When you decide to open a cell phone store, there are many critical business decisions you have to make.
What location do you want to do business in? What will your operating hours be? And importantly, do you want to open a multi-carrier cell phone store, or become an exclusive retailer?
Before you decide whether to go exclusive or multi-carrier, you need to understand both types of operations — and their pros and cons.
Let’s break it down.
Option #1: Multi-Carrier Cell Phone Store
Multi-carrier cell phone stores are businesses that sell wireless services of more than one carrier, usually offering services from two to four carriers. These retailers are equipped to fulfill the needs of a wide range of customers who may be looking for robust data plans or hefty international minutes. And because multi-carrier cell phone stores can offer the services of multiple carriers, they may be better positioned to meet the various demands of their customers.
Pros and Cons
Is this the right business model for you? Here are some advantages to consider:
- Since a multi-carrier cell phone store is not tied to one carrier, there may be a lesser risk of business interruptions if one of the carriers were to go bankrupt or close shop for legal reasons.
- A multi-carrier cell phone store has something for everyone — it may better meet customer needs through a wider range of products and services.
- Multi-carrier cell phone stores don’t always have to worry about a long list of do’s and don’ts from carriers, and can enjoy a greater level of freedom in how they operate their business.
And here are some disadvantages:
- If you offer the services of many carriers, your staff may be less knowledgeable about all the different providers — including their plans, offers and promotions, and minute and data caps.
- You may have less protection of your territory and might encounter competition from exclusive carriers in the area.
Option #2: Exclusive Retailer
Exclusive retailers sell wireless services from only one carrier — you won’t be able to conduct sales for any other wireless service. In many cases, you’ll still be able to process bill payments for customers of other carriers and earn top-up revenue, so you can maintain a larger customer base. This also allows you to convert or port in your clients over to the service you sell.
Pros and Cons
Is this the right business model for you? Here are some advantages to consider:
- Carriers may offer a residual as a benefit for being an exclusive retailer, which means that you’ll earn a specified residual percentage per month (usually two to five percent) for a set number of months or years on every phone you activate.
- You may have early access to the latest phones — before they become available to multi-carrier cell phone stores.
- Exclusive retailers may be able to take advantage of build-out or construction/renovation funds from their carrier, which is not usually available to multi-carrier cell phone stores.
And here are some disadvantages:
- You may not be able to fill the needs of all your potential customers — not all carriers offer the same data or international calling plans that your customers may be looking for.
- Carriers can restrict exclusive retailers regarding what they can sell or how they manage their store — for example, carriers might require a certain color or decor to be used in the store to maintain brand standards. Carriers can also dictate that a wireless store can’t offer certain services, like repairs, if they feel it clashes with their image.
Multi-Carrier Cell Phone Store vs. Exclusive Retailer: Which One Wins?
We’ve discussed the advantages and disadvantages of being both a multi-carrier cell phone store and an exclusive retailer — but which one is best for your business?
Well, it depends. There’s no right or wrong answer, and your decision should be based on the careful consideration of the pros and cons of each.
Study the various carriers and decide which one(s) are the best fit for you — here are some other considerations to take into account.
For you, the business owner:
- Which carriers pay the best commissions, and in a timely manner?
- Which carriers have the best top-up margins?
- How well do they protect dealer territory? Will they approve another business close to yours?
For your customers:
- Which carrier has the best price, with the most generous minute and data plans?
- Do they offer international text and minute choices?
- Does the carrier have good handset choices at different price plans? Hefty data plans?
Once you’ve selected the carrier (or carriers) that work best for you and your intended customers, it’s time to set up shop — but to be successful, you need to invest in the right business tools.
To get started with a point of sale (POS) solution that can handle your operations as either a multi-carrier cell phone store or an exclusive retailer, schedule a demo of CellSmart POS today — and get ready to take your business to the next level.