To Cell or Not to Sell

Hot cellular and tablet technologies make sense to some retailers, not to others

A few months back, Richard Glikes asked the board of the Home Technology Specialists of America for the okay to develop a program that would enable members to sell smartphones and other network-enabled wireless devices, such as tablets.

His reasoning was based on the obvious: The products are extremely popular, especially with younger demographics, and they interact with home A/V and control systems. “You can argue both sides,” Glikes said. “One school of thought is ‘stick to your core business.’ The other is ‘go where the action is.’ If you are the technology leaders, you need to have the latest technology.”

But the HTSA board’s answer to Glikes came back a unanimous “no.” There is just too much competition and not enough margin in wireless to make it worth the while of HTSA’s membership of specialty dealers, the board said. Instead, it wanted to stay focused on integrating disparate technologies.

Retailing wireless devices and solutions can be a brutal business. It’s all about holding inventory and selling handsets at a loss. Carriers issue charge-backs to their dealers when consumers return handsets or drop service plans, and churn can quickly destroy dealer profit. The upside is that dealers can receive service-plan commissions and marketing support from carriers, and make money on accessories and add-ons. But the payoff, to some, just isn’t worth the headache.

If confusion surrounding the labor-intensive model isn’t enough to keep most CE dealers away, the stiff competition is. It seems like everyone from mall kiosks to Best Buy Mobile to sells smartphones these days. That’s not to mention thousands of carrier stores.

“I like cell phones, and I like tablets,” said Glikes, HTSA’s executive director. “But a category where there’s plenty of competition probably doesn’t make sense.”

While the hard facts of the business have kept many CE retailers at bay, others see the sale of smartphones and other connected mobile devices as a major play in their future.

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  • http://RichardGlikes Richard Glikes

    The opportunity is to use tablets to drive the control platforms. Margins and the speed of model life predicate that only the largest and most nimble retailers will succeed in making any profit from the category. I recall that the PRO Group added computers to their mix at the suggestion of outside consultants only too lose money and drop the category within a year of the experiment. History does repeat itself and specialists can’t survive on 10% to 15% attainable margins. While we embrace tablets as an enabler, we do not embrace them as a profit center.

    Richard Glikes Executive Director of HTSA