Woolworths entry into prepaid mobile could shake up the industry

Stuart Corner
Monday, 03 August 2009 12:03

Business IT - Technology

The announcement by Woolworths to become an MVNO and sell prepaid mobile services in its 700 Woolworths, Big W and Dick Smiths retail stores is likely to dramatically change the mobile landscape in Australia. Woolworths is by far the largest and best known non-telco brand to enter the market.

Not only is it one of Australia's best known brands but one that touches on a frequent basis a large percentage of the population. It claims more than 21 million transactions through its stores each week and as a reseller of other prepaid mobile services it is already a significant player. It claims also that more than 21 million pre-paid mobile recharge transactions are processed through group stores each year.

The group claims to have 13 million customers Australia-wide and to have 190,000 employees, making it one of the largest private sector employers in Australia.  The sheer size and nature of the company's operations give it an opportunity for some 'in-you-face' promotional activities and very little marginal cost that are simply not available to the mainstream telcos.

The Woolworths SIMs will be sold only through Woolworths, Big W and Dick Smith stores, but recharges will be available through more than 3,000 sites a including Woolworths Supermarkets, Safeway, BIG W, Dick Smith, Dan Murphy's and BWS stores and Caltex Woolworths co-branded fuel outlets.

The initial product offering is very much down market and no-frills. It is 2G only and SIM only (Woolworths will sell phone separately), and it is quite attractive compared to present prepaid offerings: credit expiry is 100 days, calls are 15 cents for 30 seconds and text 15 cents.

And while it might seem that the market is moving to 3G, according to Woolworths, 2G is a growth market.  Business manager for the new service, Alex Cochran,  said: "We built this from an understanding of our customer base and when we profiled them we found a heavy skew towards the 2G market and we believe it to be a growth market with the emphasis on fixed line substitution and on families."

Amidst an every growing plethora of confusing mobile deals which consistently fail to spell out real costs and talk instead in meaningless terms of '$$$ value' the simplicity of the Woolworths product is a breath of fresh air.


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