Carphone Warehouse is launching a fresh assault on the prepay market, launching a new low-cost upgrade service online.
The online upgrade service, the first of its kind, goes live today (17 May) and cuts the price of handsets, including the likes of the Nokia Lumia 520, Samsung Galaxy Ace and Sony Xperia E, by as much as a half. The online proposition is available to customers on a major network who have regularly topped up their credit over a six month period. The move could be seen as an attempt to fight back against attempts by Tesco and Argos to muscle into Carphone’s prepay business.
Carphone Warehouse has overhauled its systems in order to launch the new service. The prepay market was formerly a cornerstone of the retailer’s business, but the changing dynamics of the industry, as higher priced smartphones become the norm and operators try to push customers onto longer term contracts, have seen a marked decline in sales. Russell Parr, head of prepay at Carphone Warehouse, said: ‘We struggled for quite a while to only offer this kind of upgrade in our retail stores, but this is the first time we can make the functionality track onto online... It gives us a real multi-channel approach experience and it’s much more consistent.’
Parr said manufacturers were being more cooperative in building entry level handsets, with Carphone Warehouse Europe CEO Roger Taylor historically calling for cheaper devices. He said: ‘We are definitely seeing smartphones coming in at better prices. The cheapest is now on upgrade at £29.95. Two years ago it was around £100, so we have seen significant price deflation. What we are doing is opening our offer up to customers who choose prepay as the right option for them.’
He said despite the fall in revenues, prepay still remains a ‘sizeable’ part of the retailer’s business. He said: ‘The prepay market does cross multiple ages in terms of appeal. There’s still a big element of parents buying prepay devices for their children but there’s also the older end of the market who will still stay on pay as you go. They have slightly lower aspirations in terms of the types of device that they want.’
The retailer is currently working on a number of different prepay offers for launch later this year. He said: ‘Prepay remains a big part of our business. As a specialist we see this as our role to be strong in contract, Sim-only and prepay.’
Author: Graeme Neill