We all love Xiomi…Don’t we? Xiomi has been producing a number of great smartphones for years. In fact, Xiomi has become the “No. 1 Smartphone Selling Company” in India. It focuses mostly on the mid-range budget categories. Xiomi is well-known for producing high-end specification smartphones for an aggressive price. We can easily recommend a Xiomi phone to anyone. Also, Xiomi has been producing a number of smartphones with almost same specs in a similar price bracket which is very confusing.
This year Xiomi launched the ”Xiomi Redmi Note 5 Pro” in India or ”Xiomi Redmi Note 5 AI” in China, which is a killer option under Rs. 15000 ( $ 219 ). This contains Snapdragon 636 with 4000 mAh battery which makes it a beast. Xiomi Redmi Note 5 Pro is the first ever smartphone to come with Snapdragon 636 chipset. Not only the ‘Redmi Note 5 pro was the first to come with latest Snapdragon processors, even the newly launched ”Xiomi MI 8 SE” has Snapdragon 710 processor which makes it the first to come with Snapdragon 710 processor.
There are many Xiomi phones which are great value for money smartphones. A question may arise in your head, how Xiomi is able to produce smartphones with such great specs under a surprising price? Let’s take an example if Samsung produces a smartphone with the same internals as Redmi Note 5 pro then they would generally price it around Rs. 20,000 ($292) to Rs. 25,000 ($365). So today, we are going to unravel the “5 Surprising Reasons Why Xiomi Phones Are So Cheap ”
1. Less Advertisement
You may have seen companies which only rely on advertisements. Yes, you are right! I’m talking about Oppo and Vivo :P. They just waste their money on advertisements. They generally target offline market. But Xiomi doesn’t believe in advertisements. According to Xiomi ”Consumers itself are their brand ambassadors”. Quality product doesn’t need to be advertised, bees would get automatically attracted towards honey.
Fewer Advertisements saves a lot of money, especially for a company like Xiomi. In this way, Advertisement cost detaches from the actual cost of the smartphone. I’ve used words like fewer or less for advertisements because Xiomi does use social media and MI fan groups for advertisements but it doesn’t put as much money on advertisements as other companies like Oppo and Vivo does.
2. Limited Stocks
You might think, why I’ve listed ‘limited stocks’ as my 2nd point but it’s true. Making smartphone in limited stocks does help Xiomi to overcome the price of the smartphone. Think this way, when a company makes smartphones in limited stocks then it has to put less money in shipping, storage, and security charges which makes companies expenses less. Xiomi doesn’t add this money to their profit, in fact, they focus on maintaining their smartphone’s price.
Limited stocks also have some downsides. The major disadvantage of making a smartphone in limited stocks is the ‘Flash Sale’. The number of buyers is way more than the number of stocks available. Even the ”MI Homes” doesn’t have smartphones in stocks. This gives rise to ”black marketing”. We have seen this issue with “Redmi Note 5 pro”. However, the phone was not available on Flipkart and was sold openly on websites like OLX, Quicker, and eBay. On these 3rd party website, people were selling “Redmi Note 5 pro (4gb RAM variant) ” for around Rs. 17,000 to Rs. 20,000. The craze for this phone was so high that people were paying that much amount for that phone, which is insane.
3. Online Sales
All of the Xiomi phones are sold online and at MI homes. There are around 23 MI homes in India. Xiomi believes in cost-cutting by selling their smartphone online via Amazon, Flipkart, and MI store. In this way, Xiomi is able to save the extra expenses by removing the intermediates between the supplier and the end user. This also plays a great in the final price of the smartphone.
Here is an example, how other companies work.
Maximum companies sell their smartphone from the supplier – manufacturer – wholesaler-retailer, then it reaches to us. In this way, their charges also get added to the final pricing of the end product but in case of Xiomi, it removes all the intermediates in their distribution list.
4. Low-Profit Margin
This is one of the main reasons why Xiomi phones are cheap. Xiomi keeps its profit margin very low. In fact, during the launch event of ‘Xiomi MI 6X’, the company announced that the overall profit margin of the company’s hardware business including lot, smartphone and lifestyle product will never exceed 5 percent. The company also said that if it exceeds the 5% line, it will find the ways to return money back to the user.
There are two types of business strategy:
- Selling fewer sales with more profit margin.
- Selling more sales with low-profit margin.
Both of these strategies sound to be equally good but there is a huge difference between both of them. In the long run, the 2nd strategy will make more profit. Xiomi knows this well and they do follow this. strategy.
5. Research and Development
Research and development ( R&D) are the activities taken by the companies to innovate new technology and services. All the major companies have their special R&D departments. It costs a huge amount of money in R&D of new technologies. Major companies like Apple, Samsung, and Huawei have their dedicated team for this.
Do you remember the last time Xiomi came with any new feature or design? It just uses the top-notch internals and copies the latest trendy design. We have seen this with ”Xiomi Redmi Note 5 pro”, which looks similar to ”iPhone X”. Xiomi doesn’t invest much in R&D activities. You will not believe me but this saves a ton of money.
So, these were my ”5 Surprising Reasons Why Xiomi Phones Are So Cheap”. Xiomi has mastered in the art of cost-cutting :P. It knows how to make the cost of the smartphone minimum. After seeing the Xiomi’s success and its way of aggressive pricing, other companies have also started following Xiomi’s path but at the last, it is the profit of end user. We are getting good services for cheap prices. Let me know, what you think about Xiomi in the comment section.