Telstra has announced a cut of 20% to the commission earned by newsagents for mobile phone recharge sales. This must be part of their plan to reverse their poor financial performance.
Telstra has extraordinary market power and they have just showed that in relation to newsagents. We will not do anything about the 20% cut because we would not want to lose their business. They know that. I wonder if they cut anyone else.
Our margin ought to have increased given the increase in our overheads – rent, labour and other costs.
I would like to know the commission paid on Telstra products sold in supermarkets. On October 17, 2005, I wrote here that I had proof (in the form of an invoice) that a national supermarket chain was earning 16% commission from Vodafone recharge sales while newsagents were on 5%. Maybe the same difference exists for Telstra.
i couldn’t care less about loosing telstra . everything has gone up in running cost for us but yet they expect us to take a cut out of a very low % anyway … dreaming . why not cut telstra ?? don’t understand
Would not be too interested in the supermarkets, but what about our govt owned monoply – Aust Post?
Now that Telstra has re established it’s monopoly in the NBN with the help of the Govt, why would they care about mobile recharges.
They are going to make billions charging the other suppliers to use “their” network, and those silly customers will pay for it.
I am concerned about card payment for $20 Telstra recharge, as it seems I will now make nothing once direct costs and overheads are taken into account. I already restrict card payment for $10 Optus recharge and am concerned about passing on an image of being expensive if a small surcharge is put on. Do others restrict or surcharge with card use?
Mark, my margin on telstra is about to be cut from 6% to 4%, a 33% drop
so why sell it ? would we accept it with magazines suppiers if the cut our commision back i think not there would be an uproar so what has telstra got that makes them so special
they should give us 2.5% like bustickets.
When customers go ‘Whyyyyyyyy?’ when we say we don’t do phone credit, we first have to ensure they really want to know.
If they do, we enlighten them. Then they can see why very few places will do it in this area.
About as profitable as having an ATM in the shop :-S
y&g,
if you don’t sell some1 else still selling them even at 1 cents profit and customers don’t care if you make or loose $$. they want their services , if you can’t provide they will never come to you anymore.
it is all about ME.
i never believe in customer loyalty at all!
Chris, we charge a flat 50c on all electronic recharge using eftpos, we do not hide the fact and we explain it to customers and have done this since recharge dropped below 10%. We see no decrease in sales as a result.
99.9% are OK with it as it is cheaper then the $2 the atms charge. We found that as long as it is not a hidden charge we do not get any hassle.
You may wish to tell all those people buying Telstra that they get a better deal from one of the other companies and that Telstra charge them more per call. Offer a free simcard and a prepaid for another company. That way we slowly convert their business to one we prefer. It would be like having 4000 reps against Telstra.
we charge $1.50 for every eftpos transaction. we are in a country town, we have an ATM as well. so people either spend $2 atm fee or $1.50 eftpos. there was some grumbling, but thats what we need to charge for eftpos. it is clearly marked on the terminal.
peter
If you have an ePay terminal or Ezipass then you have the product whether you like it or not. If you choose not to sell it when the customers knows full well that you can sell it then I believe it puts you in a poor light. I don’t think for one moment that a customer is going to go to Optus, Virgin or Voda etc because you don’t wish to sell it. I believe that by not selling it you are giving another business a free kick and I know that I would prefer that the customer was in my shop.
I agree this is a slap in the face but are Voda and Optus any different? You can buy a $30 Optus sim card pack (which I sell a lot of) for half price at Coles & Woolies. Voda in the past have offered discounts to customers when they recharge with the higher caps in the past. Looking at the Optus website I don’t see any reference to Newsagencies as one of the options to get recharge from. Given we are one of the channels that most consumers visit each week the fact we are given less comission and not inlcluded in marketing say a lot about what is thought of us.
Luke,
You may not have seen any decrease but have you seen any increase in sales? Given the continued growth of expenditure on mobile and data credit I would expect most retailers to see a (significant?) increase in their sales?
The same concept applies to all those charging for eftpos … Its not the customer that complains you should be worrying about. Its the ones that don’t say anything, walk out and never walk back in.
Mark, I can say that as far as I am aware independent supermarkets make the same commission on phone cards as all other independent retailers. The chains are obviously a different story.
Yes we have seen an increase in sales Jarrod, and that includes when Coles/woolies offers up to 15% off recharge.
As retailers we should not be afraid to charge for our time and or services, the larger chains do this in the way of charges for bags, not being able to use certain types of cards etc.
If you are concerned that customers will shop elsewhere because it is cheaper then maybe you should look at your offer as it may not be good enough.
Price is not the only thing people buy on, a good retailer should be able to negate the negatives of being dearer and still make the sale.
Just my opinion and it works for me, we no longer compete with others on price, we prefer to offer other incentives to shop with us and it is going good.
its not fair, but what else is new, we will bend over and say thankyou very much afterwards. i wont lose any sleep over it and i will continue to sell at the reduced commission, i dont see much alternative.
have you noticed on the recharge voucher telstra no longer print the 125 8888 recharge number, they give details about online recharging, so that should give you a pretty good idea where they see the future of phone recharging heading, all online either via computer or phone itself.
How many of the phone recharge customers purchase something else?
Or to look at it another way how many of your customers purchase a phone recharge at your newsagent just because they are buying something else there.
Its not like phone recharges done via printed voucher have a “holding” cost. So as long as any commission covers the marginal costs (depn on equipment, time to process voucher etc), then your sales are still valuable.
As mentioned – sure with eftpos sales you might see a GP loss. But the same could apply if I buy a pack of gum or a pencil or a scratch-it.
would you be happy if lotto decided to cut you back 20% ?as there is no holding cost
The point I believe is that margin is being eroded at most levels or sales have dropped yet, rent continues to climb, wages continue to climb and work gets a greater load= Productivity is not commensurate with return! The equation needs to be re equated!
Luke,
Chains are far less concerned with customer satisfaction than small business retailers should be. Independent retailers by their very nature need to offer higher levels of customer satisfaction than chains – its part of our higher level of customer service.
I don’t see EFTpos as a price issue from the customer’s perspective. Its the fact they are getting charged to use what is a standard form of payment (for many that don’t carry cash, its the only form of payment they use). Its like charging to accept cash because of the cost involved in counting, depositing and insuring it.
i personally don’t charge but i do know , the public including myself do not hesitate when having to pay the banks $2 to use an atm machine
My view is that we should not charge for customers using EFTPOS, MasterCard or VISA in newsagencies. Our attraction to customers, as a cahnnel, is fragile and any barrier can turn people off. The cost to us is minimal. Plus there are benefits.
As for AMEX and Diners, maybe because the cost is higher and the terms not as good.
To make my point clear we charge 50c to use eftpos on recharge, not everything, we also have a $5 minimum spend to use eftpos.
We do not see this as a “barrier” to our business, to not offer eftpos for a newspaper or a can of coke but if others do then I still suggest you look at your overall offer. Some newsagencies have no point of difference to everyone else ie servos, supermarkets 7-11 but complain that they are losing trade.
Suppliers will continue to strip us of commissions and margin because they can, so we need to move out of this space to where commission and margin are not the be all and end all.
Jarrod, what I am saying to you is that customer service and satisfaction should not be based on what things cost or what you charge or do not charge, it is far more then that.
If a customer wants to shop around to get the best price then that is not us especially recharge but if they want fast, efficient, friendly service then my team is No#1. I have customers that walk past 2 servos, a night owl and another newsagency to buy recharge off me (even with the fee) because my service is more then the rest.
Shaun,
We have seen a significant increase in the use of our cash-out EFTpos facility since the introduction of ATM fees.
Its also worth noting that just because banks charge for the use of atms doesn’t mean we should charge for EFTpos. Consumers don’t exactly have a friendly relationship with banks, atms and the fees attached to them. Its that kind of consumer relationship that retailers should be trying to avoid – where all other aspects of our offer are great, but ultimately the customer perception gets damaged because they are left unsatisfied at the end of their shopping experience when the proceed to pay.
Luke, as a consumer its not the fact that I’m getting charged to use one of the two standard forms of payment accepted almost anywhere, its the feeling that the business charging me doesn’t value me enough as a customer to accept my payment without additional charge.
I received 2 letters from Epay, one addressed to the old a/c I used with the Westpac eftpos terminal offering 8% and one addressed to the new a/c number using the intergrated Tower epay system offering 4% I is apparent that we are being penalised for using the Tower system, and that margins are not consistent.
No Ben it would be to do with how e-pay / telstra sees the accounts owned by the two accounts you had. There is no difference between Tower and non Tower treatment in terms of commissions on recharge as far as I am aware.
Ben I had the same problem with Optus. The margin is based on the sales information provided by your supplier of phone bundles etc. They need to know that you also have an Ezipass account.
Still on Telstra but for a different matter. I have finally given up on them as a provider of mobile/phone/internet services. Has anyone made a change of service provider recently and can make some recommendations.