Xiaomi is a privately owned Chinese electronics company headquartered in Beijing, China. It is presently the world’s fifth largest smartphone maker. Xiaomi’s products include smartphones, laptops, and related consumer electronics. However, no doubt it’s the phones which had actually made the company the world’s third-largest mobile manufacturer following Apple Inc. and Samsung in the year 2014. Now the question might arise in fact about the way its phones are priced. Why is Xiaomi Redmi phones so cheap even with high specs? Here’s a commentary on the sure-enough fact:
- Quick & Large sized Production: The most significant advantage what Xiaomi has today is their production alignment and products platform across different countries. Like established brands Samsung, Nokia, etc. – they offer almost same models in most of their operating countries, and that gives them the advantage to achieve real economies of scale. They can squeeze margins of their suppliers and in turn promise them bigger volumes and thus top lines with timely payments. They were the first one to set up their factories in India to take advantage of Make-In-India program.
- Always in-flavor models: When Xiaomi launches any model – they make sure that the time the market right. They never experiment with old processors or technology – which gives them lot of favors from the bloggers & consumers. I will explain the bloggers part a little late here, but consumers always prefer the latest technology. Today, they purchase the phone not by looks but also by the “what-is-under-the-hood.”
- Use of Influencers: This is probably the first brand, which has used the social influencers in the very best manner. They hold conferences, parties and take their feedback very seriously. If you are an influential blogger – Xiaomi will ensure that they keep calling you for feedback and involve you. This helps to create a buzz in social media.
- Success in India: Xiaomi’s success in India also largely thanks to e-commerce companies who were looking to acquire new customers and wanted to show higher GMV to their investors or bosses. That has resulted in almost zero cost of sales to Xiaomi. Today – marketplaces like Flipkart or AMZ does an advertisement for Xiaomi models because they are getting users or buyers and that help them to add into GMV.
- Xiaomi is not only a mobile company: When you buy a Xiaomi phone, it usually comes with few apps – which you may not require. These apps are of non-removable nature. Over a period, people start using these apps, and Xiaomi makes money from the advertisements which they are placing inside these apps. Now imagine the kind of broad customer base Xiaomi holds and calculate the revenue.
- Scarcity generates demand: In the initial phase, they have ensured that their supply will remain lower than the market. This creates a lot of fury among customers that they did not get blah blah model on blah blah date flash sales. Customers complained about social networks, and again company enjoyed the publicity. People who did not know Xiaomi came to know about it.
- Avoiding unnecessary investments: Even today in India, which contributes almost 60% of their overseas sales – their total employees in India are less than 100. Now consider other brands, and you will be able to calculate the savings of not only salaries but other stuff also. Also, lean organizations will always make faster calls. Bigger ones move like elephants. They take time to respond to the market.
- Sale of the products in online: Most of Xiaomi’s products are exclusively sold through its online hypermarket chains and stores, which is a massive money saver. It also solely sells its products through its own online web store, mi store. It entirely outflanks distributors and other third-party retailers, both of which dig for profits of their own and exalt the price after that.
- Constrained Stocks: Releasing only a precise quantity of phones each time it’s launched, has been a principle of Xiaomi’s game that has helped keep costs down. Thereby, no extra casting.
- Promotions: Xiaomi doesn’t seem to believe in promotions. The company doesn’t spend money on customary promotions or advertisements to hike marketing, unlike other major Chinese smartphone manufacturing companies like Vivo, Oppo, Lenovo, One Plus, Honor or Gionee. The company has confided upon social networking sites, the media and its customers around the globe.
- Innate Policy: Xiaomi’s products remain mostly in all online marketplaces for about a year before a new device is launched, and then again they launch new gadgets at just the sublime time. Hence, there’s a need for a new smartphone every year! I guess 😛
That’s all. Now you tell us your opinions on this topic. What do you think the reason why Xiaomi Redmi phones are cheaper. If you agree with our opinion, please share this article with your friends on Facebook and Twitter.
Based on the inputs from Quora.