U.S. Communications Inc. has spent $5 million during the last four years forming an in-store system designed to entice Kmart shoppers to sign up for wireless service.
“We’ve got it set up so they can just come in and buy it, like buying a toaster,” said Basil Ford, USCI vice president of corporate development.
The Norcross, Ga.-based company has an exclusive agreement with Kmart to sell cellular and paging products in 2,000 stores nationwide. USCI has equipped 1,800 stores with merchandise.
USCI installs kiosks and counter displays that promote phone products and rate plans. A dedicated landline phone is part of the display, which connects to USCI’s national call center in Norcross.
If customers have a question, they lift the handset and go through an automated menu or they can speak to an attendant.
“We have two T-1 lines coming into the call center on tandem to handle 50,000 calls an hour. We have 90 live operators and are open 24 hours a day. When we were in a Kmart national ad on Nov. 24, we got 160,000 calls in one day,” Ford said.
That ad boosted 1996 activation figures to more than 33,000, the company reported. But USCI wants more than just activation revenue.
“We would get a one-time fee of $300. But we decided we wanted to own that customer,” Ford said.
So in November, the company created the Ameritel subsidiary. Ameritel buys airtime wholesale and resells it in retail locations in 14 metropolitan markets. USCM continues to do activations in numerous different stores, alongside other providers.
“As those contracts come up, we hope to show these merchandisers the benefit of working just with us,” Ford said. “Other groups are providing a standardization of brand, but the mass merchandisers need a standardization of process and approach. We’d like to leave the regional carriers to do regional distribution and we will provide national service,” Ford said.
If USCM insists on an exclusive presence, it will find itself nose-to-nose with MCI Communications Corp., which also resells wireless service and is interested in a nationwide retail presence.
MCI bought 334 kiosks in Sam’s Club stores from CellStar Corp. last year.
According to MCI, 47 percent of U.S. households belong to warehouse clubs. MCI’s booths contain sales staff.
“The first-time purchaser wants to ask questions, and touch and feel the product,” said David Trachtenberg, MCI director of retail marketing.
MCI is confident its brand name will give it weight with consumers, along with MCI’s ability to bundle so many other products with wireless, such as long distance phone service, Internet access and local phone service in some areas.
Ameritel said launching an unknown brand in the mass merchant market won’t be a problem. According to Ford, first-time buyers aren’t familiar with any carrier’s brand.
“We will do a national rate plan, something we can’t do with 80 carriers,” he said. An Ameritel national rate plan would be something large merchandisers like Kmart can advertise countrywide.
A one-price-fits-all solution doesn’t give the provider much flexibility, countered MCI’s Trachtenberg. Retailers want a national footprint, not necessarily a national price.
“The retailer is probably doing regional advertising already because the business dynamics are different in their stores. There are special price plans offered all the time. What if there’s a promotion in a Bell Atlantic market that AirTouch isn’t doing. You have to be as competitive as your nearest competitor, and that means being flexible. You can’t have your hands tied with a national price,” Trachtenberg said.
USCM’s wholly owned subsidiary, Communications Centers Inc., has signed an agreement with Service Merchandise to equip 131 stores with dedicated communication centers. USCM said it has some arrangements with other mass retailers, such as OfficeMax, Target, Wal-Mart and American Drug Stores, but other providers have made inroads as well. USCI’s billing system is being built by CellTech Information Systems of Houston.
