In the era of steadily decreasing ARPUs, digitization is providing a lifeline to telecom operators all around the world. Sales and Distribution (S&D) is one such aspect of operator’s business which could easily benefit from digitization by allowing the operator to become more agile and responsive to market and customer needs.
The LATAM telecom market has a strong case for digitization. After many years of growth, the industry is showing signs of slowing down. According to Frost and Sullivan, ARPUs are in a state of steady decline across the board, with Fixed Telephony projected to grow at a rate of 0 -2% for 2014 -2020 and mobile telecommunications projected to grow at a rate 4.7% for the period 2015 – 2021. Mobile broadband accesses continues to grow but are expected to slow down in the coming years. Meanwhile the pace of digitization does not look like slowing down anytime soon with the Latin Americans taking to social media and ecommerce platforms with a vengeance. This creates a dichotomy of sorts as the operators have to strike a fine balance between reducing costs and meeting the increasing demands of the LATAM digital customer.
A digital Sales and Distribution strategy becomes key in this scenario. On the one hand it gives the operator the agility to scale business quickly while on the other hand it allows them to reduce costs.
One of the key drivers of a value driven market is agility. In the context of LATAM, especially in countries like Brazil with its huge size, it means enabling fleet on street (FOS) to add new retailers on the fly, on their mobile devices. In turn, the retailers should be enabled to add new customers on the operator’s digital platform, reducing the time it takes to onboard new customers from days to minutes. Similarly, the distributors should be enabled with a web based interface to view sales at the retailer level which would allow them to take proactive steps and corrections with greater agility.
Digitizing S&D gives a 360 business view of operations which has become necessary for efficient operations, whether it is about distribution, channel management, marketing intelligence, and reconciling cash or onboarding new customers.
Simplifying a Complex Distribution Business
There is no single dominant operator in Latin America .The market is distributed between America Movil (35%), Telefonica (28%), Millicom (5%F) and domestic companies (32%). The resulting commoditization of voice business has reduced ARPUs and renewed the focus on cost cutting and increasing operating efficiencies.
One such area is inventory management which is only possible if the operator has a single view of its sales and distribution right from inventorying to distribution to sales and after sales service. Better real time data on operator’s inventorying systems would not only cut inventory carrying costs but also help in meeting demand as it rises. It will also help in managing and optimizing routes, which provides another platform for driving efficiencies.
Today’s LATAM customer expects nothing less than a consistent experience across channels. By digitizing their sales and distribution process, the operators get a single view of their customer, which is necessary for creating a consistent experience across web, mobile, off-net. For example, a digitized sales and distribution strategy allows the retailer to process sales through cash/card, and sending the invoice and purchase summary to the customer’s email and SMS respectively.
Digitizing legacy Sales and Distribution is increasingly becoming important as LATAM operators make the transition from a volume driven business to a value driven business. Higher disposable income and the data revolution have changed operator’s focus from the base of the pyramid to the big middle of pyramid and value clients.
Market share to Revenue Share
As the LATAM telecom market enters the maturity phase the shift is happening from market share to revenue share – i.e. from a volume driven telecom market to a value driven telecom market. The proliferation of smart devices and high speed internet has further revolutionized the entire telecom ecosystem with a spurt in partner enabled services i.e. Interconnect/Roaming, OTT Partner, SMS/Payment Gateway Partner, MVNO/E, Content Providers, Digital Partner – IOT etc. A digitized Sales and Distribution provide an end to end strategy right from partner onboarding to settlement.
Finally, a digital sales and distribution strategy is beneficial to the society, as it reduces the operator’s carbon foot print and increases transparency.
Investors are increasingly demanding that companies in Latin America demonstrate social responsibility and include measures to increase transparency and help combat social inequality. A digital sales and distribution strategy is helping operators to become socially responsibly by reducing their carbon footprint by optimizing distribution through better route management and inventory planning. Similarly, a digital strategy is key to bringing end to end transparency in the sales and distribution process.