A month or two ago, few people outside China had ever heard of Xiao Mi. A couple of years ago Xioa Mi – known as the “Chinese Apple” for their apparent copycat approach to the Cupertino company’s products – were not known by many inside China. But suddenly, news that they were now market leaders in smartphone sales in China, toppling Samsung and leaving Apple miles behind, has made Xiao Mi a hot topic around the world (and if you think that might not matter; 37% of smartphone sales globally are made in China). I was in Chengdu in China’s Sichuan province recently, advising a mobile phone client, and was fortunate to be able to study Xiao Mi and their impact on the market firsthand. They are a slick operation. But at the heart of their success lies a fundamental understanding of shopper behavior – and the scale of this impact creates learnings for marketers and shopper marketers everywhere, not just in China.
Sichuan – the chili bowl of China, best known for its spicy food and its pandas, has a few other secrets. Nearby they make one of the best Bai Jiu (China’s local spirit) that I’ve ever tasted. They also seem to have more mobile phone shops than anywhere on the planet. On a market visit I counted around 180, all within easy walking distance; and that was just one district of the city. One after another, next door to each other and on both sides of the streets. All housing the same brands, all with similar signage, and similar bored-looking sales associates. 
All with rows of handsets, leaflets and the like. Each store looked the same, only varying in size. Each brand execution looked the same. Samsung’s bold blue – emblazoned across the entrance and prime real estate inside – dominates. And there, towards the end of a row of around thirty or forty mobile phone stores, I first encountered Xiao Mi.
Xiao Mi sells handsets. They are nice, but no nicer than anyone else. They are often cheaper, but you can buy similarly priced, and similarly featured phones from other manufacturers. Yet the Xiao Mi store was different. It was packed with shoppers. How are they doing it?
Xiao Mi have a great product, and yes, there may be many similarities with Apple, and yes their designs are good, but that isn’t what makes them great. Their success seems to be built on a number of factors.
Understand shopper behavior – which touchpoints matter
In Chengdu, as across China and the world, bucket loads of cash is spent at retail. Manufacturers really seem to believe that most decisions are made at the point of purchase. Xiao Mi worked out that this was wrong: that there are myriad influential touchpoints before the store. Xiao Mi didn’t try and be everything everywhere. They (as I advocate in my blog about Napoleon-inspired shopper marketing) focused on the critical touch points that they could win. They ignored physical stores. They went into battle online. They went massively into social environments, recognizing the power of peers. They understood that the critical battleground for influencing shopping behavior wasn’t the store (or didn’t have to be): that by winning the hearts and minds of shoppers before they went to a store, they could cut the store out completely. And because they didn’t waste a cent investing in China’s hyper-inflated retail market, they could afford to do their online marketing properly. They are completely single-minded in their focus on changing shopper behavior – that was why it worked. By the time shoppers got to see Samsung’s neon store fronts and sleek shop layouts, it was too late. The purchase decision had almost always been made.
Physical retail stores came later: with investment from retailers and distributors who wanted to jump on the Xiao Mi bandwagon. Retail execution delivered at significantly reduced costs.
Stand out to disrupt shopper behavior
For a brand which has a reputation as being a copycat (unfair – in contrast to the iPhone they have arguably the most customizable UI around), their retail execution suggests otherwise. Yes, they have borrowed, but they haven’t copied. In a retail world of dominated by blue and grey, they have gone orange. Bright orange. Their store staff are young, casual, and engaged (a massive rarity in Asia’s store staff world). Our research suggests that store staff have the highest potential for influence in this market, yet the lowest delivery – Xiao Mi have seen this and again – focused. Even at retail, they seem to have decided that they will do one or two things well. Bright orange to stand out from the crowd and pull traffic in, and engaging, informed staff to drive conversion.
There are many lessons to be learnt from Xiao Mi – but here are a few that came to my mind:
Just because you dominate the point of purchase doesn’t mean you win. Samsung spend millions on dominating at retail. Their execution isn’t always perfect but it is pretty good. You couldn’t go shopping for a mobile without seeing them. Yet they got toppled by a brand with a tiny retail presence.
Yesterday isn’t tomorrow. Most shopper data and sales data tells us about the past. The future is up to marketers to predict. Data doesn’t do that. In the past, Samsung’s business model driven by heavy advertising and massive retail presence had been effective. But the market leader was overturned in one of their biggest markets by a company which only came into existence four years ago.
Pick your battles. It’s hard to win everywhere. It’s also unnecessary. Some touchpoints are much more important to shoppers than others. Focusing there may mean you can get away with little or no investment elsewhere.
Legacy is painful. “This is how we do things” is a dangerous place to be. Part of Xiao Mi’s success must come from a lack of legacy. No retail relationships to worry about, no long term contracts, no retail teams. No belief that we might lose if we cut investment in one area. No fiefdoms to challenge. Whilst most businesses can’t start from a clean sheet of paper, starting the thinking there is a really good idea. That way the compromises are far easier to spot.
Shopping is changing all the time. Some companies fail to change, some respond to change, and some drive change. Where do you want your brand to be?
If you like what you’ve read here, you might like to try the book I wrote with Toby Desforges. You can buy it here, or try a sample chapter here. Let me know what you think!
