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Samsung to borrow from Xiaomi, adjusts Asia strategy to online marketing

According to contractors and suppliers, Samsung is looking to shift its focus in Asia towards online marketing and sales, to better compete with low-cost Chinese brands.

Published onMarch 23, 2015

samsung galaxy logo mwc 2015 4

Samsung introduced a few beneficial changes with its new Galaxy S6 smartphone and appears to be turning a new page across its broader mobile business this year as well. According to industry sources, Samsung is looking to adjust its marketing strategy for budget handsets, in a bid to compete with rival Chinese manufacturers in low cost markets.

Contractors and components suppliers state that Samsung is to borrow from Xiaomi’s successful strategy of marketing and selling smartphones through e-commerce partners located in specification regions, alongside its own online presence. India, Vietnam and China specific focuses are said to be in the works, and this strategy is unlikely to apply to Western markets.

“If Samsung sells more of its smartphones via its online channels, then it can save a huge amount in costs. This is also good for consumers as Samsung may provide handsets with more of a discount,”

It has become increasingly clear over the last twelve months that Samsung needs a new strategy to tackle the growth of brands like Xiaomi, which are impacting Samsung’s own sales levels and market share. Samsung saw profits tumble last year due to weakening global sales, although net profits are expected to level off this year, according to early estimates. The Asia market accounted for 53 percent of global smartphone shipments in 2014, but Samsung only took a 13 percent share, behind Apple’s 16 percent, which is lower than the company’s global average share.

“Xiaomi only sells its handsets via its official websites. Samsung management believes this strategy was one reason that helped the Chinese smartphone producer improve its bottom line in such a short time,”
Samsung Estimates Profits 2015
However, this shift in strategy would not be without risk. Bang-for-buck in the hardware department is the other half of Xiaomi’s dominance in the online retail market, as is an extensive brand line-up and broader eco-system.

Samsung would be underestimating Xiaomi it believe that online marketing was the only major aspect of its business’ appeal. The company will have to match hardware, price and send the right consumer message if it wants to seriously compete with the low-cost brands. The move is also likely to cut profits from local carries, which could damage Samsung’s existing retail relationships in the region. This could be quite the gamble.

Samsung declined to comment on the matter, so we will have to wait and see exactly what the company has planned for Asia this year and whether or not it can rise to the low-cost competition driving the booming Asian smartphone market.