You may have thought that Xiaomi is smartphone making company and that’s not true. The company wants to sell everything! Here is: Xiaomi business diversification explained.
After reading this article, we will understand why Xiaomi wants to sell everything!
What if I tell you Xiaomi is not just a smartphone manufacturing company but the company is in the business of technology-based services, electronic products, advertisement and many more.
Doing such diversification within 5-6 years is one of the most challenging tasks.
The chief executive of Xiaomi Lei Jun knows if the company will not provide affording price and high-quality features, Xiaomi may struggle to maintain the smartphone market share in the world.
We have seen many smartphone companies that went out of the business. In India, we can consider Micromax, Lava and Karbonn. In the global market, we can consider HTC and Nokia.
But, Xiaomi did and the company succeed!
If we talk in management term, such things are called vertical and horizontal expansion.
That means, the company has been innovating in its main revenue stream and creating smartphone-related products. It includes power banks, earphones, fitness band, charger, selfie stick, Bluetooth speaker and so on. This is an example of vertical expansion.
And here comes the main thing.
When the company is going to enter in a different segment or a sector from which the company does not belong is called horizontal expansion.
Xiaomi has built television, shoes, sunglasses, apparels, backpacks, security cameras, air purifier, air conditioner, smart home, toys, trimmer, luggage bad, pillow, anti-pollution mask, ball pen and so on.
All such products have no relation with the main business that is a smartphone.
But, how is it possible to create so many products within just 5-6 years of launching a company?
Xiaomi makes the contract with the manufacturer and also give a unique design.
The manufacturer adds Xiaomi branding. In all such non-smartphone based products, Xiaomi makes a huge profit compared to smartphones.
Xiaomi says the company takes less than 5% profit from per smartphone sell but actually it is less than 2%.
On the other hand, if we look at the other products, the Chinese giant makes a huge profit and that’s a business strategy.
In the early days of Xiaomi in India, the company used to sell smartphones with the help of e-commerce giants Amazon India and Flipkart.
After getting amazing results from Amazon and Flipkart, Xiaomi launched its own e-commerce store named with Mi branding.
By doing this, Xioami has been able to reduce its distribution cost because the company has started selling products from its very own platform.
Xiaomi uses MIUI (Mi User Interface) in its smartphones. That has been providing advanced facility compare to all other interfaces.
From early 2019, in order to generate more revenue, Xioami has started showing ads in their interface. By doing this, the company aims to automate small revenue.
Xiaomi is looking to enter the lending business in India. The company has registered the name Xiaomi Financial Services.
Also, experts from the tech industry have been saying for a long time that, Xiaomi has been investing heavily in India because the company may want to integrate all the devices of Xiaomi with Xiaomi Home!
If you enjoyed reading this article, kindly give it a share.
Hit the bell icon below on the right side of the screen to never miss any update. Subscribe to get updates.
According to Statista, the United States of America spent $778 billion, China $252 billion, India…
All the articles are written by Anuj Vohra