Good news from the specialist retail channel In the second quarter of 2016, we were able to more than triple sales and revenue for no-contract products in the area of smartphones and tablets. The reasons for this are mainly linked to the S-PoS bonus, which puts our retailers in a position to earn money at the PoS in spite of comparable prices being available online. A bonus such as this also makes sense for manufacturers, who benefit from having their products marketed with services available directly in store.
S-PoS as a factor for success
This is how it works: Manufacturers such as Samsung, Wiko, Sony, CAT and Microsoft provide special budgets, which we then use specifically and effectively as an S-PoS bonus for their original German goods, allowing our common retailers who have concluded an S-PoS agreement with Brodos to offer competitive prices for these devices at their PoS.
The S-PoS (service-point of sale) bonus allows us to reward brick-and-mortar retailers. The bonus acknowledges the particularly high requirements for quality, service and advice offered by brick-and-mortar retailers, making them stand out from purely online businesses.
Many advantages of S-PoS
The S-PoS bonus irons out the gap between inflexible manufacturer’s sales prices and the rapidly changing prices on the free market. As as result, end customers don’t have to buy the smartphone or tablet they want from an online business, they can choose instead to order it from their trusted local retailer, their Local Hero. This S-PoS system has advantages for all parties:
1. The end customer, who can buy the product they want for a fair price with all the services which only a local specialist retailer can offer.
2. The specialist retailer, who can show and explain the high-priced smartphones and tablets at the PoS.
3. The distributor, who thanks to this system can ensure that the specialist retailers needed on the market remain competitive.
4. And the manufacturer, who can obtain price stability and a balanced channel policy as a result.
In the next newsletter, we will deal in detail with the related topic of the marketplace…
S-PoS: Putting new models for financial terms into practice
The topic of new models for financial terms is explored in more detail in chapter 7 of the book “The Connected Store” by Dominik Brokelmann. There is only one way in which manufacturers should compile financial terms if all involved parties are to come to a satisfactory result:
A retailer’s margin consists of the difference between the retail price and the purchase price (excluding VAT). The retail price is limited by the market level on the internet. We have noticed, however, that brick-and-mortar retailers can charge 3 to 8 percent over and above the internet price. This is therefore added on to the retail price by brick-and-mortar retailers. The purchase price from the distributor must be deducted. Retailers naturally try to negotiate as good a purchase price as possible from their distributor. This may also be better depending on turnover.
In addition, marketing bonuses for brick-and-mortar stores should be made available to authorized retailers and paid to the retailer in return for certain services. These can be taken into account either as subsequent credit notes or immediate reductions in the purchase price. A requirement for obtaining a bonus of this nature may, for example, be that the product is put on display or kept in stock and customers are advised accordingly.
Our selective model for financial terms belongs to the future. We will continue to activel support brick-and-mortar retailers, as it is a good model for all parties involved.