The importance of Telco's products like so many other products varies from shop to shop and so ranges from small to large, to some its now one of their largest departments.
Touch systems have given me some figures for some of our clients which I think you will find interesting reading.
These listings show their products are worth to these clients of mine over a month over $1.1 million in sales; they sold over 35 thousand items, and they get more then $43 thousand in profit.
When I studied these figures in detail what I discovered is much of what people say about these products, I was surprised to find out is not true. What I was told was that more and more people are buying online, that they are buying on the mobile, and they were switching to plans. As a result, the market is declining. Well, people may be doing that but the market is not declining.
This is a graph over the last 34 months of gross sales.
The market is actually growing by about 8% a year.
Now there are two provisors to this, the first is that the number of shops selling these products is going up. How many I do not know but the number switching to integrated systems though our software is growing rapidly. The main reason for this is that margins are better as by reviewing the rates of different suppliers a smart retailer can make about 30% more profit, plus they can to a greater degree take advantages of special offers. The other point is that it's much more efficient and easier, and this becomes particularly important if you start increasing your range and sales.
The first provisor is that the margins are dropping.
I calculate that the margin drop is about 10 cents a year. Still an average profit is about $1.25 a sale which is not bad for simply ringing up an item.
It could be argued that it's an easier sale now but although the market is getting bigger, the number of shops selling the product is going up, and the margins are dropping.
This certainly affects the shop profits, which is showing the better shops are doing better vs the poorer ones. The average shop profits in this department are declining about $13 a year.
However, the number of people coming into the shop is almost unchanged. It is in an average shop bring in about 120 people a month
And that is the main reason many handle these products. When you look at your basket reports, you will see that these people tend to be good customers with high addons.
Where I think, this market is going is into giftcards and software, which should see margins going up but this will be a subject for another post.
If you want to know more, please let me know.