Sunday, October 31, 2010

My Grocery Store is a Mobile Operator

My grocery store sells generic versions of bottled water, soap, breakfast cereal, butter, milk and mobile voice/Internet service. Now thats quite remarkable considering Rewe, the German grocery store chain I am alluding to, doesn't really have a history in the German telecommunications market. What they do have are 15445 stores across Europe that can stock up prepaid SIM cards branded "ja! Mobil" (the name comes from their generic in-store brand). Their physical presence and the mind space ja! occupies drives their business model. If shoppers can drink ja! branded generic cola then they could as well use ja!-branded mobile voice/Internet service.

The innovation here is the marketing possibility offered by Rewe grocery stores (instead of any technical innovation). Rewe has partnered with T-Mobile in Germany to implement its ja! branded "mobile operator". T-Mobile provides a white-label technical platform and Rewe simply brands it "ja! mobile". T-Mobile wins because it gets to sell its service at a discount to lower-paying market segments without putting off the premium T-Mobile customers, Rewe makes a neat profit by leveraging the ja! brand, and the customer wins by getting a discounted service from the best mobile operator of Germany, minus the T-Mobile brand.

I was looking at ja! mobile pricing. There are various flavors of pre-paid and flat-rate plans, although the focus seems to be on pre-paid plans that require no long-term contract and can be dispensed at Rewe's check-out counters. Depending on a customer's typical usage, s/he can can trade-off get a discounted subset of services from among the services offered - SMS, MMS, in-network calling, fixed-line calls, data etc. Interestingly, customer support is not free. Its a little like the contemporary airline business where everything from customer service to carry-on baggage can become a chargeable add-on rather than part of the product. Customers need to be mindful of what their money is buying them before assuming that things like customer service or technical support is part of the product.

Brick-and-mortar stores also sell iTunes gift cards and Facebook credit nowadays. Dell and Amazon partner with Best Buy to sell computers and Kindle e-books respectively. There are interesting business opportunities for anyone who can funnel real customers and subscribers (read: money) into the virtual/communications world. Very real profits await those brick-and-mortar outfits who can build bridges between technology companies and customers, even if they are just plain-Jane grocery stores!

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