Why Mobile phone brands in India are moving (back in time) towards setting up brick and mortar stores

It’s surprising how all the major online only mobile phone brands in India that have been known to create virtual stampede every now and then are now moving back to brick and mortar stores.

Smartphone brands like Xiaomi, OnePlus, Motorola and others have been extremely popular in India; they have all managed to make quite an impact and money off of their online only presence. Then you wonder why in the last one year, all of these brands have tried to one up each other in building offline shops in the country.

Most recently Coolpad announced the launch of its first experience zone in India and the company is looking to expand its offline presence by opening six exclusive experience zones in all major cities in the country including Delhi, Hyderabad and Bangalore by end of this year.

After being present in India since 2014, Motorola too launched six retail set ups simultaneously across the country and the company plans to open 50 more, which are called Moto Hubs, by the end of this financial year. However Motorola does not see it as an offline expansion strategy but an expansion of experience strategy, Sudhin Mathur, Country Head, Lenovo Mobile Business Group, India said, “There is a strong demand from our consumers to touch, feel, and experience our products. The market has become very big, more than 100million customers now buying smartphones and we need to cater to all kind of consumers through all kinds of channel”. With these Moto Hubs across the country, Motorola hopes to create open, engaging hubs for 18 to 30yrs old customers at all buzzing retail sites in India.

Known world over as online only brand, Xiaomi too invested in offline stores called Mi Homes in India. After opening about 50 stores in China, Xiaomi brought its first Mi Home in India this year in May at a shopping mall in Bangalore. Even though the Mi Homes in India were a vastly different from the big experiential Mi Homes in China, it was a big move for Xiaomi as the company was seen as one of the most popular online smartphone brand in India. The latest Mi Home however is an experience store in one of the most popular mall in NCR and Xiaomi has already set up five stores and has plans to open 100 more stores in India in next two years. Xiaomi has a bigger reason for propping up offline stores across the country, Jai Mani, Lead Product Manager, Xiaomi India said, “Last year we launched Mi air purifier, I think a lot of people have definitely not bought a product like air purifier online. So if people come to the store to see the phone, they will see the air purifier and see what it looks like so it's a great way for people to experience our products. For those products (non smartphone) offline is really the key experience and MI home lets us control how the products are displayed, and control the experience of the people who walk in the store. It’s a great way to reach more people and helps us sell different types of products.” Xiaomi has a huge product portfolio in China but in India, the company is mainly seen as a smartphone brand. Xiaomi is looking to expand to more categories in the future like TVs, laptops etc.

Also Read: Google has finally realized there is a market beyond budget phones for Android One, turns to Xiaomi

Smartphone brands with mainly offline presence like Samsung, Micromax have always made a much bigger splash in India than online only brands. An offline presence certainly helps these companies in making their presence felt in the tier I and tier II cities where offline purchases are much higher. And especially around festive season when the offline sales shoot up for mobile phones, it seems to be the right way forward to set up shops in order to acquire new customers.

Chinese smartphone maker OnePlus had the most unique online only strategy when they brought in their first OnePlus flagship phone where customers needed an invite to buy their phone. Even with an invite only scheme, OnePlus managed to create quite a stir in the India market. OnePlus smartphones have been exclusively available on Amazon India since the sale of OnePlus One commenced in the country. OnePlus too went offline with their first experience store in Bangalore earlier this year. OnePlus is onto its fifth flagship device and it still continues to sell its products online through Amazon along with the offline store.

It is clear that the skew is heavily in favour of going offline, all smartphone players in India are working on strengthening the offline channel but it does not mean that the online market is not doing well, all players still consider online as an important platform to reach consumers and the offline push is only going to push their online growth, Manish Tiwary, VP, Amazon India says, “Most of them(offline stores) are for experience, for customers to be able to touch and feel the new products. I think it really helps for a complete customer experience, there is only so much you can do online but if you supplement with offline experience stores, it just brings it alive for the customers so we love when our brand partners do that, it definitely improves sales for us online”.

The smartphone market in India has been through many changes in the past couple of years, consumers in India are not hankering for cheap phones anymore, almost 70% of the consumers go for mid to premium phones and in order to sell phones upwards of Rs. 15000, it is important for brands to be able to give a touch and feel experience. In terms of telecom services, we have seen a huge growth in 4G network penetration in the last two years that is certainly going to up the demand for smarthones in smaller cities. Most importantly 67% of the consumers in India still buy phones offline and there is now saturation in the online marketplace, that leaves these smartphones brands no choice but to invest in offline expansion in order to grow in the fastest growing smartphone market in the world.