LeEco is their own worst enemy in the company's attempt to breach the US market

This article may contain personal views and opinion from the author.

Let's face it - the world of high-end, flagship smartphones has gotten quite boring. Both the Samsung Galaxy S7 and Apple iPhone 7 lines consist of some of the most popular smartphones currently in existence, but when you really look at them, there's not a lot of excitement going on. They might have refined designs, speedier processors, slightly better cameras, and water-resistance, but those are all subtle tweaks and not necessarily new features. There's no doubt at all in my mind that both the S7 and iPhone 7 are quality smartphones, but when you remember that Samsung and Apple are asking anywhere from $600 all the way up to almost $1000 for these devices, it becomes quite hard to justify spending that much money.

We live in a world where it is now very possible to spend $400 or less and get an extremely capable phone that can easily last 2 years without showing major signs of use. Some of the most notable examples of this include the OnePlus 3, Honor 8, and ZTE Axon 7. While you probably recognize those names because you regularly keep up-to-date on tech news and frequently visit our site, those smartphones are most likely alien to the majority of consumers out there. Why is that? They don't do a ton of marketing to promote these devices. I'm not saying that OnePlus, Honor, and ZTE don't advertise these handsets to try and sell as many of them as they can, but they don't make the extra push that's necessary to really get in the minds of the average consumer.

Back in October, a company by the name of LeEco took the stage in San Francisco to introduce an entirely new line of products in the United States. The company has built up quite a name for itself over in China, and they were hoping to finally bring that success over to the US. The company held a true spectacle of a press event and introduced a heap of new products (including smartphones, TVs, a bicycle, and a ton of accessories to go along with these) at very competitive price points. The LeEco Le S3 and Le Pro3 feature very similar specs and price points to other budget Android offerings we've already seen this year, but LeEco made a big push to market these as much as they possibly could. The day following the company's event in San Francisco, I started noticing LeEco advertising banners everywhere I went. From Facebook, tech sites, and everywhere else, I was seeing advertising for LeEco and their newly available products in the US. We finally got a company in the US that's making solid, budget smartphones (among other products) and marketing the heck out of them to really make a name for themselves. 

Following the company's press event, we got official word that the first flash sale would take place on November 2nd. To kick off the introductory sale of the company's new products, LeEco advertised that they'd be offering rather steep discounts on all of their gadgets - with the most notable ones being the Le S3 and Le Pro3. With normal prices tags of $249 and $399 respectively, the devices could be picked up for just $149 and $299 after a $100 rebate. Scoring phones of their caliber for such a low price point seemed fantastic.

November 2nd came, the flash sale took place, and then November 3rd was upon us. Rather than the phones being for sale at their normal price without the rebate, we got something that I honestly wasn't expecting.

LeAvailability is LeProblem

LeEco sells all of their products through their own storefront that they call "LeMall." On November 2nd, all of the company's products could be purchased with those rebates if and only if you signed up for the LeRewards program beforehand. Again, that's perfectly fine. However, on November 3rd, none of the products could be purchased any longer. And, as it currently stands, you won't be able to purchase a LeEco product again until November 9th. 

This is how flash sales work, and it's a strategy that LeEco (and other companies) has been using in China to great success. Products are only available for a certain amount of time on specific days, people rush online to buy them as fast as they can, the flash sale ends, and the cycle continues over and over again. While this is a marketing technique that's proved to turn out positive results for LeEco is China, it's a business model that's, in my opinion, going to cause the company nothing but trouble in the US.

For the common smartphone owner in the US, buying a phone primarily consists of going to a retail outlet like Best Buy or getting the phone directly through AT&T, Sprint, T-Mobile, Verizon, etc. The majority of phones in the US are still bought with either a 2-year contract or on a monthly installment plan, but stores like Best Buy have taken an initiative to offer unlocked phones from companies such as Blu, Huawei/Honor, Sony, Motorola, and others. These steps are educating the average consumer more about the world of unlocked smartphones, and it's certainly a step in the right direction.

However, with most people still getting phones through carriers, not being available on any major networks in the US was already a big hurtle for LeEco to get over. Then you factor in the fact that the phones and other products can only be purchased on certain days, and you've got a real problem on your hands. I'd understand tweaking the business model to only offer the special rebates on certain days, but only allowing the phones to be available for purchase on very specific days is a step in the wrong direction. It reminds me of the limited availability of products that OnePlus used to offer with their invite system, and although it isn't necessarily the same exact implementation, it's still the same general idea of only offering products at set times to try and increase the hype surrounding them.

I will say this though. In the case of both OnePlus, LeEco, and other companies that use similar selling tactics, this is done not only to build up the excitement surrounding the products, but also to help better manage the limited inventories that these companies have. By only selling a set amount of products at specific times, LeEco can ensure that they don't have an abundance of inventory lying around that's doing nothing but losing them money. As more and more of these flash sales take place, LeEco will hypothetically be able to get a better idea of how their sales are going, and order their inventory based upon how previous flash sales have gone. It's a strategy that helps to minimize their potential losses, but unfortunately, it's still one that doesn't necessarily work for a market like the US.

Consumers in the United States want to purchase something on their terms, not when a company says they have permission to. This form of competitive buying/selling may be beneficial to LeEco's profit margins in theory, but I can't think of too many people who would prefer to wait for a certain day to purchase a product when they can get something similar in both quality and price whenever they want to. The US is a completely different breed compared to the markets LeEco has previously been operating in, and as such, they need to adopt different selling techniques.

Lights, camera, money loss

Before I even sat down to finally put my thoughts into words for this editorial, one of my colleagues tipped me off to a news story that recently broke. LeEco's CEO Jia Yueting sent out a letter to all of the company's employees to announce that he would be cutting his salary to just 1 yuan (the equivalent of 15 cents). Why did Yueting make this move though?

LeEco is running out of money.

In the letter, Yueting said that, "We blindly sped ahead, and our cash ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited." LeEco got overambitious with their plans to expand into the US, and it came back to hurt them.

Gizmodo did reach out to the company about this letter, and LeEco's North American Chief Revenue Officer Danny Bowman reassured the site that the US is currently the company's main priority and that they are still on track with their expansion plans. That certainly is reassuring, but there's no getting around the fact that LeEco losing so much cash so early on into their expansion isn't a good sign at all.

Finding success among a sea of competition

Let me be clear about one thing: I want LeEco to succeed. The company has made a killing in China, and their current product line certainly does have some compelling aspects. The phones and TVs being offered look to be of a very high quality for such a low price, and with the right business model, I think the company does still stand a chance at success.

However, if LeEco wants to see that success blossom, they need to change the way that they're selling their products. The United States is an extremely different market than China and other countries where these sort of flash sales work, but the same cannot be said for the US. LeEco needs to work on making their products more readily available, and once that's achieved, they need to then focus on getting their products into retail stores and on other online sites. Greater availability is going to be the key to success for LeEco, so now it's a matter of waiting around to see what the company's next move is from here.

LeEco has the chance to turn into something big in the US. Let's just hope they take the right steps to actually make that happen.



1. j_grouchy

Posts: 180; Member since: Nov 08, 2016

I hope they at least bring their UI more in line with standard Android. Unnecessary tweaks (and major changes) to the interface are enough to turn a lot of folks off.

3. jack123

Posts: 278; Member since: Jan 07, 2013

It's not about UI, it's more about marketing and pricing. Well, you can see how Samsung pricing their phones just go up until their phone exploded, just joking.

9. logicsdude

Posts: 85; Member since: Jun 25, 2014

I feel like their UI could actually attract iOS users by feeling more familiar

2. NarutoKage14

Posts: 1327; Member since: Aug 31, 2016

"There's no doubt at all in my mind that both the S7 and iPhone 7 are quality smartphones, but when you remember that Samsung and Apple are asking anywhere from $600 all the way up to almost $1000 for these devices, it becomes quite hard to justify spending that much money." And then you must remember that Samsung is the biggest R&D spender by far in terms of hardware. Possibly up to 50% of the tech in any given phone has somehow trickled down from Samsung.

4. Alfred19

Posts: 1; Member since: Nov 08, 2016

Joe, great article! But I wish you would have researched the matter a bit better! I registered with LeEco but missed the flash sale. Shortly afterwards, I received a discount code by email and I am able to sign into the website and purchase the phones or any other product they sell. The rewards discount still applies. So it is not true that you can only purchase during the flash sale!

5. fyahking

Posts: 1146; Member since: Jan 28, 2015

I bought mine and will be here tomorrow.no more spendings $759 for a phone for me.:)

6. kiko007

Posts: 7499; Member since: Feb 17, 2016

"LeEco has compelling products, but a stupid business model." FTFY. My father told me something once and it stuck with me. He said "Miracles aren't meant to touch men, and charity never reaches those who truly need it." which I didn't understand until I got into business. Products made by companies like these are what we call "bait" for said company. They hope you buy the hardware so they can push the software. Xiaomi has a similar problem to deal with as well. Expansion puts a serious strain on resources for any company, but Chinese companies are the most at risk on many occasion because A) they rely to heavily on population density to inflate numbers, and B) they often refuse to accept western business tactics as a means to stave off regression. Huawei has no such problems, because they've grown accustomed to beyond border service. However, LeEco and Xiaomi have not, making it difficult to imagine how well they can actually do in places like America where their brands are nonexistent. Tl;dr- They have a tough road ahead of them......

8. Furbal unregistered

Huawei was smart to target euro markets heavily first. I got a pro 3 due to the price. It is a stellar phone in this price bracket. I hope they do make it.

7. Saywhatnow

Posts: 28; Member since: Jul 13, 2016

I brought 1 as well and it will arrive today. You cant beat the price. All i care about is speedy processor and battery life. I see people complaining about sd card and i ask myself why when the pro 3 comes with 64bg. People are so lazy today like if you cant just transfer your pics/vids to your computer??? The headphone jack is nice to have but i can deal without it because of wireless bluetooth headphones. The camera is just average nothing special even though it has the same sony imx298 sensor as the one plus 3 and several other phones but lacks stabalization which is upsetting. Dual stereo speakers is a nice touch. I will be installing nova/google launcher so the software wont bug me much but for $300 the pros outweigh the cons and if within 14 days i dont like the phone for whatever reason ill return it and get a unlocked moto z play and call it a day.

10. Jaykayd

Posts: 1; Member since: Nov 08, 2016

I have the Pro3 (typing on it now). With Google Launcher and switching away from their default apps, all the annoying bits are gone. It's very much like my old Nexus 5 now. Great phone. Stupid name. In fact, I thought that would get mentioned in the article. Telling everybody I have a Luh-Eeko is not even worth the trouble... one of the guys at T-Mobile seemed impressed until I told him the name. Anyway, I'm inclined to agree about the sales model but I think that's what works for LeEco right now. Maybe as the business grows, that will evolve. By the way, I bought an S3 as well yesterday for the discounted price. Just because I knew someone could use it. So maybe the model is working. Just for anyone wondering about the Pro: Battery is great... Heavy use in a day and I still have 50%. Camera is decent but video below average with no stabilization. Comes with a case which is great because Amazon had very little to offer. There's Wi-Fi calling with T-Mobile, but I haven't confirmed extended range LTE yet. Fingerprint reader on the back is very responsive, although I slightly prefer my wife's iPhone 7 Plus reader placement and feel. Might be the best value I've ever gotten in a phone, although I won't know for a few years.

11. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

Is like everything else, follow instructions, and hopefully things will workout. I ordered mine early in the morning, and the package arrived the next day, around 9:30 a.m. EST. Thus far, things are okay. Their UI was driving me nuts, so I changed it to the Google now launcher. https://s16.postimg.org/v4ro1gjh1/IMG_6945.jpg

12. razmahtaz001

Posts: 501; Member since: May 11, 2013

but doesnt these phones only support upto hspa+? i wish all of these international flagship and higher end phones come with u.s. lte support

13. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

Yes it supports LTE & VoLTE out of the box. It is a US variant, as such it supports most bands, only exception being CDMA.

14. Atrixboyyy

Posts: 603; Member since: Nov 03, 2011

"Lights, camera, Money loss" I don't know why I'm laughing at that so much

15. rakim2g

Posts: 3; Member since: Mar 12, 2017

The newer Le Max 2 64GB does support CMDA and has all the necessary bands, except band 13. Not sure if it's totally compatible with at least T-Mobile, AT&T, or Sprint, but it sure looks like it is. I didn't see Verizon's Band 13, and not sure what not having it means. LeEco is definitely making a concerted effort that I can only applaud.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.