Xiaomi bows to offline pressure; commits higher margins than e-commerce sites to offline retailers

Highlights
  • Xiaomi has promised higher margins to offline retailers during the Diwali festive season
  • The company will also offer the same cashback and EMI offers on both channels
  • Earlier this year, Xiaomi starting ensuring that offline and online retailers get the smartphones at the same prices 

After years of following an online-first approach, Xiaomi has finally buckled under constant pressure from offline retailers. The company has announced to retail partners that it will give higher margins to offline retailers vis a vis e-commerce platforms to ensure profitability of the former. These higher margins have been guaranteed for the Diwali festive season, but retailers expect them to continue going forward during major occasions. This is, of course, a huge win for offline retailers, which have been appealing to popular smartphone brands such as Xiaomi, Realme, etc. that have gained success via the e-commerce route and now enjoy huge demand in both offline and online channels.

The announcement of higher margins than offline retail has been made by Xiaomi in Gujarat for now, though it is expected to follow suit in other states soon as well. Along with higher margins, the company plans to offer the same discount on both channels, something we have seen in sales throughout 2020. Cashback and EMI offers, special schemes, and discount scheme settlement within 7 days are the other major plans for offline retailers that Xiaomi has in the pipeline for the festive season.

The letter in its entirety is posted below:

In the letter, the company has reiterated that it will not have any online-exclusive smartphones, that too not just during the festive sales. The company says neither did it ever have any online-only smartphone, nor will it have one in the future.

The offline market has become the next big growth channel for smartphone brands in India, with all brands eyeing the lion’s share of the pie. While Samsung, Vivo, and OPPO have enjoyed a healthy offline-to-online sales split, Xiaomi and more recently Realme have largely depended on online sales to boost their growth. However, the two brands have been successful in making the shift to offline.

To aid this offline growth, Xiaomi earlier this year brought parity to online and offline prices and discounts, which ensured customers don’t flock to e-commerce sales. Moreover, it ensured faster delivery of stock to offline stores. The company presently has 10 smartphones, two laptops, and a host of accessories and smart devices, along with a network of over 10,000 retailers and runs its own stores as well.