Newsagents were told to get together so we could compete with the big guys. We now have 3,000 in a network offering bill payment and telco recharge product. Our nearest network competitor is Australia Post. Here’s how the value of unity has played out in terms of telco recharge commissions:
This table shows telco recharge commissions negotiated by one supermarket chain compared to newsagents. Even though newsagents represent 3,000 stores and offer easier to access and better quality customer service, this means little to the telcos.
While I accept that a supermarket chain will always negotiate a better deal than a network of newsagents, the difference is offensive. It tells me how the telcos view newsagents and demonstrates their preparedness to use newsagents to pay for the bloated commissions to the gorilla supermarket.
Newsagents have every right to be offended at the commissions being paid to this supermarket chain and to be questioning the future value of recharge in their business. At 5% commission newsagents are not even on a minimum wage payment whereas the supermarkets are in a nicely profitable zone. The rich get richer and while one can remind oneself that this is the way of a free market system, Vodafone and the supermarket chain have an obligation to be socially responsible. A 16% commission for them compared to a 5% commission for newsagents for the same product is greedy.
Vodafone and their telco colleagues are providing an excellent incentive for supermarkets to grow business and a disincentive for newsagents. yet if you read the pitches they send to newsagents they urge effort to grow the business. I respectfully suggest that the best encouragement to grow the business for newsagents would be a fair commission structure, one which can be compared with what this supermarket chain is paid without causing embarrassment.
The executives at this supermarket chain and at the telcos ought to be embarrassed for this exposure of their co-operation to harm small businesses, their employees and their customers.