Newsagents are reeling after Vodafone announce a 37.5% cut in sales commission.
Around 2,600 newsagents have invested heavily in technology, delivered valuable in store real-estate and increased sales significantly. The reward for all this effort? The 37.5% cut in commission.
Under the new pricing newsagents receive 5% for Vodafone recharge sales.
Vodafone says that newsagents will make more because of growing sales an that the higher commission is competitively unsustainable.
Newsagents have high operational costs: around 11% of turnover goes in wages; rent – between 6% and 12% (depending on location); theft – between 3% and 5%; overhead – 5%.
While Vodafone recharge brings traffic to newsagencies, most customers want the recharge and nothing else.
To lose 37.5% of revenue having just invested in equipment and real-estate is a body blow to small business newsagents and something Vodafone could have managed better.