Xiaomi has hard lessons to face
When Xiaomi first entered the PH market last year, their arrival was hailed as beginning of the end for many local and international brands. And why shouldn’t it? Their Mi 3 at the time had an excellent price to spec ratio, coming in at more than half of the price of competing phones at the time. Right after that, the company released the Redmi 1S, further providing great value to the sub 7K price segment. Xiaomi also released their Mi Pistons and series of power banks to the PH market, and it seemed that Xiaomi was well on their way to becoming a dominant market player.
But then, somehow, things slowly unraveled. Expected releases of products like the Redmi Note, both the first generation and the 4G version were not released in the PH, even though they saw its release in neighboring ASEAN countries. Releases of highly anticipated products like the Mi 4, Mi Band, and Xiaomi’s other accessories never pushed through, and products like the Mi Pad were delayed.
As a result, many fans of Xiaomi were disappointed at the slow (and sparse) releases, and negative sentiment started to build. Before the release of their newer products like the Mi 4i, Mi Pad and the Redmi 2, there was a time that only four products lines were available to buy in Lazada, products that were all released last year. Many (unfairly) accused Xiaomi of selling old stock in the PH.
While Xiaomi never explained why the PH always gets the tail-end of their releases, it’s not hard to see why. To put it simply, Xiaomi’s online only selling model has never worked in the Philippines. The local market is simply too set in their offline buying ways. We’ve confirmed with other brands that even when their products are offered in Lazada at a cheaper price compared to physical stores, people still are willing to pay extra to buy it offline. In other markets, Xiaomi have always posted how fast their sellout times are, and how many pieces they’ve sold during that time period after a successful flash sale – that’s not the case in the PH, which already tells you a lot.
And that’s part of the problem – the Philippines isn’t a hot market for Xiaomi. Their products aren’t flying off the (virtual) shelves at Lazada. Stocks are sitting in warehouses, incurring storage costs wherein other countries it’s gone in less than five minutes. It’s not surprising then that Xiaomi is prioritizing other countries – the company has always stated that they operate with a razor-thin margin, and if we were in their shoes, we’d prioritize sending stock to countries where those products would sell out as soon as they’re posted for sale, not somewhere where they’ll sit for a while before being sold.
But that’s also a problem because people who want Xiaomi’s newer products aren’t going to settle for last year’s models. For Xiaomi enthusiasts, Xiaomi’s official Lazada store is no longer the destination to get products. Many have turned to the gray market imports to get their fix. It’s a big problem for Xiaomi Philippines, one that will be an issue moving forward as the company solidifies its offline retail efforts. We’ve always said time and time and again – if someone wants a phone or an accessory, they’ll find ways to get it, officially or unofficially.
So what’s Xiaomi to do? It’s a dilemma, obviously – a real chicken or egg situation. To justify the speedier release of products, sales of Xiaomi’s devices need to pick up but to do that, Xiaomi has to release more devices to win back customers. To be fair to Xiaomi, they’ve correctly identified one problem – the lack of an offline retail presence – and have taken steps to resolve that. Folks from Mi Philippines have assured us that they’ve gone to great lengths to cover the entire PH with their retail network, a feat that’s not easy, considering that offline isn’t their primary selling channel. Keeping the prices of devices the same in both offline and online retail channels is also a great move from Xiaomi, one that will keep their competitive edge against other brands. That’s not enough, and Xiaomi will need to start upping the ante when it comes to product releases and at least try to get parity with other ASEAN neighbors like Malaysia and Indonesia.
Will Xiaomi ever regain the momentum that they had when they first entered the PH market? We hope so, but to do that, the company needs to regain its lost fans first.