Is there money in b2b?

Is there money in b2b?
Each month passes with another independent dealer closing its doors. Chasing business customers was seen as the last vestige for a profitable independent dealer. But many are dismissing b2b as an over-saturated market.

One industry recruiter claims to have had around 10 people come to them who have gone down the b2b route and failed. One b2b dealer says her clients are 'sick to death' of the number of dealers they have knocking at their doors. And one sales director at a large distributor is certain that the amount of business available is not enough to keep everyone happy.

Those with enough know-how and sufficient contact lists claim that there is still money to be made. Orange distributor Mainline has launched a drive to recruit new business-channel dealers. 'Other distributors are looking to climb on the b2b bandwagon, but none can match our levels of experience or expertise,' claims Mainline managing director Andrew Boden.

Meanwhile, Vodafone business operator Yes Telecom aims to grow its base by a further 30% this year, with data a key area.

Survival of the fittest
It has become clear that, just like the consumer market, the b2b arena is now a case of survival of the fittest – the weak are being squeezed out of an increasingly saturated market. Independent b2b companies are apparently the hardest hit. GfK's Aaron Rattue says there are currently 10% fewer independent businesses than there were two years ago, when b2b was at an all-time high.

There appear to be too many mobile businesses fighting over the prized b2b land, and many lack the expertise to survive.

The operators have all made significant moves into b2b, having already achieved the optimum level of consumer connections. Andrew Darley, analyst at KBC Peel Hunt, says the networks 'are still very much in charge' of the b2b market.

Orange has trained staff in most of its high-street stores to enable them to offer business advice and demos alongside its business tariffs, and has a dedicated marketing team and direct sales force for SMEs. All the networks have invested heavily in their own direct business teams to identify and secure even medium-sized businesses on long contracts.

3, which is expected to roll out a new range of business tariffs in 'Q1 of next year', is struggling to convince some b2b dealers of its plans to increase its share of the business market. One said: 'It's moved very slowly. There's not much there for business customers; they've got to expand their portfolio.'

For the smaller players too, this shift has become necessary due to the saturation of the consumer market and the b2b route is attractive because there isn't the need for a significant high-street presence.

According to Andy Taylor, Blue Cow Mobile MD, another major attraction of b2b is the promise of high commission. 'On the face of it, people think “look at all the commission I could earn from that”, but actually going out and doing it is a different matter. Some distributors persuade people to get into b2b by saying it's really easy because you don't deal with the consumer.'

Advantages
Darley says mobile operator partners have clear advantages over independent b2b resellers. 'Companies like Alternative Networks and BNS Telecomm, who have managed to get service provider status from Vodafone, get beneficial margins and they will have some fun and success in terms of making profits from reselling mobile.'

But others are more pessimistic. The sales director of one distributor says: 'My honest opinion is that the amount of business available doesn't fit.'

Written by Mobile Today
Mobile Today

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