America is the proverbial “melting pot,” a nation of immigrants and their neighborhoods. With greater than 80% wireless penetration, everyone needs a mobile phone. Add the complexity of the shifting landscape from voice to advanced data services and you have a business proposition for those who can reach beyond the mainstream.
In a nation of 300 million-plus people, that translates to big business, even for those pursuing a relatively small slice of the market.
Enter the “authorized master agent” and the independent retailer, whose reach “on the street” is sought after and backed by the major carriers.
The “authorized master agent” typically is aligned with one or more carriers to deliver phones, service activations and support to the indie retailer, which is the face of the wireless industry to countless neighborhoods where carriers’ own retail efforts aren’t cost-efficient.
While carriers dominate the direct retail channel with about 66% of the market, an array of other players divvy up the rest of the pie, according to an online survey conducted by market research firm Jupiter in March. Big-box retailers and consumer electronics stores grab perhaps another 10% to 20% of the market. That duo is followed by kiosks, with perhaps 5% of the retail channel.
The independent retailer pursues 5% or less of a multibillion-dollar market, according to Jupiter. (The apparent inexactitude of the figures is due to some blurring of the categories and resulting vagueness in consumer responses, the market research firm said.)
One master agent put the figure solidly in the “double digits,” but would not share proprietary market data.
“These bits and pieces aren’t a bad business in a market with 300 million people,” said Jupiter analyst Julie Ask. “The independent retailer adds value by walking people through the various wireless options.”
Two trends
Two threads run through the independent retailer’s business – one current, one perennial – according to two master agents.
The most pressing issue facing all wireless retailers?: how to convey the full value proposition of advanced handsets and data services in an industry rapidly shifting its emphasis from voice to data. Consumers in the upgrade cycle now out-number the numbers of potential, new subscribers.
“The big evolution today for independent retailers is from specialty wireless retailers to specialty consumer electronics retailers,” said Mike Mohr, president of Los Angeles-based Celluphone. “It’s the biggest shift we’ve seen in the 25 years we’ve been in business. Our retailers must leverage what’s cool in handsets to sell new services.”
As carriers and OEMs pack MP3 players, cameras, GPS, browsers and mobile TV into the handset, indie retailers can struggle to explain the evolving value proposition, Mohr said.
The role of the master agent in this shift?
“We help the independent retailers evolve as times change,” Mohr said. “Some independents are adapting to this change, others are finding it difficult to survive. Identifying the needs of the customer is the key issue and customer service rankings for these independent retailers are high.”
To that end, master agents such as Celluphone provide training staff and marketing support to the indies it serves. The 148-employee company is closely aligned with Verizon Wireless to address 2,000 indie retailers in California, Texas, Illinois, Wisconsin, Kansas and Missouri, and serves all carriers in the other 44 states, the company’s growth market, Mohr said.
The heart of America
“Every village, every neighborhood in this country has mom-and-pop stores and a demography that the big carriers can’t serve,” said Bill Bourke, VP for national sales at American Wireless. “They’d like to, but we have our feet on the street, local inventory and an ability to extend credit locally.”
Campbell, Calif.-based American Wireless is a 300-employee, national master agent for Sprint Nextel Corp. and mobile virtual network operator Helio L.L.C., which also serves Verizon Wireless in 12 Western states. The master agent represents prepaid offerings as well from Virgin Mobile USA Inc. and Boost Mobile.
“I see the independent retailer channel as necessary and viable for the carriers because this is a nation of immigrants,” Bourke said. “Each generation brings a new wave. These are new, vertical channels. My family came from Ireland and when they arrived, they tended to do business with other Irish immigrants, at least at first.”
“That’s happening in wireless, too,” Bourke added. “Independent retailers speak the same language, literally, that their customers do. And it’s in our own interest to hire people from the communities we serve.”
Mohr echoed this basic point about the master agent-indie retailer channel.
“Demographic diversity is what we look for when entering a new market – that’s our stock-in-trade,” Mohr said. “These are unique communities. They’re Americana, the heart-and-soul of the country.”
The value proposition
Once the retail discussion begins, however, the challenge is very much akin to the same scenario in a carrier retail outlet, the two executives said.
“The question we help to answer is: how do you present the value proposition to the consumer?” Bourke said. “If you’re not listening to their needs and giving carefully qualified advice, the consumer is not being served.”
For instance, if a consumer is in sales or real estate, a navigation service and a handset to support it may be the answer. The more closely tailored the device and service is to the consumers’ needs, the more stickiness to the carrier brand, Bourke said.
That underscores the value of “consultative sales,” Bourke said, in which the carriers offer master agents’ staffs and their indie retail shop owners training opportunities and marketing resources. The indies can decide whether to align themselves with a single carrier or offer a range of carrier options, he said.
The macro economy
“We’ve been doing this for 25 years, so we’ve gotten a lot of perspective on changes in the industry,” said Celluphone’s Mohr. “Today, the slowing economy has hit all retailers, yet mobile phones are considered essential. We’re still figuring out what those two factors mean for our retailers.”
With their “feet on the street,” the indie retailers and the master agents that support them may well be the first to know.
