"Killing" Tiffany and catching up with Apple, why is Xiaomi Home so competitive?

Recently, #小米网街# has become very popular. Xiaomi Home also took advantage of the trend to promote its products. So, how did Xiaomi become the second-highest e-commerce company in terms of floor space efficiency? In this article, let's explore the secret of Xiaomi's high floor space efficiency.

Recently, #小米网吧# has become a hot search on platforms such as TikTok and Weibo. In the video, groups of primary school students play with mobile phones and tablets in Xiaomi Home. Therefore, some people jokingly call Xiaomi Home "the first Internet cafe for young people."

In the comments section, some netizens believe that Xiaomi is playing a big game, aiming to cultivate potential users and make children become Mi fans from an early age. This is similar to the 80s and 90s who used to hang out in Xinhua Bookstore to read books.

In the face of netizens' ridicule, Xiaomi Home chose to "take advantage of the marketing situation" and actively downloaded games, claiming that the Xiaomi Internet Café was open and welcomed primary school students to come to the store to play.

This also reflects the business philosophy of Xiaomi Home: service and experience first . This also indirectly proves why Xiaomi's floor efficiency is so high.

As a benchmark of new retail, Xiaomi has begun large-scale offline expansion since 2017, and its sales per square meter has reached 270,000 yuan , surpassing the luxury brand Tiffany and second only to Apple's 400,000 yuan .

So how did Xiaomi achieve the second highest sales per square meter in the e-commerce industry? In this article, let’s explore the secret of Xiaomi’s super high sales per square meter.

1. Xiaomi’s sales miracle

Let’s first look at a set of figures disclosed by Xiaomi in the past:

• The average sales per square meter of Xiaomi stores is 20 times that of offline stores, and three times that of Best Buy, the best 3C home appliance channel (sales per square meter of RMB 60,000).
• The average shopper stays for 20 minutes;
• Xiaomi purchases an average of 2.75 items per order;
• The average customer spending is 800 yuan.

Assuming that the average user purchases 2.5 items, if the user's purchase rate is 50%, then the user browses at least 5 items.

Considering that most of the products on display in Xiaomi stores are high-value products such as mobile phones, TVs, and tablets, it is surprising that customers can browse, select, and purchase within 20 minutes. The thinking time allocated to each product is only about 4 minutes.

Xiaomi users make shopping decisions at an unimaginably fast speed, even similar to the time it takes us to buy daily necessities and fast-moving consumer goods, but the average customer unit price is as high as 800 yuan.

Lei Jun once revealed the secret of Xiaomi store operation in one sentence: "Let users buy with their eyes closed."

He believes that the state of buying things with your eyes closed requires that you don't need to spend time thinking about its design, its quality, or its price. If you need this thing, just buy it.

So, how does Xiaomi make users shop with their eyes closed? Below I will summarize the secrets of Xiaomi's success from four aspects.

2. Xiaomi ranks second in the world in terms of sales per square meter. What did it do right?

1. Choose a popular shopping mall to build a good reputation

For offline stores, site selection is a very important part. If the address is not chosen well, it will naturally cause great troubles in customer acquisition and sales. Even if more resources are invested in the later stage, it may not be able to reverse the disadvantage.

Most Xiaomi Home stores are located in prime locations on the first floor of shopping malls, facing the street externally and connected to the main aisle of the mall internally. They highly overlap with the locations of Starbucks and Uniqlo, so naturally the customer flow can be guaranteed.

On the other hand, most Mi fans come directly from online stores, and they are very loyal and sticky, and have clear shopping purposes. After opening physical stores, Xiaomi successfully activated online fans offline, making word-of-mouth landing and bringing conversions.

2. Multi-category ecological chain to increase store traffic

Xiaomi executive Lin Bin once said: If Xiaomi Home only sells mobile phones, TVs and routers, users may only visit the store once a year on average.

Therefore, the product line of Xiaomi Home is also constantly expanding, and a more critical link is the "Xiaomi Ecological Chain". In 2015, Xiaomi invested madly in some startups that focused on a single category and took the creation of popular products as their core concept, gradually building the Xiaomi Ecological Chain.

Xiaomi's ecological chain investment mainly focuses on the following five directions:

1. Mobile phone peripherals: such as headphones, mobile power supplies, and Bluetooth speakers;
2. Smart wearable devices: such as Xiaomi wristband;
3. Intelligentization of traditional white appliances: such as water purifiers and air purifiers;
4. Geek cool play products: such as balance cars and smart building blocks;
5. Lifestyle category: such as Xiaomi power strip.

It is this product combination that has greatly increased the frequency of customers visiting Xiaomi Home Stores, laying the foundation for subsequent conversions.

3. Hot product strategy + extreme cost performance to boost sales

Lei Jun once said, "Xiaomi's goal is to be close to users, and more importantly, to allow users to shop in our store with their eyes closed."
The reason why Xiaomi Home is so confident that consumers can "buy with their eyes closed" is that the core is the hot-selling product strategy, which is the product proposition of Costco (American supermarket chain) that insists on the ultimate cost-effectiveness.

Take the first generation of Xiaomi power bank as an example. When the market price of a 10,000 mAh power bank was generally more than 200 yuan, Lei Jun insisted on pricing it at 69 yuan and included free shipping. Naturally, the purchase rate of Xiaomi power bank soared, and it became a hot item that year.

Xiaomi mobile phones focus on high cost-performance and attract customers through regular price cuts and promotions. They have obvious advantages in sales conversion, and use this to drive sales of other products.

4. Big data product selection to improve conversion rate

Since offline stores have limited space, what to sell depends on what products sell well. Because Xiaomi has been engaged in e-commerce for many years, it can select products based on the Internet data it has accumulated.

For example, Xiaomi Home can give priority to best-selling products that have been verified online, such as Xiaomi 6 mobile phones, bracelets, rice cookers, etc. If it is a new product, it will check the online reputation before listing it based on online reputation and reviews, and will not list products with bad reputation.

In addition, we arrange the product selection of stores in different regions based on big data and make unified arrangements. For example, when a rice cooker is sold online, there are a lot of buyers in Henan. So when Xiaomi stores in Henan distribute the rice cooker, it will definitely be on the shelves.

In addition, things that are not easy to sell here can be sold there; things that are not easy to sell offline can be sold online; or vice versa, things that are not easy to sell online can be sold offline.

For example, many people have never used a balance bike, and it is difficult for them to make up their mind to buy one just by looking at pictures online.

However, if you put the balancing car offline, users can touch and try it out, and if they find it interesting, they are more likely to buy it. This is the use of the offline experience advantage, which truly realizes the integration of online and offline.

By using big data to accurately select products and sell best-selling products, Xiaomi Home has greatly improved its user conversion rate.

3. The success of Xiaomi Home gives companies something to think about

So, what inspiration can the success of Xiaomi Home bring to enterprises?

1. Shift from single category to complex category

Although many companies initially stood out in the market competition by relying on a single product category or a certain hot-selling product.

However, as the market dividend disappears, the concept of repurchase rate is increasingly emphasized. In order to effectively increase the repurchase rate, business operations cannot be limited to one category, but must operate interrelated complex categories.

Take Luckin Coffee, which has been very popular in the past two years, as an example. In 2021, Luckin launched the hit product, Raw Coconut Latte, which was in short supply as soon as it came out.

However, if you really understand Luckin, you will find that Luckin is not just a coffee company. It also sells cheesecakes, caramel biscuits, cookie daifuku and other products.

After the user purchases coffee on the ordering page, the system will automatically ask whether the user wants to add bread and give a certain amount of discount.

Image source: Luckin Mini Program

Jumei also shares the same mindset as Luckin. In addition to cosmetics, Jumei also sells clothes, bags, and other related products. Therefore, at its peak, Jumei's valuation once reached 30 billion yuan.

Therefore, it is better to extend related categories than to focus on a single category, that is, focus on your user base, provide them with a complete set of life solutions, and provide more suitable products.

2. Find your golden spot

In fact, not all places with large traffic flow will necessarily have good spots. Sometimes, places with large traffic flow may just be golden spots for others.

For example, the bus terminal has a relatively dense flow of people, but most of these people are mobile customers, so such a location is only suitable for small businesses such as food and beverages, but not for large home appliance stores.

To find your golden spot, you need to think about who your target users are and where they often hang out.

For example, a campus KTV called "Hello, Classmates" is located downstairs of the student dormitory.

From the user scenario perspective, college students like to sing but their overall economic ability is average, and many campuses are not located in urban areas.

So in the eyes of this type of users, instead of taking a taxi to go to KTV to sing, it is better to sing in a shared KTV downstairs in the student dormitory, which has lower overall costs.

The unit price may seem low, but in fact the average daily revenue of a campus KTV spot often exceeds 1,000 yuan.

Therefore, the best place to open a store is where the brand’s target audience frequently hangs out and is most concentrated.

Summarize

To sum up, the secret of Xiaomi Home’s second-best sales per square meter in the world lies in its explosive product strategy and its insistence on offering products with the best cost-effectiveness.

Scientific site selection and refined product selection can ensure that it has a steady flow of customers, and that the products sold are the most popular products recognized by local consumers, further improving the store visit rate and conversion rate.

With the expansion of Xiaomi's ecological chain and Youpin Mall categories, the number of SKUs (product varieties) in offline Xiaomi stores is also becoming increasingly abundant.

In summary, although the management of Xiaomi Home may not be the most sophisticated, Xiaomi has formed a set of replicable high-efficiency strategies, and implemented this systematic methodology in every Xiaomi Home. This is the reason why every Xiaomi Home is so popular.

Author: Yan Tao WeChat public account: Yan Tao Sanshou