Virgin Mobile, an Optus company, yesterday advised newsagents that commission on the sale of Virgin mobile phone recharge product is to be cut again. What used to be profitable business for newsagents is now of questionable worth. Consider this, a recharge transaction takes between one and three minutes and newsagents make, on average, a dollar gross profit. Once you allow for card fees and overheads it is, as I say, questionable business.
Virgin has a responsibility to answer the following questions for newsagents:
Has Virgin cut the commission it pays to Coles, Woolworths and Australia Post?
What commission is Coles, Woolworths and Australia Post on? (I ask because of evidence published here last year of Vodafone paying Coles 16% when it cut newsagent commission to 5%.)
Has commission to wholesalers and any other middlemen between Virgin and newsagents been equally cut?
What is Virgin’s justification given that its profits are strong and given that newsagents do not have any means of reducing the cost of providing the service?
Under corporate responsibility at the Virgin Mobile website, there is nothing about fair treatment of its retail network or respect for those who have helped build its brand.
I understand that commissions on telco recharge are falling globally. This does not make Virgin Mobile’s move acceptable. Newsagents need to achieve a fair return on labour for all services offered.
The lemming like approach of telcos to drive commissions down and down, once newsagents have invested tens of thousands of dollars in equipment to be able to do the recharge, is disrespectful. If their profit situation demanded it, okay, but it does not. Companies like Virgin have been happy to use newsagents to gain market share and now it is achieved they cut newsagents out of the game.
How socially responsible is that?
Hi,
Seems like we’ll have to start charging transaction fees to make up the shortfall, like we do with bill payments plus take cash only.
Cheers,
Phil
A mate of mine works for Aust. Post and gets a 10% discount on recharge his mobile. I’m sure Aus Post won’t sell to him at a loss so they must be over 10% commission on their recharges.
Woolworths advertise Vodafone recharges for 10% off; simularly they will not be running at a loss.
How can you justify for chains like Aus Post and Woolworths / Coles to get high margins (in excess of 10%; and then on the other end of the scale offer Newsagents (of which some do higher turnover than a single supermarket) half that.
It is absolutely outragous. It would be funny if it wasn’t so serious.
Virgin Mobile vs brandport.com intellectual property conflict?
The next time I see the name Virgin anywhere, I doubt if I will ever use any of their products. Cheating and bullying small companies is no way to make money and become popular. Mr. Varghese, that’s a great thing you are doing, showing the big guys that they can’t get away with everything.
Virgin Mobile vs brandport.com intellectual property conflict?
The next time I see the name Virgin anywhere, I doubt if I will ever use any of their products. Cheating and bullying small companies is no way to make money and become popular. Mr. Varghese, that’s a great thing you are doing, showing the big guys that they can’t get away with everything.