6/10/2009 3:17:00 PM
‘Laptop and dongle deals put margins at risk’
Dealers are reluctant to sell standalone laptop and dongle deals as they won’t be paid until at least one year into a customer’s contract.
Distributors are trying to extract more attractive deals on dongles where commissions can be paid up front, but they claim progress has stalled due to heavy costs incurred on providing ‘free’ laptops.
Dealers said they do not break even on costs until around one year into a contract, and there is a risk that customers will disconnect during the period, effectively putting the dealer into a loss.
One distributor said dongles are better for ‘secondary sales’, when they are sold alongside a traditional mobile package.
He added: ‘If you have to pay for a laptop and you have commission on revenue share, then you must pay up front. The margin is at risk until the laptop is paid for.’
Another distributor admitted: ‘Dongles are not selling as well as the networks want them to.’
Meanwhile, some view broadband as a way to gain new customers and to make money on top of day to day sales. One dealer said: ‘Dongles can be useful because they allow you to sell products to customers that are on other contracts.’
However, the dealer agreed that margins were too slim, and added: ‘With laptop deals, it is supply and demand. We could sell more if we were empowered with hardware costs – we need to drive down hardware costs.’
Mobile broadband sales have been ‘quite slow initially’, according to another dealer, because dealers have not prioritised the service.
He added: ‘It’s a mass proposition – that raises ARPU, there’s a big old market for it and it’s not a difficult sell.’