'Xiaomi looking to leverage offline channel to regain lost share'

As the proportion of the offline smartphone market grows in comparison to e-commerce, Xiaomi, which used to be heavily dependent on online channels, is aggressively expanding its presence among brick and mortar retailers.

Xiaomi India, which saw shipments decline by a sharp 44% in Q1 2023, as per Counterpoint Research, has released over a dozen job listings to strengthen its offline market presence. The company is hiring multiple cluster managers and zonal sales managers primarily across tier 2 cities.

The job description states the employees will be responsible for driving business across categories, build the brand and drive sales via offline channels, and build relationships with the local distributors, retailers and local regulatory bodies, among others.


Experts said this indicates Xiaomi is expanding aggressively in the offline segment in a bid to offset the slow demand in the online channels where the company’s shipments declined aggressively.

Currently, Xiaomi India gets over 60% of its revenue from online sales, according to industry estimates.

Earlier in May, Xiaomi’s top executives B V Mallikarjun Rao and Rohit Khatter, responsible for channel sales and national distribution respectively, met with the All India Mobile Retailers Association (AIMRA), a retailer body representing over 1.5 lakh mobile phone retailers, where the company announced a new app to help dealers hit targets and track achievements. The company is also extending new financing facilities to cater to the current consumer demand trend of buying premium and high-end handsets.

Xiaomi didn’t respond to ET’s queries.

Another online-dependent brand, Realme saw its shipments decline 52% year-on-year, with its market share going down from 16% in Q1 2022 to 9% in Q1 2023. The company's shipments were hurt due to inventory build-up and unfavourable market conditions for devices under Rs 10,000 where the brand saw the most action, Counterpoint Research said.

However, retailers said the brand is going through organisational changes presently after India head Madhav Sheth stepped down to pursue a global role under the brand. As a result, the company has not been able to focus on a strategy to expand further offline to gain back market share. Realme didn’t reply to ET’s queries.

Counterpoint Research said Flipkart and Amazon commanded around 47% of the shipments a year ago, which declined to 44% in Q1 2023, as demand in the mass-market segment suffered due to macroeconomic headwinds.

At the same time, offline channels strengthened as the market shifted to high-end handsets. “For premium smartphones, users like to have a touch and feel which is why the footfalls are higher in offline stores,” said Tarun Pathak, Research Director, Counterpoint Research.

He added that offline channels are also seeing competitive offers and higher margins to match prices that’s available online.

In fact, brands such as Samsung and Vivo leveraged their strong offline presence to beat Xiaomi and climb up the rankings.

Pathak said Samsung leveraged its affordability schemes at offline channels to capture 20% market share, becoming the top brand in the country for the second consecutive quarter, while Vivo placed more in-store representatives and offered higher margins to maintain its second position with 17% market share, despite a 3% on-year decline in shipments.

However, despite the renewed enthusiasm for expanding offline presence, retailers routinely allege low supplies of popular models, delayed payments and reduced support for clearing end-of-life products.

AIMRA said brands often offer exclusive offers for online channels leading to lower prices. This, they claimed, has led to some retailers buying from online channels to sell in their stores, leading to a large grey market for such devices.