online mobile phone business

[zaq]

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Hi all,

Does anybody now how the online mobile phone business works as in l now that affiliates get a commission of around £8 to £25 per contract phone sale but how much does the online mobile shop make do they get a cut out of the line rental or a bigger commission cut?

[watcher]

With contract deals, the networks pay the retailer a commission based on the tariff connected. Retailers often use this kickback to subsidise the price of the phone (hence free phones), and some of it to fund their affiliate marketing.

I don't beleive the commission paid to retailers is residual - just one off.

Obviously, the more efficiently the retailer can run their business, the better margin they can make. Hence the popularity of marketing mobile phones online.

[zaq]

Thanks watcher for the info anybody else would like to add?

[Matthew Wood]

Its a lot more complicated that you would believe.. perhaps one of the merchants would like to comment, but from my basic knowledge of course merchants get more than this, however it can be very hit and miss.

Chargebacks are a big factor. A network such as Orange or Vodafone will claw back a large amount of commission (hundreds of pounds) for a customer who fails to pay their bill.. The networks dont want to lose out, so they blame the agent in simple terms.

So these must be factored in.. some mobile networks have more stringent credit check levels than others, thus take more risk on bad debts, and trust me you dont want to not pay a bill with orange.. from my brief spell in credit control there at uni they would send you to the boys and completly mess up your chance of getting any future credit.. I had one bloke who was having ago at me coz he couldn't get a mortgage.. he got his file from equifax found out it was orange and went mad... said to him, well mate if you paid the £3,800 you owed from 2 years ago youd be ok dimwit.

Anyway these credit check are important, which is why obvioulsy a certain percentage of leads fail. Some merchants I think may take more risk than others.. and I presume would be affcted by the deals you are pushing, i.e tmobile are less strict at the moment.

Just a few pointers, I may of course be wrong, but it may help ya.

Cheers,
Matt.

[Aquanuke]

I had one bloke who was having ago at me coz he couldn't get a mortgage

ummm.. so your the reason I can't get a mortgage

[watcher]

Hi Matt,

Besides the network connection commissions where do you reckon the merchants (retailers not the networks) get their main revenue ? I suppose there are margins on handsets and sim cards. What others ?

Always interested to find out more !

[Matthew Wood]

Connections really.. thats it just about it.

Some merchants also ring you after your 12 months.. carphone warehouse did this to me - the usual spiel - hey its 12 months since yout took out your contract with us - you know you can get a new cool phone don't you? blah blah.. hence another round of connection commissions.

suppose you have to think how much a contract is worth... networks give out bigger commission if you sign upto a monthly plan with 10,000 minutes for instance - thats naturally why some merchants give away free tacky cameras, or cheap dvd players to lure the consumer.

I would presume its also upto the merchant to negotiate good deals with the networks themseleves for their cut.. - but that last part is speculation as i'm only an affiliate like yerself

Cheers,
Matt.