4/1/2010 3:59:00 PM
Argos cracks down on box breakers
Argos has started a massive crackdown on box breakers in a bid to win back operators after a lockdown last year.
New measures include mobile handsets only to be sold with airtime, with one handset allowed per customer.
Argos’ prepay phones have had an increased activation rate of around 80%, up from 30% last year, since the start of the crackdown in January, sources told Mobile.
The retailer’s prepay share has remained between 5% and 7% over the last two years, but it was hit by box breaking after the fall of its biggest rival Woolworths in 2008, and operators started to pull prepay deals.
Argos has historically been targeted by box breakers, damaging the so-called ‘activation rate’ on prepay phones sold through the retailer, which is the critical measure used by operators to identify whether customers who buy subsidised handsets remain on the network.
The measures to improve quality are thought to have been spearheaded by head mobile buyer Gary Venn, who was appointed in March last year.
The move marks a tug of war between operators and manufacturers – with the latter keen to sell as many handsets as possible and the former wanting to exercise caution over volumes to make sure they are activated.
The conflicting goals are currently restricting Argos’ ability to increase volumes, but the anti-box-breaking efforts could win operators over.
One manufacturer source told Mobile: ‘From a manufacturer perspective, it’s great to do business with Argos. They can shift between 20,000 and 30,000 low-cost handsets at a time.’
However, an operator source said: ‘There is improvement, but we are reluctant to increase volume for fear of introducing more box breaking. It’s certainly been an issue that’s left operators concerned about whether Argos can be a serious channel.’
Meanwhile, one retail source said: ‘Argos is a catalogue company that does pretty well at what they do. They can sell a lot of phones but they all get box broken. I can’t see how they can sell them in a controlled fashion unless they limit sales.’
A distribution source added: ‘Argos is aggressively trying to get back into the market. All the manufacturers are very keen to get back in there, but the networks are more cautious.’
Argos did not comment.