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Shebang cancels £20m Tesco contract

Mobile News
July 19, 2010

Specialist distributor Shebang has served notice to retail giant Tesco that it is to walk away from its £20 million supply contract, leading to a likely scramble for the deal among rivals

Shebang Distribution has instructed Tesco it will stop supplying it with handsets and contract airtime by October 1.

The firm said the decision was down to a lack of profitability in the arrangement, and a lack of collaboration to develop contract sales within the retailer.

Shebang won the deal from 20:20 Mobile in late 2008, and installed its Sellfone EPOS software in all Tesco Telecoms Centres. The deal covers contract connections across all network operators.

Shebang managing director Iain Humphrey said: “It is a major contract, and was a significant win for us at the time. But, from our experience, we do not believe it has offered us sufficient value. We do not believe Tesco understands the value supply partners bring, nor shares in the reward with them. There is a transition period now of 90 days to ensure Tesco’s business is not interrupted.

“We will remodel the Shebang business without Tesco. Low-margin turnover is not our goal. We want profitable business, and to work with our customers in a real partnership arrangement that utilises our logistics expertise, so we both win from the relationship.”

Tesco maintained the Shebang deal stands at present. It was unavailable to comment further.

Tesco is expected to invite distribution firms to tender for the contract. 20:20 Mobile, Data Select and Brightstar are expected to lead the chase.

Tesco works with Kondor and Dextra for supply of accessories, and goes with the network operators direct for prepay airtime.

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