Like many other retail categories, wireless device and plan sales are moving on-line. Consumers are already researching phones and plans on manufacturer and telco websites before they buy. Some reports estimate that on-line sales for new activations represent 10% of total Canadian wireless sales and are poised to increase.
Interestingly, while e-commerce in many other areas of retail has led to store rationalization, Canadian telcos have been increasing their store count at an annual rate of 5% for the past 5 years – even as wireless penetration has been flattening. As these trends play out, telcos will need to re-think their go-to-market models in order to profitably deliver a seamless, omni-channel customer experience.
For most, buying a mobile phone requires physical interaction, but consumers have many opportunities to try out a phone before they buy – in telco stores, big box outlets and mass merchants. Today, they can explore their phones at different points in the purchase process. One European study recently showed that one third of consumers start their purchase process in a store but then complete the phone and plan purchase on-line. A slightly higher percentage do the opposite – research as much as they can on-line, narrow down their selections and complete the phone and plan purchase in a store.
So we can see the evolution of wireless sales from multi-channel — where consumers shopped mostly within a single channel — to omni-channel, where up to 75% of consumers move back and forth between store and on-line channels. How can a telco make sure that its on-line and store channels deliver the same experience to all types of shoppers?
From our research and client work we are finding that there is no one right way to get there. For example, a telco might decide to maintain its store coverage and service offerings, but downsize individual store sizes to recognize the increased usage of the on-line channel. Another model could be to create two types of stores – large destination stores with specialized services and staff supported by smaller, neighbourhood stores offering shopping convenience and the most common services and products. In either case, store channel changes will need to be accompanied with investments in e-commerce and m-commerce to better serve the purely digital shopper who expects to complete the entire purchase process without visiting a physical store.
As e-commerce sales increase, stores may require cross-compensation to recognize the marketing and service presence that they provide beyond the point of purchase. But striking the balance is tricky – if stores are over-compensated, the telco loses the cost efficiencies and the profitability gains from lower costs in the e-commerce channel. If stores are under-compensated or left to compete with an e-commerce channel, some of them could become unprofitable.
Left unresolved, these inter-channel issues will become more acute as more wireless sales move on-line. Telcos who face these challenges head-on by integrating and optimizing their channels will be better positioned to profitably serve the constantly evolving omni-channel shopper.