Online Retailers Carve Wireless Niche
By Sue Marek
March 1, 2003
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© 2003, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.
Buying wireless service always has been a complex purchase. Finding a device that you like and matching it with a compelling service plan that fits your anticipated usage pattern takes time and knowledge.
At brick-and-mortar retailers, where various wireless products are sold from multiple service providers, the successful purchase of a wireless plan depends greatly on the salesperson. But because many retailers have a high turnover rate for their sales associates, finding a salesperson who knows wireless service plans and devices can be a challenge, at best. And getting them to help you, particularly when the store is packed with customers, can be an added obstacle.
Lack of time and information are not problems for online wireless retailers. According to executives with these online stores, their main advantage is they can provide potential customers with a bevy of buying information at their convenience. "We want LetsTalk to be the one place where customers can find everything," says Delly Tamer, founder and CEO of LetsTalk.com, a San Francisco-based online retailer founded in 1999. "They can come to our site and really get educated on the different plans, the phones and their capabilities."
Tamer says the company relies primarily upon word of mouth instead of using advertising or marketing campaigns to draw users to the site. "We've spent money on traditional advertising vehicles but the reality is that customers are our best advocates," Tamer says.
And though some customers may use LetsTalk.com to educate themselves but still make their purchase at a traditional retailer, Tamer says he isn't worried about losing their purchase. "We're not just here to make money but to provide value to customers even if it's not monetized today. If a customer researches and learns from their experience, eventually they will buy from us," Tamer says.
Tamer is quick to differentiate LetsTalk.com from the former brick-and-mortar retailer Let's Talk Cellular and Wireless. Besides the similarity in names, the two companies at one time shared a distribution center in Dallas, but they have always been completely separate entities. In 2000, Let's Talk Cellular and Wireless filed for bankruptcy and Nextel Communications purchased its stores.
LetsTalk.com not only makes money by fulfilling orders from individual online customers but also through licensing its technology platform to other wireless firms. For example, LetsTalk manages Nokia's U.S. online store so that when customers buy products from Nokia's Web site, that purchase is managed and fulfilled by LetsTalk. "We are proud of our technology engine and many entities come to us because they want our technology behind their site," Tamer says. Other partners include vendor Danger and fellow online retailers CNET and MyRatePlan.
Like Letstalk.com, MyRatePlan.com was started in 1999 at the height of the dot-com bubble. Back then, there were at least 20 online wireless retail startups, many of which have gone bust in the past few years. "This is not an easy business. Technologically it's quite complex," explains Tamer. However, as more customers make their wireless purchases online, Tamer expects the online retail market may expand. "It's a growing area so it may draw more companies."
One reason for MyRatePlan.com's longevity is the company doesn't provide order fulfillment, but outsources that service, according to MyRatePlan.com President Allan Keiter. MyRatePlan.com provides the information and then refers the customer to another online retailer such as LetsTalk.com. MyRatePlan.com then gets paid for the referral if the customer makes a purchase. "We provide the information and our software helps the buyer cut through the fine print," Keiter says. "But we don't have the large cost structure."
One strength of MyRatePlan.com is the site contains rate plans from all competitors in a market, not just the ones that can be purchased online. "We don't want to exclude a rate plan just because we don't have a place to send a customer to buy them online. That would defeat our objectivity," Keiter says. In addition, the company also has a rate plan analyzer, called CellCalc, which asks customers how and where they will use their phone and then uses their answers to estimate the monthly fee on every rate plan for sale in their market.
Keiter says he works directly with wireless operators to make sure the rate information on MyRatePlan.com is accurate and up-to-date. "It's an ongoing challenge to keep the information current," Keiter says. "We have developed a variety of methods. Some carriers will send us the rate plans directly or we can research Web sites."
Nevertheless, Keiter says most operators are receptive to MyRatePlan.com's efforts. "We are trying to be a value-added information intermediary," Keiter says.
In the past year, many operators have been focusing more closely on their own online sales, a trend that Keiter says likely will be helpful to the entire online retail industry. Similar to how the airline industry offers its customers the ability to purchase through the carriers' sites or through independent sites, Keiter sees online wireless retail evolving the same way. "It will just provide more opportunities for us," Keiter says.
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