And no, it’s not just about e-Commerce
Xiaomi has managed to capture the hearts and imagination of almost every place it sets-up shop in, primarily because of its uncanny ability to offer top-of-the-line gadgets at almost unbelievable prices. So how can Xiaomi offer hi-end gadgets at dirt-cheap prices? We know that selling their products exclusively online is part of the recipe, but it seems that it goes much deeper than that.
Techcrunch recently sat down with Hugo Barra, Xiaomi’s VP for Global, and the ex-Googler told the tech blog how they’re able to offer their fantastic devices. Part of it is their very narrow product portfolio – a smaller product portfolio means that the company can focus their efforts at making the supply chain that’s attached to each product as efficient as possible.
Xiaomi also keeps their products on the shelves much longer, and continues to sell tweaked versions of those devices 18-24 months after their release, which is unheard of for other manufacturers like Apple, Samsung and Sony. The rationale is simple – because the products have a longer lifespan, Xiaomi can get better deals for each individual component that makes up for their products from their suppliers.
“The vast majority of the components [in our devices] are still the same, so in terms of supply chain and component sourcing, we’re on the same supply contracts as Redmi 1, which means we’re still getting the same discounts on components,” he explained. “We can continue to ride the cost curve, so the importance of having a very small portfolio is significant — the fact that we only launch a few products each year, and (the fact that) we only have two product families,” said Barra during the interview.
