Wal-Mart introduces wireless plan under own brand
NEW YORK - Wal-Mart Stores Inc. said Monday that it is introducing the first cell phone plan that uses the chain's own branding, further demonstrating its clout in getting special deals from wireless carriers.
Context & Ripple Effects
This is the next step in a retail arc that began when Wal-Mart started selling connectivity itself — its 2007 move into broadband service showed it could merchandise telecom like any other aisle item. Since then it has stocked the iPhone 4 alongside Apple and AT&T stores as of June 2010, and expanded its online marketplace against Amazon, which launched its own AmazonWireless phone-and-plan storefront in July 2009.
What changes today is whose name is on the plan: rather than reselling a carrier-branded offer, Wal-Mart is putting its own label on the service, which the company frames as proof of the special deals its scale extracts from wireless carriers. Retailer-brand wireless turns the store's foot traffic into a distribution channel the carrier no longer controls.
First-order effects
- Wal-Mart gains a private-label recurring-revenue product layered onto store traffic, while the supplying carrier gets volume it could not reach through its own branded channels.
Second-order effects
- Rival mass retailers and online storefronts — Amazon's AmazonWireless most directly — face pressure to match the own-brand economics or cede the value-conscious wireless shopper to Wal-Mart's checkout lines.
- Carriers that supply such plans trade brand visibility for distribution reach, weakening their direct customer relationships as the retailer owns the point of sale.
Third-order effects
- If retailer-branded plans prove out, wireless shifts toward a structure where mass merchants set the customer-facing terms and carriers compete as wholesale network suppliers behind them — a template other big-box chains would be pushed to copy.
The trend: Mass-market retailers are converting store traffic into private-label telecom distribution, pushing carrier brands behind the counter.