Smartphone Oppo – betting on offline retail

In OPPO’s rise to become China’s fastest-growing smartphone brand, the company did one thing right: betting on offline retail.

The Dongguan-based smartphone maker surprised many industry watchers earlier this year when it pushed into the ranks of the world’s largest five smartphone companies by shipments in the first quarter this year, according to IDC. In China, OPPO became the second-largest smartphone company.

Unlike Xiaomi or Huawei, the company relied on a nationwide network of 200,000 stores to sell its products.

Focusing on offline wasn’t an easy decision, Wu says. When OPPO was painstakingly opening brick-and-mortar stores a few years ago, its competitors were seeing breakneck growth by selling through the internet. Xiaomi, for example, shipped 18.7 million smartphones in 2013 and the number grew 227% to 61.1 million in 2014, thanks to its internet flash sales model that attracted bargain hunters who crazed its limited batches of affordable and sleekly designed devices.

“From 2011 to 2013, we were confused,” Wu says. “We tried to build up our e-commerce channels and studied consumer habits and the business models of the online brands. Then we realized that most of our customers would still like to experience the phones first. So in 2012, we continued to focus on offline.”

The decision turned out to be right today, as Chinese consumers shift to upgrade their devices or try new brands instead of buying smartphones for the very first time. They are visiting retail stores more often to experience the products or seek after-sales services.

The company pays the “most competitive” commission rate to sales people, compared with the industry average of 10% to 15% of the phones’ price tags.

The company will continue to work on smartphone batteries and cameras as a way to meet consumer demands yet to be satisfied by other companies. OPPO will focus on smartphones and won’t branch out into other product lines.

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