The Art of the Dealer

After nearly a decade participating in the evolution of the wireless industry, Mark Howell has logged a lot of hours observing — and influencing — the way mobile devices and services are distributed and sold. And he believes those entirely necessary but seemingly commonplace functions are in the midst of radical transformation.

Howell is president of Brightpoint, which provides outsourced services like packaging, device and accessory distribution, and inventory management to wireless service providers, retailers and device manufacturers. The company also acquires and manages independent points of sale for wireless carriers, and it's primarily here that Howell sees the revolution brewing.

“The independent dealer historically has been incredibly important to network operators because the market was growing so fast and their focus was to gain as much market share as quickly as possible. The primary tool by which they did that was signing up independent dealers as agents,” Howell said. “Now things that are of greater importance to network operators are the quality of a customer coming on to the network, retaining that customer for as long as possible and training that customer to use what have become incredibly feature-rich devices and services, like messaging and data.”

Because of that, Howell said, the primary responsibility of the independent dealer today is customer development, training, retention and qualification, not just customer acquisition. So Brightpoint's aim is to teach independent dealers — not to mention other sales channels, like the one directed toward the highly coveted enterprise sector — how to adapt to and flourish in that new environment.

If scale is any indication of a company's ability to help guide carriers into a new era of distribution and sales models, Brightpoint certainly has things covered. The publicly traded company, which is based in Plainfield, Ind., logged $1.3 billion in revenue last year and $340 million in Q1 2003, operates in 12 countries, and handled the distribution of more than 15 million wireless handsets in 2002. Howell said Brightpoint counts most of the major U.S. wireless carriers among its customers and that it is one of the largest customers of Nokia, Ericsson and Siemens, which rely on Brightpoint to get their mobile products into carriers' supply chains around the world.

In its efforts to guide independent wireless dealers toward new ways of selling wireless, Brightpoint focuses on helping them differentiate themselves from the other retail outlets that exist for wireless distribution — especially large retail chains that sell wireless alongside electronics or other consumer products.

“In a mass retail environment, there may not be the knowledge. The consumer can have a much fuller purchasing experience with someone for whom wireless is a top priority,” Howell said. “Enhanced features are high-margin revenue opportunities for network operators, so they are highly motivated for their subscribers to use a broader menu of services.”

Brightpoint also raises a carrier's visibility in the retail market. “Sprint PCS is focusing more on the local retailer, and certainly a big portion of that strategy is to build up our local presence,” said Blair Frock, the carrier's director of local and direct distribution. “Brightpoint gives us more feet on the street — not only do we have our own people out there, but we also have the Brightpoint representatives.”

In any channel, Brightpoint is concerned with helping carriers enhance the customer encounter — whether the sales outlet is directed toward a high-end wireless customer seeking sophisticated data functionality or a teenage user shopping online for the most minutes at the lowest price.

“There will be a broadening of the channels by which wireless devices are brought to market because there are going to be significantly different demographic types and needs,” Howell said. “The overall consumer experience is what's most important.”

Brightpoint also is looking to aid carriers in their efforts to tap the ever-elusive corporate enterprise market. There, the company's master agent model for independent dealers can be adapted to large value-added resellers (VARs) like EDS that are just beginning to add wireless products to their mix, said Alex Paskoff, Brightpoint's vice president of business development.

“Certain carriers have a competency selling into the enterprise space, but not necessarily selling to a third-party indirect VAR that then provides those products and services down-channel,” Paskoff said. “On the business-to-business and enterprise side, we're bringing an educated approach to data-centric channels such as VARs that have been used to selling consulting services and more PC-centric type devices.”

But Brightpoint's focus isn't solely on high-use consumers and enterprise customers. The company's conviction is that wireless carriers must increase penetration by whatever means possible — which means tapping markets, channels and points of sale they haven't touched before.

“Incremental growth will come by marketing into new demographics or into markets where the network operators haven't historically invested a lot of money,” Howell said. “We might do it through affinity programs, or we might find opportunities in non-traditional retail points of sale — like a campus bookstore or a surf shop — which historically had not marketed wireless service.”

Virgin Mobile, one of Brightpoint's customers, is one example of that model, Paskoff said. “For Virgin, we would obtain all the products from their various suppliers, aggregate the product, program the handsets, do the packaging, deal with the collateral, and physically manage the movement of that product into all of their different retail channels,” Paskoff said.

Howell by no means downplayed the wide range of other sales channels available for wireless distribution — including, importantly, carriers' own retail outlets, where Brightpoint might play more of a distribution role than the educational role that it adopts with independent dealers and VARs.

“Given where we are in wireless in terms of the sophistication of the technology and the broad demographics of the participants,” Howell said, “I think all channels — direct to consumer, Internet, company stores, outside sales forces and independent indirect dealer channels — will be important.”