Xiaomi India has launched its first flagship experience store in India, offering products sold in China but hitherto not available in India. The products this store in Chennai will offer include an electric cycle, a self-balancing scooter and an electric folding bike. The company plans to use feedback from customers on these products to understand the level of customisation required before launching some of them in India. In an interaction with Gireesh Babu, Xiaomi India's MD Manu Kumar Jain dwells on the company's retail strategy in India. Edited Excerpts:
What is the idea behind displaying products that you haven't yet launched in India?When Xiaomi started almost eight years ago, the aim was to build an internet company. We have several internet products -- what we call ecosystem products. There are 40-50 such categories in China, such as smart shoes, smart cycles, smart scooters, smart air purifiers, smart water purifiers, and smart routers. Our aim is to make everything smart, internet-enabled and eventually run by a smartphone.
We started in India with smartphones, and have around eight to ten categories today. In smartphones, fitness band and power banks we are number one in India. In air purifiers and routers we are number one in online alone. Now we want to launch many more categories in India. We decided to display 15-20 categories in our flagship stores here. These are not for sale, but for experiencing and giving us feedback, for customisation in India. This will help us launch many more such categories here over the next two or three years. This is our way of collecting live feedback from people.
In India, Mi is seen as a smartphone company. How are you planning to expand this definition?
How would your retail system evolve to include other products? What is the offline sales strategy?
We are an online company and will continue to focus on online. But we also want to build offline. Our market share in offline used to be less than 0.5 per cent, but in nine months -- from March-April 2017, to the fourth quarter ending December -- this had grown to 11 per cent. We grew almost 20-30 times in offline. We already have 2,500-Mi preffered partners in 25 big cities in India. Mi preferred partners now are smartphone specific sellers, who might not have the capacity to store or sell the bigger products like Mi TV or the smart scooter or smart cycle. Do we want to develop offline market for all these categories we launch in next few years? Yes, Of course. Would we use the same channel? We don't know. We need to evaluate this. If some of these shops are big enough and want to sell the entire portfolio, may be yes. But if the shops are small and can only cater products like smartphone, we may need to build a separate channel. It depends upon the product category. We will have to take a very informed choice for the channel selection.
What about aftersales services?
We have been working on launching the TV for three years, and our service network for TV is already there in close to 200 cities. We have around 750 service centres for phones across the country. In January 2017, we had 250 centres. When we launch many more product categories, we will have to accordingly build service networks for each of them.
Do think the experience stores will bring down the time to launch?
Of course. We are talking about the importance of the Indian market. We would want to compress the period taken for launch, and may be few years down the line we will have simultaneous launches between China and India. There might also come a day when we launch products first in India and also design and develop products exclusively for India. Eventually we want to manufacture everything in India. But we need certain volumes to start manufacturing and you have to do a return-on-Investment analysis. If that is favourable, we would want to set up local factories for everything here. We would love to consider TV manufacturing in India, but it is a complicated process requiring heavy investments and we need to understand what the volumes would look like before taking a decision.
Would you bring the television to the retail stores?
Eventually, yes. We are still evaluating what is the best way to do it, since many of our current channels are not the best way to do it. We are selling through the Mi Homes. We have to re-evaluate our offline strategy for TV, but the aim is definitely to sell offline.
How much have you invested in India? What would you invest in the future?
The short answer is: a lot. By 2015-end we were selling, as per IDC numbers, almost a million a quarter and by 2016-end we were doing three million in a quarter and in 2017 we were doing nine million a quarter. In two years we have grown nine to 10 times, which means we have set up more capacity requiring investment. As far as Mi Home is concerned, we started with one in the middle of last year and now we are opening the 25th Mi Home in 11 top cities in India. We may open flagship experience centres in Mumbai, Delhi and other metro cities. Tripling the number of service centres in a year would have required a lot of investments. Instead of two warehouses, we have expanded to five big warehouses and 26 smaller ones. We used to have one call centre, now we have three. The total headcount is around 400 people in India now, one year back it was 150. Everything is growing exponentially for us. All of these things require investment. I don't know and can't share the number.