OXFORD, United Kingdom-Independent mobile dealers feel threatened in many countries in Europe.
Those that have not been swallowed up by the national retail chains or taken over by a cellular network operator increasingly feel isolated and poorly served. Many now believe events surrounding the introduction of prepaid wireless service have sounded the death knell for the independent mobile retailer.
“Network operators feel a strong urge to reduce the power of mobile dealers,” said Jeroen Visser, director of the Consumer Business Unit at Eircell in Ireland. “They are looking to develop new mobile distribution channels.”
The traditional distribution channel structure of network operators, independent service providers (SPs) and mobile dealers set up in countries like the United Kingdom to stimulate the cellular market has now passed its sell-by date. It has left a legacy of a commission culture, materializing itself at street level in the form of handset subsidies.
In the early halcyon days, independent dealers became adept at swapping clients between SPs and network operators simply to earn commission payments.
That has now been controlled, but with churn rates of 25 percent to 30 percent, network operators are fighting to retain customers.
“The problem is that it is the salesperson in the mobile dealer who decides the network for the customer,” said Visser.
Operators, therefore, are developing their own retail outlets, bundling handsets with subscriptions and searching for new channels to market.
“The search for new channels is restrained by factors such as contract administration, dependency on operators’ systems and procedures, and customer confusion and acceptance,” noted Visser.
But prepaid bypasses these restraining forces. “It has led to a channel-opening frenzy,” observed Visser.
One of these new channels is the supermarket.
Major national chains whose core business is providing groceries have expanded into the FMCG (fast-moving consumer goods) market. Selling prepaid packages through supermarkets apparently gives power back to the operator as the new channel no longer “advises” the customer.
Not true, warned Visser. In fact, there is less power to the operator because supermarkets follow their own rules.
“Networks must develop new skills in retailing,” stated Visser. “They need to learn the FMCG rules.”
They had better learn fast.
“Supermarket economies are driven purely by high volumes and low margins,” explained an independent mobile dealer, declining to be named. “The network operators will be eaten alive by the supermarket chains. They don’t realize what’s going to hit them.”
They are beginning to realize in the United Kingdom. A few months before Christmas, network operator Cellnet formed an alliance with the supermarket chain Asda to sell its prepaid package. Vodafone soon followed, signing a deal with Tesco. But they soon experienced one of the FMCG facts of life: Supermarkets have no loyalty to their suppliers.
In early November, Asda unilaterally slashed the price of the Cellnet prepaid package by
