Looking at Xiaomi's e-commerce from Double 11: Fission and crisis coexist

1.16 million mobile phones and a total sales volume of 1.56 billion yuan, this is Xiaomi’s Double 11 performance this year.

Xiaomi/Redmi dominated the mobile phone category, with Xiaomi TV 2, tablets, power banks and other products taking many first places. In the end, Xiaomi defended the title of No. 1 in Tmall's Double 11 single store without any suspense.

After the Double 11 shopping festival, Lei Jun immediately released an internal open letter, saying, "This fully demonstrated the overall strength of our full-line business, as well as our comprehensive strength in supply chain, logistics distribution, customer service, etc." Last year, Xiaomi achieved outstanding results in its first participation in the Double 11 shopping festival. After one year of development, Xiaomi has made great progress in supply chain management, product line expansion and after-sales service. It is not surprising that it won the championship again.

Double 11 is not the best performance of Xiaomi in selling mobile phones. Back in April this year, Xiaomi sold 1.3 million mobile phones on Mi Fan Festival, completing the e-commerce coming of age ceremony. Half a year later, facing the imminent arrival of Meizu and Honor, Xiaomi once again broke the record. Where did it get the confidence from? The hustle and bustle of Double 11 has gradually faded away. Forget the data. What problems are there for Xiaomi to solve on its e-commerce road?

Xiaomi e-commerce big fission

Since its founding, Xiaomi has always adhered to the e-commerce channel sales model, which greatly reduced the channel construction and marketing costs. However, due to the tight supply chain in the early days of Xiaomi, the insufficient supply led to the mobile phones being snapped up in seconds after they were put on sale. Lei Jun, Li Wanqiang and other founders often received cordial "greetings" from netizens, and Xiaomi was also dubbed the notorious "hunger marketing".

The supply chain shortcoming made it difficult for Xiaomi to fully utilize the advantages of e-commerce channels, which directly hindered the development of the e-commerce platform. On August 15, 2012, the e-commerce war broke out, and e-commerce players such as JD.com, Suning, and Gome all joined the war. Xiaomi, which had just started a year ago, had no choice but to choose to be absent.

In fact, before 2013, the outside world defined Xiaomi as just a mobile phone manufacturer, and it was difficult to associate the e-commerce platform with Xiaomi. In 2013, Xiaomi e-commerce started a crazy expansion plan, not only participating in the e-commerce wars many times, but also ushering in the transformation and upgrading of the e-commerce platform.

In June 2013, when JD.com celebrated its 10th anniversary, major e-commerce platforms joined the campaign to encircle JD.com. Xiaomi, unwilling to be left out, also took the opportunity to "show its face" and launched promotional activities to build momentum for a price war.

What is not noticed by the outside world is that Xiaomi has surpassed Amazon and become the fourth largest e-commerce platform after Tmall, JD.com and Suning. The unlimited purchase of Xiaomi mobile phones and the large-scale discounts on accessories indirectly indicate that Xiaomi has made great improvements in supply chain, warehousing and logistics. At the same time, Xiaomi e-commerce is no longer limited to selling mobile phones, and accessories have become an important source of income for Xiaomi.

I think the "618 e-commerce war" was a landmark event for Xiaomi to truly prove its e-commerce strength. Since then, Xiaomi has been more confident in its performance on the e-commerce stage, gradually increasing its investment in e-commerce platforms, including entering Tmall, and striving to shape its "e-commerce" role.

Double 11 is a grand event in the e-commerce industry, where major brands gather to share benefits with consumers. Xiaomi, which wants to create influence in the e-commerce circle, will naturally not miss it. Before Double 11 last year, some people predicted that Xiaomi would become the single-store sales champion of Tmall Double 11. At first, I didn't think it was a big deal, but Xiaomi's easy victory opened my eyes. Xiaomi won the first place in four categories: single-store sales, single mobile phone product sales, and mobile phone brand awareness.

In 2014, the launch and sale of Xiaomi TV, router, bracelet and other products enriched the attributes of Xiaomi e-commerce platform. Xiaomi e-commerce was also given a more important mission by Lei Jun, including carrying part of the international mission. Xiaomi spent 3.6 million US dollars to purchase the new domain name "mi.com" and underwent two major and minor revisions of the website.

As another original festival created by an Internet company after Double 11, this year's Mi Fan Festival was particularly lively, with 1.3 million Xiaomi/Redmi phones sold in 12 hours, with sales of 1.5 billion. Lei Jun defined Mi Fan Festival as the coming-of-age ceremony for Xiaomi's e-commerce. But I think Mi Fan Festival is a touchstone for Xiaomi's ecological chain.

In addition to testing the carrying capacity of logistics and Xiaomi.com, Xiaomi's full range of products, from mobile phones and TVs to accessories, e-books, MIUI themes and other ecological chain products are fully open for purchase. This logic is more in line with the way e-commerce websites or Internet companies play. Li Wanqiang even admitted that Xiaomi is essentially an e-commerce company.

After the baptism of Mi Fan Festival, Xiaomi's e-commerce ambitions are getting bigger and bigger. Compared with the relaxed mentality of "going to Tmall to run a score" when participating in the Double 11 for the first time, Xiaomi has changed to a winning mentality to defend the title when participating again. In addition to Lei Jun and Xiaomi's official Weibo waving flags and shouting, Xiaomi's focus is more on products. First, Xiaomi put the 16000mAh mobile power bank on Tmall for the first time, and then Xiaomi made a big move, announcing a full price reduction for the Redmi series (1S and Note), and launched the Xiaomi 4 special edition (1799 yuan).

Previously, the sales of Redmi series products exceeded 10 million. Some people estimated that the break-even point of Redmi is about 3 million units. The increase in sales will help increase Xiaomi's bargaining power with suppliers, and the cost will drop accordingly. Compared with competitors such as Huawei and Coolpad, Redmi has enough confidence to reduce the price by another 100 yuan. At the same time, the Xiaomi 4 special edition gives Xiaomi more confidence to compete with MX4.

With its rich product line and brand influence, Xiaomi is set to dominate Tmall Double 11. The real test for Xiaomi is its annual sales. Although Xiaomi has adjusted its goals again and again, it is not satisfied with the status quo. According to Hugo Barra, Xiaomi will soon surpass JD.com to become the second largest e-commerce platform.

It is worth noting that Xiaomi dispatched all orders in 7 days during the Mi Fan Festival, while the time was shortened to 3 days during Double 11. This means that Xiaomi's logistics construction has made great progress in half a year and has become an important fulcrum for catching up with JD.com. In addition, compared with Tmall, which leaves after-sales service to third-party sellers, JD.com's after-sales service is not outstanding. Lei Jun intends to make after-sales service another core competitiveness of Xiaomi, such as launching the Xiaomi Service Like Month event in June.

In just three years, Xiaomi's e-commerce platform has completed a perfect upgrade from zero to the third largest e-commerce platform, and its growth rate is beyond the imagination of the outside world. It is conservatively estimated that Xiaomi will achieve sales of 70-80 billion this year. Based on the minimum sales of 70 billion, the growth rate is 124%; JD.com's sales last year were 100 billion, and the growth rate was only 40%. According to the speed of Xiaomi's product line expansion (such as smart home products) and the investment in e-commerce platforms, it is only a matter of time before Xiaomi challenges JD.com.

Xiaomi's e-commerce crisis surfaces

To some extent, Xiaomi promoted the prosperity of mobile phone category on Tmall Double 11, and Tmall won the honor of "the online platform with the most mobile phone sales in 24 hours" and broke the Guinness record. Among them, Xiaomi sold 1.16 million mobile phones, and Lei Jun also became proud, "Here is the question: on Double 11, Xiaomi sold 1.16 million mobile phones on Tmall, while other manufacturers sold only 730,000 in total?"

The impressive results not only represent the progress of Xiaomi's e-commerce, but also the integration of Xiaomi's ecological chain. We should indeed congratulate Xiaomi, but it is too early to say success. Behind the gratifying data, the crisis of Xiaomi's e-commerce platform is also surfacing. I think there are at least three major crises:

1. Difficult scalpers and crashed websites

Although Xiaomi opened up to users to purchase during Double 11 and tried its best to meet user needs, Double 11 is not a regular holiday after all, and Xiaomi's futures model determines that it cannot be open to regular purchases. After the shopping festival, users still need to make reservations and rush to buy through Xiaomi.com to buy Xiaomi mobile phones and other products. In front of the powerful scalpers, ordinary users are absolutely weak. Without an F code, the result is either not being able to buy, or having to go to Tmall or offline channels to buy at a high price.

In mid-October, the article "A Xiaomi scalper's autobiography: Earning tens of millions in three years" deeply disclosed the scalper's operating model and the inside story of Xiaomi's channels, which caused widespread discussion. Afterwards, Xiaomi officials specially found several express delivery companies such as SF Express, Rufengda, and YTO Express to issue "express delivery data certificates" to prove their innocence. Li Wanqiang also launched a response plan for the rampant scalper buying phenomenon. First, strengthen the identification technology of scalpers, second, establish a scalper blacklist, and third, based on the fact that scalpers are afraid of deposits, avoid interference from scalpers by pre-selling products.

In fact, the weekly Xiaomi sales have become a battleground for ordinary users, students, scalpers, Internet companies and other groups. Xiaomi not only has to bear the risk of server crashes, but also has to deal with scalpers and their offline agents. The "Internet companies" threatened to be Baidu and 360's special browsers for Xiaomi. The lively scene of people scrambling for Xiaomi is quite similar to the rush for train tickets during the Spring Festival. Xiaomi was forced to play the role of the Ministry of Railways.

In addition to the limited capacity leading to ticket shortages, the Ministry of Railways is embarrassed that 12306 can only run to meet the daily website load. During the Spring Festival, it uses technical means to improve the server's pressure-bearing capacity as much as possible, but cannot continue to maintain the website at the highest load to meet ticket purchase needs, which will increase costs and deliberately waste resources. This is exactly the trouble of Xiaomi. Although its technical strength is not weak, it still cannot avoid worries every time it starts selling. Engineers even burn incense and pray that the server will run smoothly during the rush to buy.

In addition, even the most powerful technology can fail. Although Xiaomi has tried to improve its ability to identify scalpers, scalpers are also upgrading their methods of grabbing goods, and ultimately, mistakes in judgment are inevitable. For example, Xiaomi may mistakenly identify enthusiastic Mi fans as scalpers, and the phenomenon of "floods flushing the Dragon King Temple" often occurs.

2. Xiaomi Mall App has become useless

The advent of mobile Internet has given rise to mobile e-commerce, a new model that is different from PC e-commerce. Major e-commerce companies have deployed mobile business, especially this year when JD.com and Alibaba went public. The Double 11 shopping festival is regarded as an important test for the development of mobile e-commerce. Data shows that Taobao occupies 86% of the mobile B2C market share, and the mobile transaction volume on Double 11 accounted for 42.6%, which is in an absolute leading position.

Despite the high pressure from Alibaba, JD.com has entered WeChat to seek change, and launched Paipai micro-stores to extend its battle line to the mobile C2C market. What has Xiaomi, also a tough player in the B2C market, done?

Looking at Xiaomi's report card, its e-commerce revenue is mainly contributed by the PC side. The Xiaomi Mall App is its main product for the mobile side, but its presence among users is not high and its impact on the mobile e-commerce landscape is minimal. I think there are two main reasons:

First, Xiaomi has not promoted mobile e-commerce to a strategic level. PC e-commerce has little room for innovation, and small platforms and vertical e-commerce are facing survival crises, while Xiaomi has been enjoying the dividends of PC e-commerce. Even in the fiercely competitive B2C market, Xiaomi has been free from the impact of the competition between Tmall and JD.com and has maintained a strong growth momentum. Xiaomi has no worries about e-commerce revenue. Mobile e-commerce is at best a supplement to PC e-commerce, not a focus. Therefore, Xiaomi has not invested a lot of manpower and resources in the development of Xiaomi Mall, and has only stayed in the primary stage of daily operation and maintenance as an additional way for users to purchase Xiaomi products.

The second is the inadaptability of user habits. Although Xiaomi Mall launched the slogan "Grab Xiaomi Magical Products" in the early days to try to attract users, the promotion effect was not obvious and only had an impact on enthusiasts. As for the actual success rate of grabbing Xiaomi products, Xiaomi did not make any public statement, let alone vigorously promote it. In the end, Xiaomi Mall did not become the first choice for users to buy Xiaomi products, and it was not even a choice.

As time went by, Xiaomi Mall could only attract a small number of early adopters, and its presence became weaker and weaker. In order to enhance the influence of Xiaomi Mall, Xiaomi came up with a clever trick: every press conference ticket must be purchased and paid for through Xiaomi Mall. Therefore, on the eve of each press conference, with the influx of many fanatical Mi fans, the download volume and exposure rate of Xiaomi Mall soared, but with the end of the ticket purchase activity, it also meant that the "false prosperity" of Xiaomi Mall was reduced to its original form.

The reason is that users have not developed the habit of snapping up on mobile terminals. Although Xiaomi Mall was launched earlier, mobile e-commerce did not get on track until last year. Alibaba has also been pursuing the conversion and improvement of mobile terminal transaction volume. Unlike Xiaomi snapping up, Taobao products can be purchased normally on mobile phones, and the price is lower than that on PC terminals. Users gradually develop the habit of mobile shopping, so the total number of Xiaomi Mall users and stickiness are far less than Taobao.

Another proof is that the 12306 mobile client launched at the end of last year, aside from the imperfect product and low success rate of ticket grabbing, the fundamental reason for the low user usage is that the habit has not been formed. Users often say, "When it comes to ticket grabbing, I always feel more comfortable doing it on the computer." Of course, users' concerns about mobile payment security are also a factor that cannot be ignored.

3. Tmall’s support for Xiaomi’s competitors

Tmall President Wang Yulei was holding two Guinness certificates, while Lei Jun was smiling. I don’t know how Wang Yulei felt at the time. Although Double 11 is not a regular holiday, Xiaomi alone contributed nearly 61% (based on the number of mobile phones) of mobile phone sales. I guess Tmall (Wang Yulei) as a platform must have felt bad.

It is obviously a great opportunity for major mobile phone brands to compete on Tmall, so how can you, Xiaomi, steal the limelight? I think Tmall may support powerful players such as Meizu and Honor to compete with Xiaomi, so as to break the embarrassing situation of Xiaomi's monopoly.

At the end of October, Meizu and Alibaba reached a strategic cooperation. Although Meizu officials remain silent about the investment in Alibaba, I guess the marriage between Meizu and Alibaba is not as simple as launching the Alibaba Cloud OS version of MX4 and selling it on Tmall. There must be a deeper level of cooperation behind it (currently unknown). In addition, in the context of the mobile phone industry expanding online channels, in addition to building their own malls, mobile phone manufacturers give priority to entering large platforms such as Tmall and JD.com.

Earlier, Meizu President Bai Yongxiang revealed that the ratio of Meizu's online sales channels to offline sales channels is 3:7, and the ratios of Meizu's official website, JD.com, and Tmall are 1:1:1. As Meizu shifts from pursuing small and beautiful to focusing on scale, it is imperative to expand e-commerce sales channels, and Alibaba is an important force that Meizu can rely on. Coolpad's sub-brand "Dashen" also plans to make great efforts in the e-commerce sales model. The 10 billion sales volume set at the beginning of the year was completed without any suspense. In order to sprint to a higher ultimate goal, Dashen's operator Zhu Fanghao proposed to fully exert efforts on Tmall and JD.com platforms.

Since mobile phone manufacturers have a strong desire to compete with Xiaomi, why doesn't Tmall help them? Simply directing traffic to stores is a low-level approach. I think it can be similar to Tmall's previous approach of subscribing 12 production lines to produce new products. Based on the big data of the Alibaba platform, from product design and research and development to upstream supply chain and production, and then to sales, logistics, after-sales and other links, use Internet thinking to underwrite customization.

It is foreseeable that if Tmall does not form an alliance with mobile phone manufacturers or provide strong support, in another year, with Xiaomi's amazing explosive power, it is not inconceivable that the proportion of mobile phone sales will increase to 70%. By then, Tmall will be caught in a dilemma, and it will be extremely difficult to reduce Xiaomi's influence.

In addition, as Jack Ma said, Alibaba is a data company committed to achieving "business dataization" and "data businessization", that is, to enrich Alibaba's ecology with the big data generated and accumulated by Alibaba's various business lines, and to allow the data contained in the ecology to generate new value and then feed back to the ecology. Although Xiaomi has made great achievements in collecting data on application distribution, mobile games, Xiaomi Life, etc. through MIUI, it is still subject to Alipay, banks and other institutions in the collection of crucial e-commerce data, especially payment data, which has become a hidden worry for Xiaomi's PC e-commerce in the future.

In Lei Jun's layout, PC payment data is an overlooked link, and his focus is still on exploring more businesses related to mobile payments. So it is not surprising that Lei Jun served as chairman when Xiaomi established a payment company in December last year. What really interested the outside world was that Hong Feng, head of MIUI, served as a director, announcing Xiaomi's official entry into the mobile payment field. In February this year, Xiaomi cooperated with Bank of Beijing to seek in-depth cooperation in multiple fields such as mobile payment and mobile finance.

With Xiaomi's existing technical strength, it will definitely be able to analyze users' characteristics and preferences based on user personal information, purchase records and other data. As for the importance of the forgotten PC payment data, it will depend on the future development of Xiaomi's e-commerce and mobile payments. After all, Lei Jun is now more enthusiastic about mobile payments.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.