Amazon.com Inc. AMZN has succeeded in breaking the exclusive relationship between Chinese smartphone maker Xiaomi and leading Indian e-commerce site Flipkart. Xiaomi has chosen to partner with several e-tailers instead of being committed to one.
In teaming up with Amazon India last week, Xiaomi revealed that it will now be selling its devices on both Amazon and Snapdeal, another key player in the Indian e-commerce market.
Xiaomi entered India last year and it has been selling its phones online exclusively on Flipkart ever since. It also made an attempt at offline retail through Airtel and The Mobile Store.
Birthday Celebrations
The announcement was made via Mi India’s social media pages and by Hugo Barra, who is the face of the company in India.
Manu Jain, head of Xiaomi India, in a note said, “Mi Stores will be created on Snapdeal and Amazon, where customers can choose from a range of Mi phones and accessories.” The sale of the Xiaomi devices started last week on Apr 8.
The note also stated that the shift in strategy will mark the Mi Fan Festival, which is being celebrated in India for the first time to celebrate the startup’s fifth birthday.
Flipkart Hasn’t Been Ditched
As mentioned before, Xiaomi had been selling its devices exclusively on Flipkart in India. The recent move throws light on Xiaomi’s intention to expand its lineup in India by partnering with different distribution channels.
However, Xiaomi hasn’t dumped Flipkart. The move is simply intended to expand its reach and the company will now be selling devices through all the three e-commerce sites. (i.e Flipkart, Amazon and Snapdeal).
Looking Forward
Xiaomi has seen a spectacular rise in the smartphone space. Worldwide, as per IDC's figures, it is the fourth largest smartphone maker.
It has taken Xiaomi less than a year to become the fifth-largest smartphone brand with 4% market share in India (as of Dec 2014).
However, it is important to keep in mind that this has happened while Xiaomi followed an online exclusive model. According to the Economic Times, analysts are of the opinion that “ its online-only strategy has reached a saturation point, as indicated by its dipping import numbers.” That is why it has been trying different models to reach the market as well. In January this year, Xiaomi teamed up with Airtel to sell the Xiaomi Redmi Note 4G via Airtel's stores around India.
On the other had, this partnership is great for Amazon, too.
Top e-commerce players in India — Amazon, Flipkart and Snapdeal — all the three put forward same day delivery in some cities, which could be stretched to more in the coming months. It has been seen that more than half the people who shopped online in 2014 in India were from outside metros and large cities.
Amazon currently has a Zacks Rank #3 (Hold).
Investors can consider stocks like Autobytel Inc. ABTL, PetMed Express, Inc. PETS and Groupon, Inc. GRPN. While Autobytel sports a Zacks Rank #1 (Strong Buy), PetMed Express and Groupon carry a Zacks Rank #2 (Buy).
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