One service this blog has provided over the years is to make newsagent suppliers more aware of challenges newsagents face.
I urge newsagent suppliers to click here to read the latest margin notice change from Optus sent to newsagents. While our costs of vending recharge products to Optus customers have increased over the years, Optus has reduced our margin over the years – as have other telcos.
This post is not specifically about Optus. It is about the power of supermarkets and telcos and how they disadvantage small business newsagents to the detriment of local communities.
Back to the Optus margin notice. Optus makes out they are helping us by allowing us to double our margin. I guess they are – we all want to make more money. The challenge is that to achieve this we have to take on a product newsagencies are often not appropriately configured to handle. It takes a different skill set and time commitment to sell someone a handset compared to selling a $30 recharge. The former takes ten, fifteen minutes and the latter takes a minute or two. The former is vital to turn the $1.20 commission from the latter into $2.40.
To sell handsets I need prime retail space in addition to time. At the counter this is difficult.
Shop floor time for many of us is about moving gifts, cards and other high margin items, items where I make between 50% and 75%. I don’t see the value in taking some of this time and investing it in handsets that deliver considerably less value unless I can move volume to justify the investment.
It’s not enough to be best practice at vending recharge, doing telco brands proud at offering a convenient and respected service. No, I must take on this other product. If I am in a centre with four or more other Optus handset outlets including a world-class Optus shop what can I do. Well, I cop the third-world margin and hope that the shopper buying recharge purchases something else.
In 2005 I wrote about Vodafone margin. A newsagent in a country town was getting 5% for their Voda recharge compared to the local Coles on 16%. A check of the Coles invoice at the time showed that Coles was doing less than half the recharge of the newsagent.
I wonder if this is the case today – if major supermarkets are making more than even 8% (yes, they sell handsets). I suspect they do.
What I’d like is a relationship built on trust and respect with a telco for recharge product. Given the convenience and service we offer, I consider an everyday margin of 8% to be a reasonable base without the need to offer handsets. Companies like Optus should leave us to do what we do well – provide a convenient and fast service to customers. They should not force us to chase new business for them in order for us to be paid fairly for our recharge services.
I’d like to see newsagent associations pursue this issue, to find out what we are paid for recharge compared to our competitors and to support newsagents with a plan of action in pursuit of fairness.
