A new beginning

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Whilst I can’t mention everything we discussed, as Ofcom have asked us to keep some points confidential, I can reveal us dealers met up at Fonedoctors beforehand (thanks for the Jaffa Cakes Faisal!) to discuss what points we wanted to get across at the meeting. It was nice to finally put some faces to all the names from the Phone Dealer Forum – it’s funny when you build up a mental picture of someone and then you actually meet them.

We then headed to the rather plush offices of Ofcom and were escorted to the top of the building to a meeting room that overlooked the Thames; it was easy to see where all those tax payers’ pennies go to!

The meeting went on longer than planned and we broke for a bit of light lunch before getting back around the table for another hour or so.

No expectations

Beforehand, I didn’t have high expectations of the meeting – I thought it would just be a matter of Ofcom digging into the cashback issues and trying to lay blame. But I was pleased with the overall outcome, as I believe we (dealers) managed to get a few home truths across to the industry regulator that I’m sure they weren’t aware of beforehand.
It was the first time ever that Ofcom have truly recognised the fact we even existed, and as such Chris Caudle of the Independent Mobile Phone Dealers Association (IMPDA) is to be applauded for his continuous efforts on behalf of the rest of the independent channel. Cheers Chris.

As further recognition of how far the IMPDA has come in a relatively short time, as the meeting concluded, Ofcom’s representatives stated their eagerness and willing to include the IMPDA in further discussions should they arise. This came on the back of the fact the association will again be in London at the end of this month, this time for a meeting with Roger Godsiff MP (pictured), who has been very vocal in the House of Commons of late in regard to high profile cashback collapses.

It would seem, all of a sudden, that the general outlook for independent dealers might actually be on the up.

In fact, the signs are pretty encouraging at the moment. As well as Ofcom and MPs taking on our points of view, we have T-Mobile suddenly deciding there is some more money to be made available to the independents – the network has added an extra £40 onto all consumer tariffs for new connections.

This can only add grist to reports floating around that the networks’ direct stores might not be as profitable as said networks might have hoped, and that those stores aren’t performing as well as was expected.

Cashback’s had its day

I think the whole issue of cashback will start to dwindle more and more as time goes by.

A growing number of people are aware of cashback due to the recent adverse publicity it has been receiving, and these people will either mistrust cashback deals or, if they take one, make damn sure they jump through all the hoops required to obtain their money.

Most cashback business models are based on only a certain percentage of customers ever claiming – typically 40 per cent, sometimes even less. The more people that claim, the less profitable the whole cashback model becomes, until it becomes unsustainable and the seller struggles to pay. This generates more bad publicity, and so the downward spiral continues.

There will always be a certain amount of cashback from the big guys like Carphone and Phones 4U, as they can afford to offer such deals due to having much better margins. In fact, they need to offer it to compete with the levels of service offered by smaller dealers and one man bands. I don’t care what anyone says – a paid employee on commission can never offer the service that someone who owns the business themselves can. They just don’t care in the same way.

I believe there’s more change to come. We’ve lost a lot of independent dealers over the last year and I suspect a large number have called it a day after a disappointing Christmas too. And while I do see a brighter future in 2008, we’re going to have to work bloody hard to achieve it!

I think the networks will start to level the playing field a little, but I also see some major change in how dealers are rewarded for business. The high up-front commission payments won’t carry on. The networks will still pay handsomely for quality customers, but the payments will be staggered in some way to ensure continual quality business.

 

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