Retailers are not always victims

Retailers are not always victims

Mobile distributors, dealers and retailers generally view clawback of commission as an injustice that they will fight at all costs. Over the years, the main argument has been that the operators are piling the risks for whether phones are used properly after sale, and at the same time creating the potential for abuse such as box breaking by the commercial deals that they alone decide.

The allegations against Woolworths and Comment Retail Services’ representatives are unproven at present, but the sting of them is that – if true – they would completely turn the first half of this argument on its head. Far from being unwitting victims with no visibility of what is going on, the allegations suggest that the retailer would have had an unusually clear view of an artificial trading pattern that would have cost the networks money.

That is why investigations need to take place to determine whether these allegations are true, and whether individuals have taken it upon themselves to act in a way that is inappropriate. Operators also need to ask themselves some tough questions. The second half of the age-old argument about clawback holds true. It is often a problem of operators’ own making. They continue to create the conditions in which box breaking can exist because of the deals they create. The peril is particularly great in prepay, which is the more active part of the market at present, and therefore is being targeted by both operators and manufacturers keen to secure their share.

Operators also need to ask themselves if they do enough to deal with situations when they suspect things are going awry. True, they have put in place tougher procedures for retailers, but there is a feeling, as with the cashback crisis last year, that they are too laissez-faire. Are managers in operator organisations looking hard enough at situations that should arouse concern? (There are tell-tale signs, such as premium rate phone activity or ‘lumpy’ activation patterns). Or if someone else, say a distributor, ends up carrying the can financially, are they still more interested in looking at the connection figures?

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