Xiaomi underestimated India demand, to ramp up production

Written by Anand J | Bangalore | Updated: Aug 13 2014, 07:20am hrs
Even as the fourth batch of Chinese mobile device manufacturer Xiaomis Mi3 handset was sold out in 2.4 seconds on Flipkart on Tuesday, the company's India head Manu Kumar Jain defended the sales strategy. He said that Xiaomi grossly underestimated the demand in India and now plans to ramp up production of the handsets.

We are changing the production plan at the factory (in China). We are slowing down the production of some other handsets meant for other countries and ramping up the production of Mi3 in India. Hopefully, the quantity would be higher in a few weeks. We understand a lot of people are disappointed and I apologise for that, Jain told FE.

Xiaomi sold 20,000 units in the latest sale on Tuesday the fourth in less than a month since its launch in India on July 22. Flipkart, its sole distributor, had asked users to register in advance for a chance to buy the phone. But even as there were over a lakh of registrations, only 10,000 units were available in the first and second flash sales. The company ramped it up to 15,000 units in the third sale on August 6, but still couldnt keep up with the demand. In fact, Xiaomis first sale in India saw Flipkart website crashing for a while, before returning to normal.

The next sale of the handset, priced at R13,999, is onAugust 19. We are talking to disgruntled customers to see how we can do thisdifferently. This is not a strategy. We did not do any marketing, said Jain. He added that the registration process helps the company draw up a weekly demand forecast and plan better.

The companys India Facebook page had less than 10,000 likes before the first sale on July 22, currently it stands at 33,000, and Xiaomi thought the phone would only appeal to tech enthusiasts. We knew India was going to be big, but we grossly underestimated the demand. No one had any clue. This was a new geography. These are India-specific handsets and there is a limitation to ramp up the production line in China, said Jain.

According to Jain, the handsets made for India come with country-specific stickers, software, box, user manual and pricing label. Jain added that countries have different specifications and regulatory requirements. Units dispatched to Thailand or the Philippines or India are all different. We are changing the production line according to the demand, said Jain, who joined the company in May this year.

Jain, who co-founded online fashion portal Jabong, said Xiaomi wont take bookings in advance and then deliver handsets late as such strategies may prove counter-productive. He said the company has gone over various models with sales partner Flipkart and found this (flash sales on select dates) to be the best way.

Xiaomi will launch another phone, the Redmi 1s, in a few weeks followed by Redmi Note, a phablet device. The company is planning to introduce its new flagship device Mi4, launched in China less than a month ago, in India before the end of the year. While we don't have targets, we will plan significantly higher quantities for all our handsets in the future, he said.