How did this China's company climbed to the world's top 3 position in just 3 short years? In our latest course Business is Booming (details are at here), we teach you the 3 lessons from Xiaomi that we too can learn and apply in our business:
1. Focus on Quantity but with Quality
Xiaomi sells its phones at cost (i.e. no margin at all) but such products are of similar quality to that of Apple and Samsung, but at half or less than half of their price.
2. Lose Money on Selling Phones but Make Money on Software
If you include tooling, research and selling costs, Xiaomi is actually losing money on every phone that they sell. But they make money from software: every Friday Xiaomi will have a software update and invariably some users will click to purchase some proprietary software (like new wallpapers).
3. Sell Direct with Zero Marketing Costs
Instead of spending US$15 billion on marketing like what Samsung did, Xiaomi relies on free marketing on social media like Facebook, Weibo and news sites.
4. Makes Money on Selling Services, like streaming of videos, downloading of songs and custom-made designs.
5. Makes Money when product reached critical mass volume.
4. Makes Money on Selling Services, like streaming of videos, downloading of songs and custom-made designs.
5. Makes Money when product reached critical mass volume.
Often Xiaomi will launch a new product at a loss but created a momentum of sales in 6 to 12 months time. By then it would have reached critical mass and lowered its component costs for its subsequent mass volume sales. This is the new business model: make money on subsequent volume sales.
By Andy Ng of Asia Trainers, related articles on sales include:
By Andy Ng of Asia Trainers, related articles on sales include:
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