Mobile Phone Distributors - What You Need To Know!
Mobile phone distributors
are a critical part of a prepaid wireless provider's success!
Are you interested in becoming a cell phone
distributor? Here you'll
what it takes to be a wireless master agent, how it works, the
technology involved, and more! The fact is that the world of
mobile phone distributors is fascinating, and can be the life blood of
many wireless carriers.
What are cell phone
let's define what exactly a distributor is and does.
people will have different definitions and describe various scopes of
generally speaking the following points are very consistent.
worked directly with prepaid wireless distributors for many years, I
feel comfortable that the following information will help you get
jump-started on becoming knowledgeable!
often referred to as master agents. This is because they are
the top of the so-called distribution food chain. What that
while a distributor or master agent may sometimes sell phones and
airtime directly to customers, they typically mostly sell wholesale to
- In turn, dealers have
their own stores, but
also sell wholesale to smaller stores. Sometimes there is
sub-dealer level between the dealer and the store level.
cell phone distributor will buy phones and airtime discounted directly
from prepaid wireless carriers. They will then mark up the
and sell it down to the next level.
- Mobile phone distributors
can have relationships
with dozens, hundreds, or even thousands of stores beneath them.
The layers under them are often referred to as their
sub-distribution. Depending on the size, reputation, and
of a prepaid wireless carrier, some wireless distributors won't be able
to work directly with a prepaid carrier. In other words, as
wireless distributor, you could have a direct relationship with a
prepaid carrier, or you may have to work as a sub-distributor under
another larger master agent who is working directly with the carrier.
What's the best level?
can become a very personal decision. Are you the type of
who wants to run a large distribution network, and deal with the
operations, collections, and warehousing that comes along with that?
the type of person who enjoys working day to day directly with the
customer? The answer will likely be a combination of what you
enjoy, as well as what are your strengths and capabilities.
no doubt about it that the higher you are on the mobile phone
distributor food chain, the more
money you'll make, and the faster you'll make that money. The
simple reason is because once you have a network of sub-distributors
and stores, you'll be able to sell hundreds, or even thousands of
in one deal, versus the bottom of the chain, where you'll be selling
one phone at a time to the customer, which practically speaking, will
simply take more time. But for that apparent ease,
you'll have more overall risk.
Consider if you
were to buy 10,000 phones
from a prepaid carrier. If you don't have the operations in
to receive and ship out those phones in an efficient manner, it could
take you some time before you get the products in the hands of those
who will actually be selling them. And that doesn't include
cost of paying for the phone (or topup) inventory, and the cost to
store it. Many prepaid
carriers require that distributors prepay for inventory. Some
will give you payment terms (ex. net 10 days or 30 days), however, that
becoming less common these days. Even with payment terms,
still need to get the product out, and get paid in time to pay the
carrier for the inventory if you want to minimize your cash flow outlay
to support your inventory.
As a side note,
I've seen more
than a few mobile phone distributors selling millions upon millions of
dollars of phones and airline who have been extremely
cash-strapped, and on the brink of bankruptcy! One
operational issue, or trouble collecting money from your
sub-distribution, and you're toast! But don't let that scare
off. Those issues really come down to poor management, and
perhaps greed, trying to grow their business too quickly. If
you're wise, you should be able to profitably (and safely!) build your
business without being
on the edge of financial disaster.
What do you need to become a
- You'll need to have relationships with sub-dealers and/or stores.
my opinion this is the most difficult part. Building
relationships with other dealers or stores is not easy.
takes a certain kind of person to seek out such opportunities and to
sell your services. Due to the amazing potential to
a lot of money in the prepaid wireless distribution business,
competition is fierce! You can target a specific
type of mom and pop store, small convenience store, etc.
about where people might want to buy a phone or topup their prepaid
account. Also consider what unique value you can add.
have special knowledge, insight, or existing relationships with a
specific type of community? This should be considered a
success factor, and will largely determine whether you should be a
master cell phone distributor at the top of the chain, a smaller one,
or somewhere in the middle. There's really no "wrong" place
be. Wherever you fit in, and can apply your passion, you'll
a chance to succeed!
- Depending on where you are on the food chain,
you'll need to have
technology to process airtime sales. Usually the master cell
phone distributor will provide access to technology to
them, so lets assume you're at the top for the moment. You'll
need to partner with a Technology Service Provider (TSP).
TSPs also have relationships with prepaid wireless
ones will have direct relationships, while the smaller ones will have
indirect relationships. The closer they are to being direct,
more money you'll likely be able to make (due to higher available
margins). There are a number
technologies currently available, and depending on the dealers/stores
that are selling your prepaid products, you may need one or all of
- These are Point Of Sale Terminals that typically look like credit
card terminals. They can be used to sell electronic PINs
or to perform PIN-less Real Time Replenishment (RTR) transactions.
are secure websites that provide the same products as do POS terminals,
but can be accessed via the Internet, without the need for special
hardware or equipment. Internet access, however, IS required.
- This product has been phased out of the market.
These require minimal or no technology, and can often be
directly from the carrier or master distributors. The
operational and fraud risks around this product lead carriers to get
rid of it; I keep it here as a historical reference, and you may
encounter people who talk about it even to this day.
read about these technologies in detail, visit the Point
Of Sale Technology
page. As a cell phone distributor you'll need to get a very
good understanding of these
replenishment technologies so you can sell your services to dealers
stores. You may only need one of them or all of them.
Remember that you need to keep in mind the needs of YOUR
(dealers and/or stores), as well as what the end
customers) need and prefer. Believe
it or not, these are not always the same things!
on how large you are, as well as your relationship with your TSP(s) and
sub-distribution, you may be able to get these technologies from free,
you may have to buy them outright (ex. terminals), or you may
be able to lease them.
Depending on where your business lies in the food chain, you
be able to pass any costs down to your sub-distribution.
- You'll need to either have cash on hand, or access
to money from banks or investors. You'll need this money to
technology, warehousing, staff, and of course, prepaid phones and
prepaid airtime. Although people tend to worry the most about
getting money, I put it last because it really is the easiest part of
the equation! If you have good relationships and access to
technology, you're well on your way to building a successful cell phone
and finding the money will be the easiest part!
How To Become A Mobile Phone Distributor