Is the indirect sales model still relevant?
Three years ago Phones4U was in the throws of liquidation. A boon for Carphone Warehouse who grew share and category from 16% to 24% as customers sought an alternative independent experience. However, when Dixons Carphone issued a profit warning this month nerves started to wash through the industry, exacerbated by the decision to exit the Phonehouse brand in Europe and sell the iD MVNO in Ireland, a venture it only set up two years ago. Among the many calls I’ve had, particularly with investors and analysts, the topic of conversation has been centred on whether the indirect retail model is relevant today. After all, statements used to describe the offloading, such as ‘flourish under dedicated management’, makes one wonder if even the senior leadership thinks the days of Carphone Warehouse are numbered. So what’s the answer I’ve been giving? In the last three years things have moved on considerably. People have got wise to the way the traditional contract model works and are now buying online and splitting their handset from their SIM, using services from Apple and even online dealers like Unshacked.com (which happens to be run by ex P4U guys, but that’s another story). (more…)
