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Prepaid Cellular Phone Plan: Its Pros and Cons
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Electronic Distribution
How Electronic Distribution Works
The Problems of Distributing Prepaid Services with Hard
(Scratch) Cards
Introduction
One of the most significant developments in the prepaid telecom
industry in the last few years has been the emergence of
electronic distribution technologies, such as Prepaid Wireless
Direct point-of-sale activaton (POSA) will completely
reconstruct the way in which prepaid services are sold.
How Electronic Distribution Works
Prepaid Wireless Direct electronic distribution systems enable
any prepaid sevice to electronically transmit their services to
virtually any retail location. Prepaid Wireless Direct provides
an integrated POSA solution comprised of flexible and compact
point-of-sale terminal equipment, proprietary software,
transactional communications, protocols, and professional
services to assist retailers with implementation.
Once in the retail environment, consumers simply select a
product from point-of sale signage or displays and make the
approprate payment to the clerk who then inserts a wallet-sized
thermal card into the POSA terminal. After pushing a few key
corresponding to the desired product, terminal prints a prepaid
PIN along with usage instruction on the card. Prepaid Wireless
Direct also supports PIN-less delivery whereby the terminal
makes a real-time connection service provider. A credit is
instantly issued to the customers account. Within moments of
purchase, customers can use services.
The types of retail environments that are beginning to switch to
electronic delivery include wireless shops, supermarkets,
conveience stores, check cashers, food marts, university shops,
electronics stores, hotels and many more.
The Problems of Distributing Prepaid Services with Hard
(Scratch) Cards
Prepaid Wireless Direct has developed electronic distribution
services to address the many problems of distributing prepaid
mobile and other prepaid services through hard cards. Hard cards
are also known as scratch cards because the customer scratches a
panel on the back of the card to reveal a PIN or other secret
code.
The current and traditional distribution methodology of most
prepaid services involves the prepaid services involves the
provider printing scratch cards, warehousing them and fulfilling
orders to distributors. The distributors purchase large
quantities for providers, warehouse them and fulfill retail
orders. And retailers purchase the cards from distributors,
manage the inventory and sell the cards to consumers.
Each participant in the distribution chain encounters problems
with scratch cards.
Retailer Problems. Under todays traditional hard card
distribution format, most retailers struggle on several fronts
to offer prepaid products
Retailer have a difficult time carrying the inventory costs of
prepaid services. The recent growth and popularity of prepaid
wireless intensifies the problem. With prepiad mobile, airtime
denominations are much more expensive the phone cards that most
retailers are familiar with. Its common for one prepaid
wireless provider to offer 5 or more different airtime
denominations that range in price form $20 to $150 each. To make
things worse, prepaid wireless airtime is carrier specific,
meaning that Verizon prepaid wireless customers cannot top up
(recharge or replenish) their accounts with ATT, Cingular or
any other providerss airtime, and vice versa. This makes it
critical for retailers to carry airtime for all of the popular
national and regional prepaid wireless carriers or operators in
their area, something that retailers didnt have to worry about
with phone cards. Today there is an average of six major
carriers or operators offering prepaid wireless in each of the
top 20 U.S. markets. Trying to inventory product for all six
could mean that prepaid wireless alone could account for as much
as 25 percent of a conveience stores total in-store inventory
costs. Many retailers simple cannot afford the cash outlay
required to successfully sell prepaid wireless services.
Retailer trying to minimize inventory costs often create
out-of-stock problems. In general, stock outages cost the
average retailer 6% of its sales, resulting in loss of billions
of dollars every year and high customer dissatisfaction.
To make thing worse, todays airtime hard cards, also know as
vouchers, scratch cards, replenishment cards, recharge cards,
and hanging cards, increase the likelihood of fraud. The biggest
problem seems to be at the point of sale where easily concealed,
high-value airtime cards can be the target of both retail
customers and employees alike. To prevent comsumer theft,
retailers often put cards under lock and key but still suffer
losses due to employee pilferage. In the conveience store
industry, it is believed that as much as 80 percent of the
stores shrinkage is attributable to employees. Retail employess
often feel underpaid and rationalize theft as a way to make up
for what theyre owed. As prepaid wireless airtime cards often
range in denominations from $10 to $150, employees can easily
conceal thousands of dollars of product in their pockets or
purses. Cards are also attractive because they can be easily
converted to cash on the street by offering them for sale at a
discount of their face value. Because theyre close cash
equivalents, prepaid wireless cards have become tantamount to an
underground currency in some places including Europe. Because of
the proliferation of theft reduction is the number one
investment priority among convenience store executives.
Additionally, each of the supply chain participants lacks
efficient inventory controls and reporting while battling fraud.
Because of the difficulties they face, and retailers that sell
traditional hard cards are in dire need of cost-effective
distribution solutions.
Electronic Distribution Solutions
Prepaid Wireless Direct products and services solve the
distrbution problems of retailers that sell prepaid wireless
(mobile) and other prepaid services.
Retailer. Retailers are increasingly demanding electronic
delivery for the significant benefits they derive.
By delivering prepaid products electronically, on demand, with
point-of-sale activation(POSA) techniques, Prepaid Wireless
Direct essentially allows any retailer to sell prepaid wireless
or other prepaid service without carrying any inventory. This
eliminates prepaid inventory costs that acted as enormous cash
barriers, prohibiting many retailers from selling prepaid
wireless or other prepaid services. What once tied up thousands
of dollars in inventory, now requires no up front cash from
retailers. Now virtually any retailer not only can afford to
participate in selling prepaid services, but also can expand
their product portfolios to include phone cards, wireless, dail
tone, credit cards, internet and more. In addition, they can
also afford to represent all of the popular prepaid wireless
service providers in their areas.
Also, because products are automatically replenished at POSA
terminals electronically in PIN or real-time formats, retailer
never run out of inventory. With Prepaid Wireless Direct POSA
solution, retailers avoid the heavy costs of out of stocks and
resultant customer dissatisfaction.
Once installed in a retail location, the POSA terminal virtually
eliminates theft by retail customers and employess. Because only
inactive products are on display, retail customers can no longer
steal valuable airtime. And because all retail employees are
assigned unique passwords required to accesss the POSA terminal,
the system creates an audit trail that details all sales
activity by date, time, shift and employee. This audit trail
provides a monitoring system that virtually eliminates employee
theft. With the POSA system, retailer no longer need to count
and reconcile scratch card inventory amounts at the beginning of
every shift.
POSA also reduces shelf space requirements and simplifies a
retailers job by consolidating all prepaid products into one
convenient POSA platform. POSA delivers operating flexibility to
the retail marketplace that traditional point of sale products
fail to provide.
Retailers also have 24/7 online access to reports that show
real-time sales activity by each of their locations. Retailers
can also print real-time sales report directly for their POSA
terminals. Reports can drill down to sales activity at
individual retail outlets by product, clerk, day, and time.
Reports come standard but may be customized to match the
retailers unique information needs. Retailers use sales activity
reports can also highlight sudden changes in sales at a
particular location. Subsequent investigation often reveals a
simple solution to boosting sales such as replacement of signage
that has been taken down by a window washer. Timely awareness of
problems and simple remedies often make a significant difference
to the amount of sales at retail.
Prepaid Wireless Direct is proud to be leading the way in the
electronic distribution of prepaid services through retail
environment. By delivering unique, industry-first features and
benefits, while supporting a growing list of platforms, methods,
suppliers, and products. Prepaid Wireless Direct is poised to
lead the electronic distribution movement into the future. In
addition to its current suite of products. Prepaid Wireless
Direct intends to introduce many more electronic product
delivery solutions as it continues to leverage the leading
technologies to create cutting-edge, customized products for
emerging customer segments.
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