Amazon, eBay Sell More Cell Phones
Posted by: Olga Kharif on August 05, 2009
A quarter of mobile phones recently sold in Western Europe had been purchased through online vs. physical stores, research project TNS ComTech found. Amazon and eBay facilitated the majority of the online purchases, according to the survey, which was based on responses from 60,000 consumers.
The fact that Amazon and eBay are emerging as major retailers of mobile handsets could have major implications for the wireless industry. It could affect the way carriers and device manufacturers market, subsidize and sell products and services, and how much revenue and profit they receive.
As purchases continue to shift online, Amazon and eBay could become the go-to brands for wireless services, at least in certain countries and for certain services, such as prepaid. That market power could allow the sites to dictate prices, and to negotiate for a larger cut of the industry’s revenues and profits.
Eventually, this market power could even allow these companies to launch handsets and services under their own brands. Amazon already sells its Kindle e-book reader, which can download titles via Sprint Nextel’s network. Offering an Amazon-branded cell phone or a cell-phone service could be the next logical step.
More likely, though, the online retailers will simply continue to resell others’ handsets and services and eat into carriers’ margins. A carrier makes more money by selling a phone to a consumer through its own stores than by selling the service to the user through Amazon, which takes a commission.
An increase in eBay purchases, meanwhile, suggests a rise in consumer purchases of used cell phones. The good news is, whenever a consumer buys a used device, the carrier doesn’t spend anything on subsidies. The bad news: That carrier may not be able to sign up that consumer to a long-term contract.