Joe Barbat and Wireless Toyz Eye Mobile Marketplace

Feb. 28, 2011 - PRLog -- The sales of mobile phones in the United States continue to rise.  Most of those handsets are sold through the wireless carriers, but other retailers are trying to make inroads into the market.  The big box retailers especially are gaining ground.  One-third of RadioShack’s revenues normally come from handsets, but RBC Capital Markets says in a research report that RadioShack has had a hard time with the switch to Cingular. Radio Shack has been reporting declining overall sales, including double-digit declines in post-paid wireless handset sales in the past year.

Recently, Best Buy took aim at gaining an even bigger share of the phone market by partnering with Carphone Warehouse, the U.K. phone retailing juggernaut,to open as many as 200 phone stores in the United States. Carphone Warehouse said it will spend as much as $30 million to open the stores over the next 18 months. The Best Buy-Carphone Warehouse partnership will be branded Best Buy Mobile. There already are 13 stores in the Manhattan borough of New York City. Three of those stores are inside regular Best Buy stores, with 10 more standalone stores. Jeff Dudash, a Best Buy spokesman, says the partnership has completed a pilot phase in New York City and now is going to move forward with 190 stores in eight markets starting in July. Most of the Best Buy Mobile stores, 170, will be built as a “store-within-a-store” with the remainder standalone stores. The Best Buy Mobile stores will be built in New York City; Boston; Philadelphia; Washington, D.C.; Baltimore; Raleigh-Durham, N.C.; Chicago, and Minneapolis. The store will offer service from eight carriers, and will carry more than 90 handsets and 100 accessories.

Ovum analyst Mike Cansfield, who follows Carphone Warehouse in the U.K., says the company believes wireless penetration is low enough in the United States to give it an opportunity to break into the market. With 233 million subscribers, the United States has about 75% penetration, which is well below most European countries. Dudash says Best Buy decided to partner with Carphone Warehouse because “they are the No. 1 phone retailer in the U.K. and know how to do this. By partnering with them, it gives us that same level of insight to replicate their model in the U.S.”

Best Buy also believes it has an opportunity to capture a larger share of the phone market with its new mobile branding, Dudash says. The retailer tops the market in TV and computer sales, he says, but hasn’t done as well as it wants with phone sales. Avi Greengart, an analyst with Current Analysis, recently toured two Best Buy Mobile stores in Manhattan, one contained in an existing store and the other a standalone store. He described the in-store Best Buy Mobile store as “awful” because it had confusing signage and was poorly staffed. He says he liked the standalone store, which had phones and accessories laid out by carrier and had “reasonably well-trained” employees. What was notable about the standalone Best Buy Mobile store he toured was how it differed from a carrier store, Greengart says. Carrier stores use devices as a lure, while pushing service, he says. Best Buy Mobile salespeople, who are non-commissioned, focused on selling devices and Greengart felt they were more willing to talk about prepaid service or unlocked phones.

Another mobile phone retailer seeking to expand its market penetration is Wireless Toyz, which started in 1995 selling pagers in the Midwest but now sells phones and service for eight cellular operators or MVNOs. Those include Sprint, T-Mobile USA, Verizon Wireless, Amp’d, Helio, Disney Mobile, Alltel and AT&T. It has both corporate and franchise stores. Joe Barbat (http.//www.joebarbat.com), says Wireless Toyz now has about 100 stores in 23 states, and is “poised for years of pretty rapid growth.” Wireless Toyz wants to be a national wireless retailer, he says, with as many as 1,000 stores. Wireless Toyz has an advantage that it works with so many different carriers and offers so many different handsets, he says. As Wireless Toyz expands, Joe Barbat says, it is using the Carphone Warehouse model from Europe as a model. He says he spent time walking the streets of London asking people where they bought their phones and why. Most times it was at Carphone Warehouse. Barbat thinks Carphone Warehouse’s decision to enter the U.S. market, even in partnership, is good news for mobile retailing in general. “Quite frankly,” he says, “we are thrilled by it. We believe it validates the space we are trying to carve out by being a national retailer with a sole wireless focus.” Locally owned wireless stores are going to have an increasingly difficult time, Joe Barbat says, because the business has become more complex both in terms of technology and carrier strategies. There is increasing pressure on mom-and-pop stores to deal with different kinds of services, diverse devices, and keep up with inventory and accessories, he says, adding these pressures could lead to consolidation in wireless retail. With as much as $12 billion in sales this year, companies such as Best Buy, Carphone Warehouse and Wireless Toyz could be among those consolidators.

Online Buying Boom More consumers are buying products and services online, and even more are using the Internet to do research before buying in a store. According to a study by Cisco, wireless operators are doing a good job on the basics of online sales but have some room for improvement. Online shopping is expected to account for 10% of all retail sales in the United States – $323 billion – by 2012, according to Forrester. Almost half of U.S. households shop online, the study says. As many as 50% of consumers do online research before buying in a store. Mohsen Moazami, vice president of Cisco’s Internet Business Solutions Group (IBSG), says it is becoming increasingly important for all companies, including wireless carriers in the retail business to pay attention to e-commerce. He says retail stores saw a 3% sales growth in the past holiday shopping period, while on-line sales grew 26%.

The Cisco study ranked wireless carriers as well as online retailers on how well they are doing in e-commerce. The carriers made up 7 of the top 10. The study ranked Verizon Wireless in a first-place tie with Carphone Warehouse. Best Buy, which recently started a partnership with Carphone Warehouse in the United States, was in a tie for third with LetsTalk. T-Mobile USA and Cingular were tied for fifth, while Nextel, Telecom Italia Mobile, T-Mobile Germany and Vodafone Italy were tied for seventh. Sailesh Yellumahanti, who headed the study for Cisco, says the carriers scored well in such e-commerce basics as ease of use and content of their Websites. Those include searching for handsets, getting information about them and making it possible to order quickly.

For more information on this topic or similar topics, please visit http://www.joebarbat.com.

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Entrepreneur Joe Barbat of Wireless Toyz has been referred to as one of the industry thought leaders in his effort to revolutionize the wireless retail industry.