Following the Vodafone announcement of a 37.5% cut in commission paid to recharge retailers (to 5%), I have been looking into the retail efficiency of phone card retail. While my sample size is small at present – 5 newsagencies – it seems that phone recharge is purchased alone 75% of the time. That is, in only 25% of cases did the customer purchase something else.
While one could argue that this result is a commentary on the effectiveness of the retailer in creating an environment which drives up sell, it also says something about the convenience factor in the recharge space. Consumers run low, they buy recharge wherever they can get it. This is why telcos have recharge retailers on every corner.
One argument put by at least one telco supporting a reduction in commissions paid to retailers is the traffic they draw to the store. My survey of five stores and their sales data over the last six months demonstrates that consumers are unlikely to purchase anything else.
All this adds consideration to the Vodafone decision and will focus newsagent attention on the dramatic cut by Vodafone for some time to come.