The retailer’s days as simple box-movers are long gone
|– But are operators and retailers aware of that?|
|Retailers in the mobile market, whether that is psychical shops or internet based shops will experience huge changes in the way they are doing business. A few years ago it was the retailer’s task to sell mobile handsets and acquire customers for the mobile operators. That is not the case today, where it is increasingly becoming the retailer’s task to sell the right mobile handsets and get the right customers.|
Previously retailers could handle their role in the value chain acceptably by just selling a low-end handset to customers entering the store. At that time mobile operators wanted to boost their customer bases as quickly as possible and any customer was considered a good customer. This strategy has however cost the mobile operators millions, as they amongst other things have paid retailers too much money when acquiring low usage customers. However the mobile market was not satiated back then, and so this way of doing business was acceptable
Now, however, the market is satiated, which makes this business model inappropriate. Retailers need to adapt to that they will be expected to be able to analyse the customers’ actual mobile needs and thereafter sell the customer a mobile handset that is advanced enough to cover the mobile customers need for functionality.
Also retailers will to a much greater extent than previously have to teach mobile users how to order and use mobile services. This is directly connected to mobile operators being under pressure on their revenue from sales of voice telephony and SMS messages and they have therefore moved focus towards an increase in revenue from sales of data services.
The future business models will be designed in a way, so that retailers have a larger financial interest in doing business in a much more suitable fashion for the mobile operators. As mobile operators in the future focus on making sales of VAS a larger part of their total revenue, the new business models will ensure that also retailers naturally focus their sales towards VAS. In other words, the business models will be engineered to minimise conflicting interest between operators and retailers
The conflicting interests in the mobile value chain is among the 10 Mega-trends identified by Strand Consult. Due to these Mega-trends, the mobile telephony market is in the middle of an upheaval of the whole value chain, which will lead to the implementation of new business procedures and revenue sharing models.
To summarise, the retailer’s days as simple box-movers are long gone, as retailers today will only have a right to exist if they understand how to contribute with specific competencies to the value chain and especially to the mobile operators. This requires retailers that are able to attract and stimulate the right segments such as high-spenders that continually can give a positive cash flow to operators – those retailers not able to adapt and just doing business as usual will die.
Megatrends in the Mobile Industry