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Xiaomi’ Marketing Strategy in Malaysia

Xiaomi entered Malaysia with the promise of having a real alternative to the more expensive smartphones of Samsung and iPhone. Even other chinese manufacturers like Oppo cant compete with Xiaomi smartphones at very good prices for the hardware and specs on their phones. Xiaomi’s Marketing tactics these month though need to be further investigated to determine if Xiaomi is actually good for Malaysian Customers.

Xiaomi Malaysia had three flash sales so far, selling their Xiaomi MI 3 Smartphone for 889 RM and its Xiaomi MI Powerbank 10,400 mAh for 36 RM. Xiaomi sells them exclusively online on these flash sales. All three sales managed to get a incredible popularity and the devices got sold out very fast. The last 5000 units were sold out in under 2 minutes.

This Xiaomi Marketing tactic of selling the devices only on FlashSales and not regularly definitely raises popularity and demand a lot of customers get angry and frustrated. There are tons of complaints on Xiaomi’s malaysian Facebook Fanpage and in Forums. The opinion of most people is that Xiaomi creates a artifical scarcity of its devices in Malaysia to boost sales and demand.

Lets look at it from Xiaomi’s site first to be fair. Lets play Devils Advocate for a second. What does Xiaomi really gain from these FLash Sales ?

• 1. Stock scarcity spreads the words, people are worried to not get their favorite device. Xiaomi gets free marketing with that tactic and they increase demand. -> Scarcity Theory
• 2. They further create marketing hype by making scalpers think its easy for them to buy a fex Xiaomi devices and make their own profirs later
• 3. Limitation on Stock makes sure that Xiaomi has very little warehousing and supply chain cost. They can minimize their operations and warehousing cost dramatically.
• 4. Xiaomi has total control about market availability, and they can direct demand immediately by controlling exactly how many devices they import.
• 5. Scalpers are apparently part of their business strategy. They manage to buy those xiaomi items with a lot of tricks and sell it for a profit to those that couldnt order. Probably Xiaomi is watching closely to see how much they can increase their prices in future and people still buy.
• 6. Efficiency. Xiaomi achieves a big marketing boom yes. But also they have total control about warehousing, supply chain, operations and hr cost. That helps keeping the prices as low as they are.

So to sum up we can say that Xiaomi employs these Marketing tactics to keep the prices for their smartphones as incredibly low as they are. They are not targeting the Malaysian mass market for now, but tech savvy customers. These tech savvy customers know in doubt how to buy. Many will be even able to build those direct buying scripts, or maybe even pay a bit more from the scalpers.

Now lets look at it from consumer site.

Surely Xiaomi manages to boost demand. But the common thing is on every Flashsale there more customers then smartphones sold. That naturally means a lot of angry customers. Much of the anger comes from the fact that most customers could add their Xiaomi Mi 3 or Mi Powerbank to the shopping cart but after adding the payment information, the devices were sold out. Sure there were follow up sales, 3 by now, but still a lot of frustrated customers left.

Now you can say that Telco and Maxis sell the items with a two year telco contract. But surely now everyone wants to buy a expensive two year contract. So the only real alternative to buy a Xiaomi smartphone in Malaysia is to wait for the flashsales.

Worsening the matter, from consumer perspective ar definitely scalpers. Those crappy creatures manage to buy several Xiaomi Mi 3 phones and Mi Power Banks at once, only to sell them later for way higher prices. The highest Xiaomi Mi 3 sold we saw, was for 1400 RM, more then 500 RM more expensive then the original. Often these scalpers use buying scripts and dirty tricks to have several orders in. With this behaviour they make it impossible for other customers to buy.

Xiaomi has tried to limit the exposure of scammers with limiting the maximum orders to one Xiaomi MI 3 and two Mi Powerbanks but that barely helps. It would help more if they would extend the time that the phones are available, avoiding server issues meanwhile like on the second sales.

The main argument of people that are pro Xiaomi’s Strategy is, that they provide a valid alternative for local customers in buying a high end smartphone for reasonable prices in Malaysia. That is simply not true. To be an real alternative the Xiaomi phones would need to be availble permanently in Malaysia. Instead they are having short Flash Sales, leaving a lot of customers disappointed and angry. This leaves most of the customers still only the alternative to buy an Apple or Samsung Phone, if they can afford it.

We could understand if Xiaomi just creating a Marketing Buzz while reinvesting their profits in building better manufacturing and providing more phones for the Mass Market. It seems that their are not though. Xiaomi China has been using the Flash Sales Model as only Way of Sales for 4 years now and it seems like they wont be going away from it anytime soon.
Summing up we can say that Xiaomi Malaysia has been very successful in creating a buzz around their brand and selling those devices that they had available. Meanwhile they are disappointing a ton of customers and fans and getting a big step away from competing for the Mass Market with Samsung, Apple and Sony. If Xiaomi is happy with limiting devices to a small elite mass and frustrating the Mass Market they should keep on with that strategy. We think so it would best if they change their Scarcity Marketing Tactics.

Xiaomi has great smartphones that is their strong point at unbeatable prices. Why not take the bet and offer their great devices to everybody. We dont really believe that they need to keep their flash Sales Model to be able to compete. After all smartphones are not that expensive to produce and Apple and Samsung have huge profit Margins on their phones. It would be great if Xiaomi finally comes to the battelfield with Apple and Samsung. This would have the effect that Malaysian and worldwide customers truly have an alternative to these overprices smartphones. Xiaomi if you hear us – Please go for it and dont go down the way of Samsung, taking profits over your loyal fans and customers.