam and Bengali, and are working to add six more languages including Punjabi, Marathi and Gujarati.
Xiaomi's social media strategy has helped in creating a loyal fan base. What is the best way for brands to leverage this medium?
Social media is extremely important to Xiaomi's brand strategy. Our social properties are not just platforms to push sales but are also channels to meaningfully engage with customers. It's also the channel through which we try to be more approachable than most other phone brands. You will always find a human-interest and fun angle to all our pages/posts, be it on Instagram, Facebook or Twitter. Take our recent 'Mi Box Testing' video where our VP Hugo Barra and product PR head Clinton Jeff risked breaking their bones to let our fans know that the packaging for our phones is super solid. We talk to fans and try not to make just sales pitches. On an average we have 3,000-5,000 fans engaging on every single Facebook post, while 2,50,000 fans are following us.
What does the government's 'Make in India' initiative mean for Xiaomi?
We want to become an Indian company. To do so, we want to build an R&D team, manufacture phones, set up a data centre in India and invest in the ecosystem companies in India. We would like to start with an assembly plant in India and are talking to partners and a few state governments for this. We hope to close these discussions within this year.
The 'Mi' man
Before joining Xiaomi in June 2014, Jain co-founded Jabong.com
Prior to that, Jain was an engagement manager at McKinsey & Company for over four years
He has a Bachelors degree in Mechanical Engineering from IIT, Delhi, and PGDM in Business Management from Indian Institute of Management