Time was that the Indian mobile phone market followed global trends. For instance, in 2011 Samsung overtook Nokia’s market share in Europe to become number one. The next year, it would pip Nokia at the global level to become the world’s largest mobile phone maker. But it would be in 2013 that Samsung finally dethroned Nokia in India to become the largest player.
For nearly the next five years, Samsung would go on to stay number one in spite of massive disruptions in mobile phone form factors, consumer purchase behaviour and cut-throat challenges from dozens of competitors.
Until January 2018. That’s when two firms that track smartphone shipments—Canalys and Counterpoint—independently announced that Xiaomi had pipped Samsung to become number one for the quarter that ended in December 2017. Just a couple of months ago, IDC had declared Xiaomi a joint market leader with Samsung in its Q3 market share report.
Source: Counterpoint Research
By all accounts, this is a massive feat for a company that entered India just three and a half years ago. Per Counterpoint’s analysis, Xiaomi grew at a whopping 259% in India during the calendar year 2017.
These numbers are significant because they signal an inflection point in India’s smartphone market, which has now come to be dominated by the Chinese. As per its founder and CEO Lei Jun, India has emerged as a bigger priority market for Xiaomi than its home country China. While China’s smartphone market declined by 5% in 2017, India’s smartphone market registered a 12% growth in the same period. Thus, India could be pivotal to Xiaomi’s IPO plans, which reports say, might happen sometime in the second half of 2018.
How did Xiaomi manage this?
I, Mi, and my cult
In July 2014, Xiaomi entered India. The company was a bit of an unknown entity back then, even though it was making waves in China. India was a Samsung-led market, typified by its robust distribution network, with retail presence in every nook and corner of the country. Pair with the fact that Samsung sold both smartphones and feature phones, which, even today, continue to dominate the country’s mobile phone market.
Its entry strategy was akin to what Royal Enfield has been doing with its motorcycles forever. Launch a product and don’t ship enough of it, thus creating a feeling of scarcity, and, hopefully, demand. Some call it “hunger marketing”. It sold exclusively online, choosing to sell through its product e-commerce market leader Flipkart. “When we decided to launch in 2014, Flipkart was by far the largest e-commerce platform, with all the necessary capabilities to enable a great buying experience for the customers,” says Raghu Reddy, Xiaomi’s head of online sales. “There was also a shared vision to fundamentally change the customer buying behaviour from offline to online for the smartphone category, which was mutually beneficial,” he adds.