Science And Technology Millet'S B Side: The Breakthrough Of Offline Channel

In the past few months, the speed of Xiaomi's opening Xiaomi's home has been "Crazy". At the beginning of December 2020, Xiaomi's flagship store in Chengdu Vientiane City opened, which is the 1000th store of Xiaomi's home. Only four months later, on April 3, 2021, Xiaomi held the opening ceremony of the 5000 Xiaomi home in Shenyang Joy City.

In the meantime, Xiaomi set an amazing record of 1003 Xiaomi houses opened at the same time on January 9. On average, in the past four months, Xiaomi has also maintained the opening speed of 1000 stores a month and 33.3 new stores a day.

Many people are puzzled by Xiaomi's sudden off-line retail channel. As the head of Xiaomi's new retail business in China, Gao Ziguang, vice president of Xiaomi group, has also been questioned in the company before. At that time, he reported the opening progress of Xiaomi's house to everyone, and then someone asked, "Xiaomi has been ten years, why did you go there early?"

As we all know, Xiaomi is an online mobile phone manufacturer. In 2016, Xiaomi opened its first Xiaomi home, thus opening the layout of offline retail channels. In 2017, Lei Jun, the founder of Xiaomi, once said that he planned to open 1000 Xiaomi houses in the next three years. The landing of Chengdu flagship store marks the completion of Lei Jun's three-year plan.

Behind the huge speed contrast between opening 1000 stores in three years and 1000 in a day is Xiaomi's new thinking on retail. In an interview with the 21st century economic report reporter, Gao Ziguang said frankly that all the people in the mobile phone industry know that the sales of mobile phones account for 30% online and 70% offline. "Although we all know that offline accounts for a high proportion, in the past few years, Xiaomi's emphasis on offline channels and the results are not very good. The main reason is that we have not found a good business model that can make Xiaomi's efficient business model verified offline."

Now, when Xiaomi has 5000 Xiaomi homes, Gao Ziguang believes that Xiaomi's online and offline integrated digital store model, which Xiaomi explored last year, has been verified in scale.

Get rid of the dealer system

For Xiaomi, an efficient store model should meet at least two standards: one is to be profitable, the other is to have sufficient service level. These two points may seem simple, but they are not so easy to achieve.

First of all, in terms of profit, under the past distribution system, many dealers were not willing to make millet products because the profit of millet products was too low. Since last year, Xiaomi's business logic has been adjusted. Gao Ziguang told reporters that Xiaomi will no longer discuss with the retailers who operate Xiaomi's home that selling a mobile phone can earn several points, but emphasizes the annual return on capital.

The calculation formula of the overall capital return rate is: the single net profit obtained by subtracting the operating expenses from the gross profit, and then multiplying the turnover times of the whole year. Under this formula, even if the single profit is not high, as long as the turnover times are high, the final overall return will not be too low. At the same time, Xiaomi also solved the problem that used to be a headache for retailers, namely, inventory.

Gao Ziguang said that the biggest risk of selling mobile phones is inventory, because mobile phones are like seafood. New products are very good at the beginning, but if they are not sold after several months, according to the current product iteration speed, these products will not be "fresh". Under the new store model, Xiaomi proposed that "as long as the goods of Xiaomi's home are not sold to users, they are all Xiaomi's stocks". In this way, it is equivalent to Xiaomi helping retailers to bear the possible inventory risk.

Xiaomi dare to make such a commitment, is based on a set of pure digital management system. Now, every product of Xiaomi's home is directly from Xiaomi's factory to the store. In the past, the dealers in the middle have been cut off, which greatly reduces the loss of profits and time. At the same time, Xiaomi can directly grasp the turnover rate of each goods in the store, and the overall efficiency has been greatly improved.

In fact, under the traditional dealer system, disorderly pricing and fleeing goods are common phenomena. Many dealers and brands are in a game state. On the one hand, they want to get the goods at a lower price, on the other hand, they want to ship faster and destroy the market price system. Although it seems that the products are sold out, they are harmful to the development of the brand.

Now, not only Xiaomi, but also the whole mobile phone industry and even the whole retail industry are adjusting their dealer strategies. DTC (direct to consumer) marketing has become the general trend. In the second half of 2020, Xiaomi started to promote the new store model, and began to "attack" the original dealers.

At present, the goods rights of 5000 millet houses are basically controlled by Xiaomi. The most intuitive experience is that customers buy millet products online or offline, and the price is the same, and there is no need to bargain. For Xiaomi's retail partners, the relationship between them and Xiaomi has also changed. They don't need to play games with the brand side, but they will work with the brand side to find ways to serve users well and improve sales and turnover.

Gao Ziguang said that Xiaomi solved the problem of high efficiency of offline retail stores through pure digital and standardized management. At the same time, through the carding of underlying business models and digital means, most retailers have achieved annuity returns higher than the average level of the industry.

Matching market share

In November last year, Lu Weibing, President of Xiaomi China, set a goal to make every county in China have a millet home in the next year. According to the current expansion rate, this goal should be achieved soon, but for Xiaomi, the number of Xiaomi houses is not the more the better.

Gao Ziguang told reporters that Xiaomi has no clear plan for the number of Xiaomi's houses, but it will certainly not be unrestrained. Here is a general standard, that is, the number of stores should match the market share of Xiaomi brand.

"The number of Xiaomi's offline stores in the whole mobile phone industry is very small, even less than one tenth of that of its friends. This makes for a long time, the number of Xiaomi stores is much lower than the position of its brand. When Xiaomi was at its lowest point, the market share was close to 10%, but the proportion of its offline stores was lower than the industry average level, which means that some users originally wanted to buy millet, but could not find a purchasing channel, they went to buy other brands. " Gao Ziguang said.

What's more, different from the past, millet houses were all directly operated by Xiaomi stores. Of the 5000 Xiaomi houses now, only 300 are directly operated by Xiaomi, and the rest are run by retail partners. What's more, whether it's a direct store or a franchise store, as long as it's a store with the "Xiaomi home" brand, it means a unified standard, including decoration standards, investment standards and service standards.

According to Gao Ziguang, the franchise stores of Xiaomi's home will also be divided into exclusive stores and authorized stores. Among them, exclusive stores refer to stores opened in cities, while authorized stores are stores opened in counties and towns. The only difference between the two lies in the transaction model, "the goods rights of exclusive stores are strictly controlled by Xiaomi, but in counties and towns, Xiaomi's management ability is still not so sinking, so the goods rights of authorized stores are in the hands of stores themselves."

Gao Ziguang stressed that although the authorized store has the right to sell goods, it still needs to go through the Xiaomi retail link system for each product transaction, because only through this system can the sales of this product be recorded, and Xiaomi will distribute goods according to the data of this system.

In addition to authorized stores, the standards of Xiaomi's exclusive stores and direct stores have been almost uniform, including that the store managers of exclusive stores are all employees sent by Xiaomi. Gao Ziguang said that the most important value of Xiaomi's Direct stores in the future is the brand image. From the perspective of brand marketing, it will not pursue the profit of a single store. In addition, Direct stores can also play a role in personnel training, so the managers sent to the stores are the employees of the direct stores.

For the future, Xiaomi hopes that through the layout of Xiaomi home, offline sales can first catch up with online sales, and then further achieve consistency with the market. In fact, compared with the offline channels of other friends, Xiaomi home also has an advantage, that is, its product categories are more abundant. It is reported that Xiaomi's IOT products contributed to the sales of most stores and brought more than half of the flow of people.

In addition, based on this round of channel construction, Xiaomi will develop sales and service integrated stores nationwide, and strive to achieve at least one sales and service integrated store in each business district and county, so as to improve Xiaomi's ability from sales to service.

For the offline channel built by Xiaomi house, an industry person close to Xiaomi told the reporter that this may also become the sales channel of Xiaomi automobile in the future, because most of the stores of Xiaomi home are opened in the core business circle, and selling millet cars is only equivalent to adding a SKU to the store, without any additional cost.