Defined Need

The wireless industry is making a rapid transition in the methods used to sell and distribute wireless products.  The method used in the first decade was company owned stores with trained professionals selling expensive products to a customer with a defined need.  Often the purchase was not made from funds of the user but that of a company.  This worked fine when there were only two choices for airtime carriers.

Now competition has changed the market forces significantly.  Competing technologies, decreasing airtime prices, decreasing handset prices have pushed the selling activity into the commodity category.  Now we have newly trained sales personnel interacting with inexperienced wireless customers.  Yet these customers have become accustomed to making decisions to purchase electronics because retailers have been known for liberal return policies.

Result?  An increase in returned product due to dissatisfaction of product performance or perceived value.  In addition a significant number of customers are capable of making the retail purchase of the terminal but fail the financial threshold for activation, thereby leaving the customer disturbed with an unusable handset.

The returned product is burdening the entire distribution channel whether it be carrier, manufacturer or distributor.  These channels were designed for one-way traffic of terminal units.  The sluggish return channel is not only costly to operate but the rapid decline in product pricing puts even an unused unit at a cost disadvantage to the distribution channel.

Contamination of new stock is prevalent. With the recent exposure of a major computer manufacturer using used parts, and major automobile battery manufacturers and retailers selling previously used batteries, it is likely this industry may find itself exposed.