Since Xiaomi came into our lives and into our hands in the form of mobile phones, one aspect has given us a lot to talk about; their low prices. There is no doubt that this is a prominent reason for buying and that puts the competition in serious trouble by not always being able to offer what the Chinese giant offers.
Although now it has been possible to perceive a slight increase in prices, they continue to enjoy smartphones with a value for money that is difficult to say no. This strategy is not the result of one day, but involves complex organization and decisions behind it. To find out everything Xiaomi has done to achieve such low prices , we must go back to its origins, its great growth and today its market model.
The philosophy to compete against sharks
From the first Xiaomi Mi 1, the company made it clear that its intention was to reach many users with very attractive prices and that idea has been the one that has accompanied them throughout this time. A market strategy to deal with the big mobile brands such as Samsung or Apple and looking at the sales results, we can confirm that the move has gone well for them.
Being born in 2010 and reaching the top in just 10 years is not an easy task and Xiaomi can boast of it. The gigantic mobile brands that were already at the top and were launching their revolutionary smartphones at the same time have much more capabilities than the small Xiaomi to be noticed. This was the case for several years, until the interest in Xiaomi broke barriers and left China and even Asia to sneak into Europe.
Profit margin is key
It is not a secret that Xiaomi sells cheaper in part thanks to the fact that its profits are smaller compared to the competition. At least that happened until recently, because in several statements its CEO, Lei Jun has explained that this obtains a profit margin that is barely 8%. These data contrast widely with what we can see in other brands.
Although it makes that small percentage of profit, it is enough to continue investing in development, employment and machinery, among the many other expenses present at the hand of an outstanding volume of sales . When Xiaomi manufacture a terminal, it does so knowing that it will sell millions of units in a practically safe way and therefore can play more with prices.
Different investment routes to save
Nor can we forget the keys that allow Xiaomi to avoid unnecessary costs. In this way that money can be dedicated to other aspects without having to reinvest them again to continue generating value. The first of the aspects is based on patents, since Xiaomi is not so common in this sector, something that is repeated in advertising. Large advertising campaigns are usually signed by Samsung, OPPO and Apple, but Xiaomi nevertheless opts for more discreet actions.
The online medium was the one that opened the doors to him and he continues to opt for that idea on many occasions. The sale through the internet is more feasible for the brand because it does not have to go through so many intermediaries and be able to carry out the sale itself, a strategy that saw the light in the great “boom” of Xiaomi and that is now very present.
Things are changing at Xiaomi
Many of those ideas that we have seen are being deformed and adapting to the new Xiaomi, where we begin to see how at least the “Xiaomi” brand raises prices while the Redmi and Poco have remained to maintain the essence. Now Xiaomi dares to sell through operators and more external points of sale, in addition to its own physical stores, which entails costs. We will see where all this takes us and if one day Xiaomi makes us forget that idea that their phones are very cheap.