If you are thinking about opening a cell phone store, there’ll be plenty of decisions you’ll have to make, such as what kind of location you want to do business in and what the hours of operations should be. Another important decision you’ll have to make early on is whether you want to open a multi-carrier (mixed) store or do business as an exclusive retailer.
Before you decide whether to go exclusive or multi-carrier, let’s understand both choices a little better and discuss the advantages and disadvantages to either approaches.
Exclusive retailer signifies that you are agreeing to sell wireless services only from one carrier. You will not be able to conduct sales for any other wireless services, except for the one you have contracted with. In many cases, you are still able to process bill payments for customers of other carriers and earn top-up revenue. This is important, as it gives you access to a much larger customer base and allows you an opportunity to “convert” or port-in your clients over to the service you sell.
1. Residual: Carriers may offer a recurring per-month residual as a benefit for being an exclusive retailer, which means that you will earn a specified % residual (usually 2% – 5%) per month for a set number of months or years on every phone you activate.
2. Top-up Margin: Some carriers may offer higher top-up margins to exclusive retailers than multi-carrier cell phone stores.
2. First-Dibs: An important value of being an exclusive retailer is the early-access to latest phones before they become available to the multi-carrier cell phone stores. This gives the exclusive stores an advantage over rest of the wireless retailers with an ability to market and sell the latest phones to those who just can’t wait to get them before they become commonly available.
3. Investment: Exclusive retailers may be able to take advantage of build-out or construction/renovation funds from their carrier, which is usually not available to multi-carrier retailers.
1. One size doesn’t fit all: If you are selling services of one carrier, chances are that there will be some potential customers whose needs you won’t be able to fulfill. As you may be aware, not all carriers offer the same data or international calling plans that the customer may be looking for, leaving you unable to fulfill their needs.
2. Limitations: Exclusive retailers face restrictions from the carriers they are authorized with in terms of what they can sell or do in their store. For example, carriers may require a certain color or decor of the store to maintain brand standards. Carriers may also dictate that a wireless store can’t offer certain services, such as repairs, if they feel it clashes with their image.
Multi-carrier retailers are cell phone stores that sell wireless services of more than one carrier, usually offering services of 2-4 carriers. These retailers are equipped to fulfill the needs of a wide range of customers who may be looking for robust data plans or hefty international minutes. Because multi-carrier cell phone stores have services of multiple carriers on their menu, they may be better-positioned to meet the various demands of their customers.
1. More than one basket for your eggs: Since a multi-carrier cell phone store is not tied to one carrier, it faces smaller risk of business interruptions if one of the carriers were to close shop for legal reasons or go bankrupt.
2. Something for everyone: A multi-carrier cell phone store has better chances of meeting customer needs through their wider range of products and services.
3. More freedom: Multi-carrier cell phone stores don’t always have to worry about the long list of do’s and don’ts from the carriers and therefore enjoy a greater level of freedom in how they operate their business.
1. Master of None: Often, when a wireless store offers services of many carriers, their staff is less equipped with knowledge about all the different companies, their plans, offers and promotions, minute and data caps, phone specs, etc. And this vast offering can also leave the customer dazed and confused as they browse the showcases and plan posters and talk to the not so expert staff.
2. Lack of Protection: Multi-carrier phone stores have much less protection of their territory and can see competition crouch up in the form of exclusive stores by the same carrier they are authorized by. In comparison, exclusive stores have relative safety from the carrier who will generally not authorize another dealer within a certain geographic radius.
We have discussed the advantages and disadvantages of being an exclusive retailer as well as a multi-carrier.
There’s no right or wrong direction to take here and your decision should be based on careful consideration of pros and cons that accompany either choice.
Study the various carriers and learn which one or more are the best for you as well as your customers.
For you, keep in mind:
a. Which carriers pay the best commissions and spiffs and in a timely manner?
b. Which carriers have the best top-up margins?
c. How well do they protect dealer territory or will they approve someone so close?
For your customers, things to consider:
a. Which carrier has the best price plan with most generous minute and data plans?
b. Do they offer international text and minute choices if your customer base calls international?
c. Does the carrier have good handset choices at different price plans? Hefty data plans?
Once you have selected one more carriers that are good for you as well as your customers, it is time to get started in submitting your location for approval.
Keep in mind, you don’t want to bound yourself into a lease before your location is approved by the carrier(s) of your choice.
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Already in wireless business? What’s your take on whether to go exclusive or multi-carrier?
Good luck and happy selling!