Xiaomi offline sales

Located on the bustling Dongzhong Street in Shenyang, the address is right between the Apple store and Huawei flagship store. A few years ago, this would have been a Samsung store, but now it’s the new address of Xiaomi’s 5,000th Mi Home.

We walked in from the intersection of Area C of Joy City in Shenyang. Huawei’s flagship store is eye-catching, but you only need to shift your gaze slightly to the side. You will see two layers of large transparent glass, and the brand logo in the middle is covered by a layer of cheerful red cloth. When you get closer - MIX FOLD - you will know it is a Xiaomi store. A media colleague nearby joked: I thought it was an Apple store.

The “Apple”-style store in front of you is really designed by the designers of the Apple store.

Tim Kobe is the founder and CEO of Eight Inc. He has had a long-term collaboration with Steve Jobs, and the Apple store on Fifth Avenue in the United States was designed by Created by Tim. Before Shenyang Xiaomi Home, he helped Xiaomi design another Xiaomi flagship store that opened in Shenzhen in 2017.

But the significance behind the opening of the 5,000th Mi Home in Shenyang is to demonstrate the results of Xiaomi’s offline retail transformation.

In November 2020, Lu, the general manager of the Redmi brand, said at the Redmi Note9 launch conference that Xiaomi will have a Xiaomi Home in every county in the next year. Since then, Xiaomi’s offline channel stores have begun to speed up.

In 5 months, Xiaomi announced that the inventory of Xiaomi Mi Home has exceeded 5,000. After conversion, an average of about 1,000 offline stores will be opened every month. In the past, the expansion speed of Xiaomi's channels has been astonishing.

Since the establishment of the Xiaomi brand, online has always been a strong channel, but offline channels have undergone several transformations. In September 2015, the first Xiaomi Home store officially opened in Beijing Contemporary Mall, but by the end of 2016, the number of Xiaomi Home stores nationwide only exceeded 50. In 2017, Xiaomi began to try to expand the offline market by opening franchise cooperation. It successively launched Xiaomi direct supply points without stores, and then upgraded them to Xiaomi specialty stores. At the same time, Xiaomi’s offline channels include Xiaomi authorized stores, Xiaomi exclusive stores, and Xiaomi Home.

“Now they are all called Xiaomi Home,” Gao Ziguang, vice president of Xiaomi Group and head of China’s new retail business, said in an interview with Pinwan. Unifying the name Xiaomi Home means that service standards, decoration standards, investment standards, including prices, and even every product are close to unified. This is another comprehensive upgrade of Xiaomi’s offline channels.

Gao Ziguang said that Xiaomi Home Mall is now developing stably and has become the main force in Xiaomi’s offline channels. He also believes that after several offline channel adjustments, Xiaomi has gradually found its own offline retail system.

A practitioner in the mobile phone channel industry told Pinwan that the problem with Xiaomi’s offline model is that it is different from other channel models such as Huawei, OPPO, and vivo 3354. "Other offline brands basically reserve offline rebates on their prices. The prices are added level by level, ensuring profits at all levels from the beginning."

But when it comes to Xiaomi, Its famous low interest rates and high turnover online can easily become a backlog of "seafood" if mapped to offline channels.

Lei Jun settled a score in an interview with Indian media. Xiaomi's marketing model is to control mobile phone profits to 1 to 2, but it cannot bear the risks caused by product backlog. "This is not gambling. Once Xiaomi's data estimates are wrong, the company will be in trouble. If the capital turnover is not available and Xiaomi is unwilling to sell shares, then Xiaomi will face bankruptcy losses."

A mobile phone store owner The boss also told Pinwan that the biggest risk in making mobile phones is inventory. "Rent and labor risks are limited and easy to calculate, but the most difficult indicator to maintain store turnover is inventory."

In the past, channel dealers were often overwhelmed by brands. For example, products that sell well often need to be purchased together with some products that sell poorly. Sometimes brands will also stipulate how many goods must be sold every month to match the purchase target of new products.

But if merchants purchase according to the official website price and the mobile phone market release cycle is so fast, then the dealer is likely to face losses.

For Xiaomi noodles, the low interest rate price set according to the online model is not suitable for directly applying the OV offline channel model. The bottom line of these cases is that the channel dealers are not fighting against the brand, but a game relationship, and no consistent interests can be found.

Since June 2020, Xiaomi’s retail team has begun to run the market offline, focusing on how to find models suitable for Xiaomi. "To be honest, the past few years have not been very smooth, and I have been trying to find a suitable model," Gao Ziguang said frankly. "The previous 6,000 offline terminals were essentially wholesale coverage, but they required a very long chain. The biggest difference today is that we no longer have these. I hope that every batch of goods will be from Xiaomi to consumers. ”

Xiaomi Group President Wang Xiang emphasized an “important progress” at the 2020 annual performance report meeting. Xiaomi has gradually found the most effective way to expand offline retail channels in mainland China. This effective method is "based on digital operations and real-time data" and "the new and efficient online and offline integrated fully digital store model has been verified on a certain scale."

The answer is "Xiaomi Retail Link".

According to Pinwan’s understanding, Xiaomi Retail was released in September last year. It can be seen as a product matching and management app, but the bottom layer is to digitize all Xiaomi's products, fields, and people.

This is "real retail" that Gao Ziguang understands, automatically delivering goods, monitoring the conversion rate of people, and monitoring the flow of goods through digital means. "Because you are a real retailer, we will make a transaction as soon as the POS machine swipes the goods, and the goods will be sold. Instead of saying that they have been sold and entering the system at night."

According to his understanding , there is no second link between real retail and consumers. "Sell directly to consumers, not wholesalers."

In fact, this is also to solve the problem of selling goods on the side. An important aspect of channel digitization is to automatically match arrivals with stores. The automatic matching of products requires that the store’s size, area, product model and other indicators’ turnover should be numeric.

All goods will be counted as Xiaomi’s goods, and channel dealers no longer need to consider the issue of stocking up. "What is our common mission? Try to ensure that there is no shortage of goods, and use the least inventory to achieve higher turnover."

The distribution ratio of popular models

is also based on scenarios of sales ability. In the early strategic support period, the offline distribution ratio was higher than expected offline sales. Xiaomi currently has 5,000 stores, but its size is still not enough compared to other stores. Through the deployment of digital retail channels, some offline merchants are willing to open more stores.

It seems that this is a digital upgrade that takes into account product supply and price guarantee models.

But for the old channel dealers who have accompanied Xiaomi through the process of crossing the river, can their interests be balanced during the process of upgrading channel policies?

Gao Ziguang said that the most fundamental guiding ideology of Xiaomi’s channel construction is true retail. Anyone who does retail will definitely be willing to do business with Xiaomi, but he also said that those who do wholesale, distribute, and do all kinds of reselling I'm sure he won't be happy about it. Because after the control, it will be difficult to dump the goods out. Xiaomi still hopes that a batch of goods will go to consumers, instead of saying that a hundred folding screens are taken away by a dealer and then distributed by itself. "The benefit of doing this is that the price for each product that consumers get is stable."

As for the several problems that this store needs to solve, Gao Ziguang also mentioned the high-end brand. "There are two logics in the construction of this store. One is to use standardized methods to make high-end, and the second is to be fully digital. This is our big logic."

This Xiaomi Home in Shenyang has two upper and lower floors. Layer design, the first floor is mainly for experience of mobile phones, TVs and other hardware products, focusing on technology; the second floor focuses on the experience of smart home and lifestyle products, oriented to life.

The Mi Home store in Shenyang also uses a huge "Apple-style" log desktop; originally there were two floors between the first and second floors, with floor slabs isolated, but I heard that Xiaomi spent a lot of money to knock down the floor slabs and also designed a Stairs for users to rest.

The so-called store is the product, and high-end stores often leave more space, but Gao Ziguang said with a smile that he hopes to design more space for selling goods in the future.

Xiaomi focused on the progress of high-end products at its 2020 full-year financial report meeting. Taking Xiaomi 11 as an example, sales exceeded 1 million within 21 days of its launch. Among them, more than 50 users of Xiaomi Mi 11 are new Xiaomi users. For the whole of 2020, Xiaomi's global shipments of high-end smartphones were approximately 10 million units. Related questions and answers: