Xiaomi’s “Selling through Scarcity” Tactic Not Necessarily Good for Industry?

28 Apr

Xiaomi’s strategy of creating artificial shortages for its new smartphone lines may be imitated widely by competitors, but isn’t necessarily viewed as healthy or positive for the entire industry, according to a number of sources.

“Offering more affordable models and creating artificial scarcity are not strategies that can be successfully applied by all phone suppliers as not all of them can generate a profit from it,” Want China Times warned, citing data from Chinese website Tech 163.

In the worst case, it is believed the initial shortages will impart too much benefit to “scalpers,” people who are known for snatching up hot items early on and offering them at a more expensive price to late buyers. Looking at the recent activities taking place on the Chinese online shopping site, Tmall, Want China Times noticed that 6 of the website’s vendors have already been able to sell 14,000 Hongmi Notes within a single month. The widely popular—and currently in-short-supply— Xiaomi phablet, which originally costs 799 RMB, had been charged for as much as 1078 RMB to 1248 RMB.