The Cutting Room – more small dealer woes


It would appear the roller coaster that is the dealer channel is set for a few more twists and turns in the near future, as the debate over commissions just took another turn.

On paper, O2’s decision to change its commission structure looks to be something most would feel happy about.

Earning a percentage of customer spend every month is something many have wanted since day one, but the prospect of losing their upfront commission, and not seeing an almost instant increase to the bank balance, isn’t perhaps what they had envisaged.

According to some of the dealers Mobile News has spoken to, the network looks to have found a way of putting more focus on the bigger B2B connectors without making it look uncompetitive.

Large dealers, connecting thousands of customers and earning profits in the millions each year, will not suffer; the cost of handsets will soon be eclipsed by the revenues made from customers.

This is something the smaller dealers do not have the luxury of, and without an upfront payment covering the cost of a handset they may face a situation where it is more financially viable to reject customers wanting a high numbers of handsets, as it would require too much debt to be recouped.

And of course, we all know what happens to a dealer who fails to hit its targets. 

Orange has confirmed its interest in following a similar path to O2 – is it only a matter of time before Vodafone, T-Mobile and 3 do the same?