Traders selling cell phones losing out to telecoms
10 June 2013, 18:08
Nairobi - Businesspersons selling cell phones in Kenya are facing stiff competition from mobile phone service companies, which have aggressively joined the business as they seek to expand their revenue base.
The firms, Airtel, Safaricom, Yu and Orange have opened shops across the country where they sell mobile phones rivalling independent traders.
In Nairobi, the four telecoms have shops on various streets enabling consumers to reach them easily.
The shops, some which double up as service centers, are conspicuously branded, with most of the phones being sold advertised on displays outside the premises.
Many consumers in search of mobile phones in the country are now turning to the shops operated by the telecoms as they shun other traders.
At a mobile phone shop along Kimathi Street in the central business district operated by one of the telecom giants, queues of consumers seeking to buy mobile phones and other services last all day.
The lines are always long particularly when the company has advertised new makes of mobile phones, most of the time being introduced in the market.
However, as the queues at the shop and others operated by the company in the capital stretch for several meters, at adjacent businesses, there are hardly any customers.
One of the reasons the telecoms are taking over the mobile phone market is that they source gadgets directly from manufacturers, thus, consumers are guaranteed quality.
For instance, Safaricom currently has a deal with Nokia, which allows it to sell the Lumia 820 and 920 gadgets.
The handsets are retailing at 529 U. S. dollars and 648 dollars respectively, with Safaricom offering 6 dollars airtime and 1.5 gigabyte data bundle as incentives.
"I better buy a phone at a shop operated by telecoms, where I am assured I will find quality gadgets than gamble by purchasing from independent traders," Nairobi resident Francis Maeni noted on Monday.
About seven years ago, Maeni bought his first phone from an independent trader. However, the 32-year-old said he cannot return there since he believes he can get a better deal from shops operated by telecoms.
"When I bought the phone, the telecoms had not ventured in the business. They then had opened shops in town but they were being used as customer care center. But with time, they started selling mobile phones," said the accountant.
Another thing that makes Maeni, as many other Kenyans, visit the shops is that the telecoms advertise new makes of phones, which makes consumers make decisions whether they want to buy them or not.
"Once they advertise the phones, you know what to go for since they give features of the gadgets and prices. It is not like going to shop for a phone from an independent trader, where you will take time looking for what you want," he explained.
And the fact that most independent traders do not offer warranty on gadgets works against them. Most telecoms offer consumers a year warranty, which gives them confidence.
"I recently bought a smart phone at a shop operated by a telecom and it developed problems. I returned it and they repaired it for me. If I had bought it at another place, I would have had to pay for the expenses," said university student Bob Ouma.
Most traders dealing in mobile phones in the capital acknowledged that they are facing stiff competition from telecommunication business.
"The giants are slowly driving us out of business. Their massive operations give them an edge over us since they can advertise and source mobile phones directly from manufactures thus sell them at affordable prices," said Cynthia Waweru, an attendant at a mobile phone shop along Moi Avenue.
Waweru recounted that while the telecoms have aggressively joined the market, the rain started beating them heavily when Communication Commission of Kenya last year ran a campaign to switch off fake gadgets.
During the campaign, in which over a million fake mobile phones were cut off, the four mobile phone companies took advantage of the situation to position themselves in the market.
"They came out aggressively urging consumers to buy genuine handsets from their shops. Then, it appeared like they were the only ones selling genuine handsets. They won over consumers, who now look at us with suspicion," said Waweru, adding that most people she serves ask whether the phones she is selling are genuine.
She noted it takes a lot of convincing, which includes sending the IMEI number to a certain code to confirm the gadget is authentic.
"This I am sure does not happen when one goes to a shop operated by one of the telecoms. He will ask for the phone and buy without bordering about IMEI number," she said, acknowledging that business has gone down.
She believes that it is just a matter of time before majority of them close shop.
"Due to partnerships they have with manufacturers, the telecoms have latest phones, which some of us take time to get. This gives them edge. Things are worse with smart phones, which they regularly bring new ones," said Waweru, whose employer had to start a mobile phone shop at the facility to boost the business.
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