Revolutionizing offline retail with our new retail dream

Over the past eight years, we continue to ask ourselves one question: “what has remained constant in the evolving world of business?”

Xiaomi’s answer is this: users have always expected amazing products at honest pricing. Over the past few years, we’ve created devices at accessible prices through our highly efficient online channels. But, we wanted to take on a new challenge of revolutionizing offline stores given their low efficiency, which adds unnecessary costs to products.

Since 2015, we set to revolutionize offline retail through our new retail model – a term that indicates a combination of the best in online and offline retail practices. We have significantly expanded our direct offline retail network, through our self-operated Mi Home Stores. Our direct offline retail capability allows us to broaden our reach and provides a better user experience, while maintaining similar efficiency and the same price point as our online channels.

The long lines at the opening of each new Xiaomi brick-and-mortar store across the world has become a recurring phenomenon and a testament to our new retail model. Our largest flagship Mi Home Store in Shenzhen that opened on 27 September 2017 marks another milestone for our new retail dream.

“It has become a tourist destination in Shenzhen these days,” said store manager Liang Chao. He was standing at the entrance of the beautifully designed 650 sq m, two-floor store, where several customers were trying Mi Electric Scooters, one of our bestselling products.

Liang said every month, the flagship store welcomes dozens of tourist groups from all over the country, with many new international customers. Located at City Crossing, a landmark shopping mall in Shenzhen, the flagship Mi Home Store features the full line of products from Xiaomi and Mi Ecosystem portfolio companies. Different from our previous offline stores, its second floor is a demo zone for users to experience what a truly connected home is like. By giving simple voice commands to Mi AI Speaker, users can control the TV, lamp and other smart devices connected to our IoT platform.

Products in the store also include items such as rice cookers, sofas, bedding, toothbrushes, pens, lithium batteries, and musical instruments – all of which have the same specifications of being quality products with low prices.

“Because we offer a rich portfolio and allow customers to experience products in stores, they have a stronger will to visit and buy repeatedly,” Liang said.

To create a more efficient and pleasant shopping experience, the store also offers a special shopping wall made of five 80-inch screens, allowing customers to tap a product and instantly receive information on its features and capabilities and if desired, consumers can instantly add it to their shopping cart and pay via WeChat. Additionally, every shop assistant has a mobile payment device, allowing users to pay at anytime, anywhere in the store, without waiting in line.

Changing the perception of “made in China” products

In the past, in China, a single article of clothing that costs 100 RMB could be sold for 1000 RMB in a shop, a shocking markup of 10X. The list is endless, which was why Chinese citizens used to buy in bulk while travelling abroad to bring back to China.

“It has always been difficult for me to understand why consumers have to bear the costs of this inefficiency. This is why Xiaomi has the will and determination to revolutionize the industry’s cost-efficiency. We do this by putting in every bit of effort to create quality products and maximize value to users,” said Lei Jun at the Mi 6X launch event in Wuhan this April, where we promised our users that our hardware business, including smartphones, IoT and lifestyle products, will have an overall net profit margin that will never exceed 5%.

Our offline stores are changing people’s perception of “made in China” products. Some users have said that they can walk into a Xiaomi store, close their eyes and buy anything, because they are confident that our products offer the best quality and price. You can also spot many international faces at our offline stores. Just like Chinese travelers who bring home products made in the US, international customers now bring our amazing products back home.

“Can you imagine tourist groups come all the way to our store as a must-see place on their travel itinerary? They purchase so many things here and eventually buy our big suitcases to put everything in,” Liang said.

Shortly after the flagship Mi Home Store opened, we debuted our first Mi Home Store in the Shenzhen Bao’an International Airport in March. In addition to our bestselling smartphones, it brings a range of travel accessories including suitcases, neck pillows and power banks to travelers.

“We’ve been continuously making innovations in our offline stores for consumption upgrade, and our stores are becoming more commonplace, enabling users to buy better products at lower prices at their convenience,” said Eugene Chan, general manager of Mi Home Stores in South China.

Just as Lei Jun wrote in a recent letter to all Xiaomi employees, “nothing can surpass the feeling of hearing a user say that they can walk into a Mi Home Store, and buy any product with confidence, because they know that our items offer the best quality and price. When I hear this, I know that all our effort and energy has not gone to waste.”

Rise of our e-commerce: an efficiency evolution

No one knows what would have happened if Lei Jun, our founder and CEO, hadn’t sold the e-commerce site Joyo.com to Amazon for $75 million in 2004. Joyo.com became Amazon’s seventh global website and was rebranded as Amazon China in 2011.

“Selling Joyo made me feel like I was parting with my child,” Lei said in his office at Kingsoft after a colleague came to congratulate him on the sale. He established Joyo in 2000, and in just four years, it became China’s largest online retailer for books, music and videos. At that time, Alibaba was only a small start-up.

Though saddened by the sale, Lei was greatly motivated by the high efficiency that e-commerce could bring. He had the belief that by improving e-commerce, it would be possible for Chinese manufacturers to make high quality products and sell them at accessible prices.

He put this belief into practice by starting Xiaomi in 2010, embarking on a new journey of making smartphones with features that match the best models in the world, yet sell at half the price through Mi Store, available in mobile app and Mi.com. Mi Store offers the full line-up of our products directly to our users. In Chinese mainland, India and certain selected markets, users can purchase products directly from local Mi Store apps and websites. For other international markets, Mi Store serves as the centralized platform for users to learn about our products and services.

The newly launched Redmi S2 is now available on Mi.com.

Our first smartphone – Mi 1 for RMB 1,999, which is powered by the dual-core processor Qualcomm Snapdragon S3, received more than 300,000 pre-orders in the first two days on Mi.com in September 2011.

Our company is built on innovation and efficiency, and our mission is to relentlessly build amazing products at honest prices thereby helping everyone in the world enjoy a better life through technology.

“Since our inception, we have focused on direct online sales of our products to maximize efficiency and build a direct digital relationship with our users,” said Lei in an open letter published on 3 May 2018.

Due to the efficiency of e-commerce, we can deliver products into the hands of users in a very short time span. During this year’s Mi Fan Festival in early April, a customer in southern China’s Fujian province posted on his WeChat moments with excitement, “I placed an order for a Mi Band 2 on Mi.com in the morning and received it in the afternoon! What delivery speed, I can’t believe it.”

Mi Band 2 is one of the best selling Xiaomi products.

Now Xiaomi’s Mi Store is the third largest 3C and home appliance direct sales online retail platform on the Chinese mainland. Additionally, it’s the third largest direct sales online retail platform in India by GMV in 2017, according to iResearch. Available on Mi Store are several dozen smart devices and household products from Xiaomi and our Mi Ecosystem portfolio companies. We’ve also launched Mi.com in several global markets, bringing users inspirational products at accessible prices, with strong user experience around the world.

Cementing our commitment of bringing amazing products at accesible prices for lifestyle products, last April, we established a new self-operated e-commerce marketplace Youpin, which we created not only to sell our Mi-branded products but also to sell high-quality products that are not associated with Xiaomi but curated and sourced by us.

Youpin, which includes the Youpin mobile app and the Youpin.mi.com website, stands for good taste and premium quality, which is also the Chinese meaning of the name.

We replicated the successful model of Mi Store to Youpin to maintain relentless efficiency and excellence to our customers. Other than Xiaomi and Mi Ecosystem products, Youpin also brings selected lifestyle products from third party companies, offering a wide variety of goods from household items and furniture to clothes and food and wine – all high-quality products made available to consumers at accessible prices.

Our neck pillow from RMB 49 is one of the best-selling products on Mi.com and Youpin.

For example, one of our bestselling products is a tomato egg instant noodle with a price tag of RMB 59.9 for a box of 12 packets. It has received over 22,000 customer ratings in just four months, with a satisfaction mark of 94 of 100.

“It has always been difficult for me to understand why consumers have to bear the cost of inefficiency. That is why Xiaomi has the will and determination to revolutionize the industry’s cost-efficiency. We do this by putting in every bit of effort to creating quality products and maximizing value to users,” said Lei.