What Xiaomi PH's physical stores mean for consumers

What Xiaomi PH’s physical stores mean for consumers




Last week, Xiaomi Philippines has announced that Mi products will soon be available in retail stores. This is a stark contract to their core strategy of selling directly to consumers rather going thru dealers and retailers, thereby saving up on cost and passing the savings to Mi fans.

So, why the move to offline from an pure online strategy? Perhaps, you might want to read up on our previous article on “Top 5 Crazy Filipino Gadget Buying Habits“.

Xiaomi PH used to be exclusively sold by Lazada Philippines since last year. They’ve also tried doing a pop-up store sometime last year, giving them insights on offline buying habits of Filipinos.

But why are they going offline when the online-only strategy has been their biggest advantage over many other brands in the region? Well, it could be 2 things:

1) Low online adoption. Despite Lazada’s digital marketing prowess, not enough people are buying Xiaomi products which could be due to several factors — provincial fulfillment (couriers do not deliver to some remote areas), low credit card penetration (just 5%), and low internet penetration (35%).

2) Consumer Confidence. Some online retailers have shared with us that as many as 25% of their potential customers are afraid of transacting online. Many others also want to touch and feel the devices first before deciding to buy one. Add to the fact that Xiaomi isn’t yet a household name like Samsung, Apple, Sony or LG.

This move is not unique to the Philippines. Xiaomi has done this in India as well.


 

Better Availability and Customer Reach. The biggest advantage to customers will be provincial availability of Mi products. That means you can just go to a number of retailers (perhaps MemoXpress or Villman) and inspect the gadgets before buying. This will also place the devices on open sale (no more 1 day flash sale).

Higher Suggested Retail Price. By shifting from pure online to offline (dealers, retailers), Xiaomi will need to increase the SRP of Mi products. The additional margins will allow dealers/retails to make a decent profit to carry the items. This could be somewhere between 15 to 30%.

One example is the Mi In-Ear Headphones which now has bumped up the price to Php849 from Php695. That’s basically around 22% increase on the original price. Expect other models to be have similar percentage in price increase.

Here are our estimates:
Mi Powerbank 10400mAh – Php645 to Php785
Mi Powerbank 16000mAh – Php1,299 to Php1,599
Redmi 1S 8GB – Php4,999 to Php5,999
Redmi 2 8GB – Php5,999 to Php7,299
Mi Pad 16GB – Php10,999 to Php13,499

Online Price to Increase as well. While it makes business sense that retail stores will carry a higher price tag due to additional cost and margins, the online price (Lazada listed price) should remain the same right?

Well, there’s the One Price Tag Law (2006) that requires sellers to use a single unified price tag for their products. This was imposed before to prohibit merchants from giving two different prices — one for cash buyers and another higher price for credit card buyers (passing on the credit card charges).

This law also applies to the setup of Xiaomi. If the offline price is higher, then the online price needs to be adjusted to reflect the same price.

The Bottom Line. Well, it boils down to two inter-dependent factors — wider distribution channel vs. higher retail price. We think this will be a welcome change especially to provincial consumers. However, repeat Xiaomi customers/fans who are familiar with the brand and the quality products might be disappointed with the price increase.

With the new estimated SRP of MI products, do you think they are still a good buy?



Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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26 Responses

  1. Fireice2 says:

    One price law is a retarded move. Sellers simply will mark up all their prices to incorporate credit card fees. No benefit for cash buyers.

    • doom says:

      Is it? You’re missing the point. The benefit is not for the consumers. It’s for the sellers. It’s not always about the customers.

  2. leonard says:

    correction Mi powerbank 16,000mAh

  3. bamboo says:

    walang kwenta!

  4. Easy E says:

    mas mahirapan makabenta ng fones xiaomi dito pag ganyan. Sana lang mag benta rin sila ng iba pang mga gadgets nila like the tv. Mas mura pa rin siguro sa ibang online stores na nagbebenta ng xiami from other countries.

  5. psikick says:

    Yung remote areas ba na yun na di daw na deliver ng lazada may mga mall o cellphone stores para sa xiaomi? Di ba wala rin?

    2. Kung nahihirapan sila magbenta online bakit sold out lagi? Yung redmi 1s lang di na sold out recently kasi alam ng lahat may 2 na..

    3. One Price tag law is useless as pointed out by sir fireice2.. The tag price became the card price and buying cash gives you a “discount” you can’t get by going card..so dalawa pa rin ang Price ng item..

  6. Mi Powerbank 10400mAh – Php645 to Php785
    Mi Powerbank 10400mAh *(16000mAh) – Php1,299 to Php1,599

  7. typo

    Mi Powerbank 10400mAh – Php645 to Php785
    Mi Powerbank 10400mAh – Php1,299 to Php1,599

  8. Do the Delima says:

    It wasn’t that it was sold online. It was that products were not readily available even online. Palaging out of stock.

  9. kalolooy says:

    bye xiaomi your new strategy seems to be a retard one….

  10. me says:

    I guess this could be goodbye Xiaomi. You’re not worth buying anymore. The problem is the availability of the NUMBER of phones/Accessories in Lazada. The flash sale was ok but you obviously did not learn that people find other alternatives when they believe what they want is out of reach (always out of stock). If you had more items that could last for about an hour, maybe you’d have more customers, more sales and more money. But nah you had to stick with the “hype”.

  11. john says:

    hindi mabenta sa online ang xiaomi kasi bago nila bigyan ng stock dito sa pinas, naunahan na sila ng ibang companies ng better deal. sobra tagal kasi bago magdala dito ng stock

  12. The problem with the online store LAZADA selling XIAOMI products is the products are often OUT OF STOCK!! Example, the much awaited Xiaomi power bank is not available for months!! Even the Mi3 phone is extremely difficult to purchase. Flash sales were fine to get some hype but they should have the item available after the flash sale as well.

  13. rabbitkun says:

    Ang first at major na naging problem nila na naghamper sa kanila is ang government natin. :/ Then yang One Price Law na yan is dahil din sa government pa rin as they’ve stated “Certain government regulations prevent us from having an online and offline price, thus, we are forced to maintain the offline prices for Mi products across all selling channels”.

  14. hoqnq says:

    they should stay online-exclusive in my opinion. reason being that their products are not really at par with familiar retail market brands like samsung, apple, etc.. that exclusivity makes their brand coveted and that is their edge. now they’ll be right smack in the middle of a market under an unfamiliar brand and selling products with marked-up prices to a brand-conscious customer base.

  15. pedro makaluso says:

    one word “GREED” meron na namang EPAL na gusto i-take advantage ang pagka-mabenta ng xiaomi products – most probably may isang grupo ang nakipag-negotiate sa xiaomi for them to be the exclusive wholesale distributor dito sa pinas. at ano namang kalitohan ‘yang sinasabing “price tag law” – paki-educate naman po kami kung sa’n duon ang stipulation na ang ibig sabihin ng unified price when a merchant sells a product? (dapat kung si merchant A nagbebenta ng bayabas for PhP 10.00 dapat si merchant B dapat at least PhP 10.00 din? ‘yun ang pagkakaintindi po namin sa lines po ninyo when you expressed that “One Price Tag Law”) naman naman – we are not lawyers here, pero kung ang puhonan namin ay mas mababa pa sa competitors namin, ipe-penalize ho kami kasi ibinebenta naman ng mas mababa sa aming ka-kumpetensiya? ganu’n ho ba?

  16. zen2zen says:

    their phones will also be available in the reclaimed islands that China is now building in our very own sovereign territory.

  17. wtf says:

    ‘hope all xiaomi products be available at retail stores that are more accessible sa compared to the “very short” flash sale….

  18. wrongmove says:

    Kaya hit na hit ang xiaomi sa lazada because of its very good price. kaya sold out lagi. Kung tataasan nila ng ganyan e goodluck nga talaga. Wala na silang advantage over other brands

  19. David Ong says:

    Xaomi have more than one option of creating a reseller market resulting in a higher price. They can have a Xaomi showcase office, in only a few key cities, and sales be done through COD couriers, of which many are reliable for most have received remittances in this way. Customers who wish to see it themselves can avail of it, but those who don’t can still buy online. This way, the price remains very competitive, online still, but showcase office, strictly no sales outlet. That said, comments that Xaomi products are always out of stock is true. Myself, whilst in Singapore, I simply pick up a Mi Note Lte and a powerbank over the counter at a price just slightly more than what’s on Lazada, but if online same or lower than Lazada price.

  20. Rain says:

    Merchants circumvent the One Price Tag Law by providing CASH DISCOUNT for CASH buyers, which apparently is legal. In other words, mas mura ang cash kaysa pagbili via credit card.

    But I don’t think Xiaomi will have increase in sales because of this since with the markup, their products will have less cost difference with other (also) reputable brands’ units. One thing that entices people to buy Xiaomi products is the cost.

    Also, how come Xiaomi products are always OUT OF STOCK in Lazada? For example, the Mi Powerbank should be selling like hotcakes considering there’s a DEMAND for it yet they chose to sell them in limited quantities.

  21. Mi Fan says:

    I’m very happy to have bought my Mi items during the flash sales
    That’s all I could say

    Mi 3, earphones, 16K Powerbank

  22. dmytris says:

    yes, it’s a stark contract. goodness, yugatech! hire a copy editor.

  23. laarnie says:

    Is Goods PH a legitimate seller of Xiaomi Piston? I saw one here https://www.goods.ph/xiaomi-mi-piston-v2-in-ear-headphones-matte-black-67613.html and it’s very cheap compared to other shops.

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