NEW YORK-Since the launch of carrier competition in the duopoly wireless market, third-party distributors have had to work hard to manage increasingly complex distribution issues. Carriers, meanwhile, are dealing with this same level of complexity-trying to improve sales processes for existing distribution channels while at the same time introducing new ones, including e-commerce.
Constant developments in the industry create both new opportunities and new challenges for distribution.
Distributor view
In the early days of wireless telecom, carriers also served as distributors because that was the only way they could buy handsets that they wanted in bulk, said Robert Laikin, chief executive officer of Brightpoint Inc., Indianapolis.
Then came the advent several years ago of competition into what had been a duopoly market. This prompted both new and existing carriers to develop market-differentiation strategies, opening the door for distributors like Brightpoint to assemble bulk pieces into specialized packages, tailored not only to individual carriers but also to individual markets.
Since then, distribution has grown increasingly complex. The North American wireless market is, far and away, the most complex in the world with regard to distribution, said Laikin.
The trend today is for those packages to include a multiplicity of services beyond traditional wireless voice, including long distance, Internet access and wireless data, he said.
Competition also has propelled mass marketing and established a role for large retailers in selling wireless products and services.
However, said Laikin, “About 15 percent of the phones we send out (to mass retailers) come back because the consumers are not satisfied. That’s 20 times more than any other channel, and managing the reverse logistics is a real challenge.”
Not only are the kinds of services offered in bundles increasing, but the kinds of handsets and pricing of various options are changing at warp speed, added James Dunham, senior vice president of American Wireless, Campbell, Calif.
Consequently, just as carriers have turned over distribution to third parties, they increasingly are calling on distributors to manage actual order fulfillment, “adding value to the box,” Dunham said. This aspect of the business comprised 12 percent of American Wireless’ post-paid activations last year and likely will be double that amount at year-end 1999.
Adding another twist, handset makers now are looking to the Internet for direct sales and to distributors to fulfill electronic commerce orders from consumers. Qualcomm Inc. recently contracted with American Wireless for this service, Dunham said.
Nokia Corp. also is “pursuing its own Web site without activation,” and other phone makers are planning to go online for direct sales, he added.
American Wireless recently signed a contract with Point.com, an online wireless phone shopping center, to fulfill Sprint PCS’ orders nationwide.
Formerly known as Wireless Dimension, Point.com, based in Bothell, Wash., allows consumers to comparison shop, providing up to five rate plans from a variety of carriers in their area, said Point.com’s spokeswoman Leigh Barer.
“We are in the top 50 U.S. metropolitan areas, and we have a full-time staff devoted only to evaluating different plans, whether or not we resell them,” she said.
American Wireless also is a master agent for smaller, independent agents that resell B-band cellular services. Dunham said these smaller players, whose sales forces are very knowledgeable, have an important role to play as wireless telecom becomes more complex.
Paris Holt, chief executive officer of Fox Communications Corp., Kirkland, Wash., said the mission of his company is to revolutionize the independent resellers sector.
“We have realized the power of national distribution and are trying to open the eyes of the wireless industry,” Holt said.
“We have a very expensive billing system specifically made for cellular resale. We are opening our entire back office network to local and regional dealer-agents, giving them access to mobile numbers anywhere in the country, pooling all minutes of use so we can offer smaller agents competitive rates.”
Fox is in the process of signing contracts with 10 carriers, including AT&T Wireless, Sprint PCS and MCI WorldCom Inc., which cover 95 percent of the country, Holt said.
“There will be one ubiquitous rate plan and promotional platform, and our network will offer a turnkey solution for cross-discounting cellular, long-distance and Internet services for business and residential customers,” he said.
Carrier view
“Despite what Bernie Ebbers says, we do have a wireless strategy,” said Paul Adams, the Atlanta-based media relations manager for MCI WorldCom, referring to MCI WorldCom’s chairman.
“We look at a lot of different ways of selling many different services-our own stores, online Internet specials, all kinds of (national) companies (like Amway), regional retailers, insurance agents, airline wireless miles.”
Until recently, the target market for MCI WorldCom’s various offerings, some of which it resells, has been its own customer base. However, it has begun billboard advertisements in cities like New York to “reach out to non-MCI customers,” Adams said.
In all of its distribution outlets, however, MCI WorldCom retains control of the billing and customer-care functions, he added.
“We don’t see any negatives in terms of any (distribution) channel. It is (a process) of expanding the customer base,” said Robert Sage, vice president of sales and distribution for Alltel Corp., Little Rock, Ark. “There will be a need for all, and our strategy is to be dominant in all … But it basically gets down to sitting down with each one and knowing their strengths.”
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