OEMs Taking Control
Once thought of as simply the manufacturers of wireless devices, original equipment manufacturers (OEMs) are seeing an incredible opportunity for growth in the retail sector. OEMs have historically relied on carriers to sell their devices in conjunction with wireless plans, but this is no longer the case. These manufacturers are now taking control of the customer’s experience of their brand, by exploiting a range of retail channels.
As of this whitepaper’s June 2021 publication, it has been 20 years since the first Apple Store opened in Tysons, Virginia. Since then, only a notable handful of OEM brands have followed suit in launching their own experiential stores, due to a wide range of challenges and hurdles within the complex telecom sector.
However, the trend for OEMs to take control of their customer’s experience of their brand is gaining momentum. Far from being limited to creating their own experiential brand stores, OEMs are using other strategies to achieve this goal — from streamlining the omnichannel retail experience to gaining visibility of their sales and inventory in wireless retail channels. What’s certain is that OEMs are no longer simply focusing on manufacturing.
Andre Tagliamonte, Vice President of Business Development at iQmetrix, said, “Previously, OEMs didn’t focus on the manufacturer-to-consumer journey. They focused on getting out their devices as quickly and effectively as possible, and on their relationships with the carriers because the carriers were the ones making sure the consumer experience was good. But as time passed, OEMs started to realize they could improve the customer experience just as well as carriers could. They started to emerge into retail: first by building their own e-commerce sites, and then, with some brands, evolving to a brick-and-mortar stores.”
Today, OEMs are in the heat of the passion of trying to ensure the customer keeps coming back to their brand.
—Andre Tagliamonte, Vice President of Business Development, iQmetrix
However, whichever method an OEM chooses to grasp control of their brand experience, no path is easy. OEMs face multiple challenges in their attempts to disrupt the wireless retail status quo. To overcome those challenges, they require the backing of a wide range of trusted partners, from technology firms to big-name retailers.
The OEM Journey into Retail
Historically, OEM brands have not had direct access to customers to be able to market their devices directly to consumers — they’ve always had to market through the carriers.
Trish Sale, Senior Director of Enterprise Services at iQmetrix, said, “These brands needed to take control over their customers’ interactions with their brands, so they don’t have to run that experience through the carrier. After all, the carriers are focused on marketing their own carrier brands, not device brands. The challenge this created in the telecom sector was that devices were seen by the customer as not valuable without the carrier. That’s where there’s been a real challenge for OEMs to make that leap and take control of the customer experience.”
Apple was the first to break that barrier, 20 years ago, in May 2001. A decade later, once the iPhone was launched, the tech giant started to talk to customers directly. It launched its first brick-and-mortar store in Tysons, Virginia, and expanding rapidly over two decades to more than 500 stores worldwide today. Apple Stores set the standard for how the “experiential” store operated, with its in-store associates (known as Geniuses) available for consultation and technical support. Since then, other OEMs have begun to follow this trend — notably Samsung with its branded Experience Stores, as well as Microsoft and Google.
iQmetrix’s Andre Tagliamonte said, “Brands like Samsung and Apple are now highly adept at finding ways to touch the customer throughout their purchasing journey. But if you look at other manufacturers out there, and there are many, there are still lots of opportunities to improve on this. Especially with some brands like LG exiting the mobile hardware space, there’s a chance for other device brands to capitalize on that.”
A Changing Model
What’s interesting from a device manufacturing perspective is that the control being pulled back by OEMs is changing how phones are designed and made. Tagliamonte explains, “Originally, telecom carriers would go to the OEMs and say ‘we need this kind of new phone’ and the OEM would make it. Now that the OEMs have a direct relationship with the customer, they are designing and creating their own devices that can work with any carrier, so that they can activate that device and sell the customer a rate plan. This creates a seamless journey and keeps the consumer bouncing back to that OEM brand. With mobile devices having such short shelf lives before the next generation comes out, brands need to keep that consumer bouncing back.”
From a retail perspective, the store model has flipped from always being carrier’s wireless stores that are OEM-brand-agnostic, to OEM brand stores that are carrier-agnostic. Either way, there’s a place in today’s retail world for both models. Above all, what’s essential is that the customer experience is consistent and seamless, no matter where they are encountering each of these types of brands.
And it’s not just smartphones and tablets that are affected. Most OEMs are increasingly focusing on delivering a multi-device experience, including wearables, smart earbuds, smart devices such as like smart home speakers, and so on. Many of these new device categories will have a cellular connectivity with 5G. All this change drives the need to deliver consistency and control the customer experiences along all devices and retail touchpoints. This also means that OEMs will have to engage also with more varied types of retail partners and push value through a more complex retail experience — one that increasingly goes beyond the smartphone.
Alongside products becoming more complex and modular, OEMs are shifting strategies beyond hardware and into services and content, either using in-house assets or through partnerships. This means retailers will not only need to continue mastering the technological aspect of their offerings but also how that integrates with new services and content as these will increasingly affect replacements sales, new buying behaviors, and brand values. This trend is also likely to result in a proliferation of innovative bundles and packaging strategies with partners, retailers, ecommerce platforms, and more.
Three key challenges facing OEMs
The hurdles facing OEMs who want to gain control of their brand experience are many and varied. They include:
Below we delve into each of these three key issues, and how the right retail technology can solve those challenges.
Whether OEMs are offering physical stores or e-commerce websites only, it’s no longer enough to simply sell the device and leave the customer to deal with their own carrier activation. Customers expect to be able to walk out of a store with an activated phone ready to go, just like they do in a wireless store. Those shopping online expect to be able to buy a SIM card and call the carrier for a simple activation after receiving the delivery.
Moreover, what customers want is the choice of all available carrier rate plans and promotions — and OEMs selling direct to the consumer must be able to offer this experience.
Trish Sale said, “What OEM brands are looking for is a multi-carrier experience — they don’t want to be stuck with just one or two carriers, as they need to be able to give customers choice and not create tensions. They’re looking to ensure their sales reps in experiential stores can create a seamless customer experience: sell the device, do an activation with whichever carrier the customer chooses, and carry out that activation as smoothly as possible. But right now, many brands are not even doing the activations. They might sell a SIM card along with the phone, but that’s the extent of it. The customer still has to go through a separate process and interact with the carrier brand for the activation.
Streamlining the activation process
Sale explained that for the consumer who is discerning about their device brand and loyal to the OEM’s experiential store or e-commerce site, they may be willing to take that dual step. But for customers who are not so sophisticated and have less loyalty, it’s a suboptimal process.
It’s also suboptimal for the OEM, which stands to gain from solving this problem. Sale added, “OEMs are looking to smooth out the process and make activation as easy as possible in their stores. Until they can do that, they’re leaving money on the table, since they get paid by the carrier for the activation. But the store associates don’t push it, because it’s often such a challenging process. They may be experts on the brand’s physical devices, but they are likely not experts in the multiple carrier rate plans and promotions available.”
These OEM stores need a streamlined point-of-sale and retail management solution that is designed for telecom, and which tracks all the sales and commission information that motivates associates to sell and carry out activations, all facilitated within the system. Ultimately what they need is a POS solution that walks associates through the multi-carrier activation options and processes, and they’re not swiveling between platforms — essentially, a sales assist that is carrier-agnostic.
OEMs are looking to smooth out the process and make activation as easy as possible in their stores. Until they can do that, they’re leaving money on the table.
—Trish Sale, Senior Director of Enterprise Services, iQmetrix
The Omnichannel Retail Experience
In today’s omnichannel world, most consumers are starting their buying journeys online, researching the device on the internet — often on the OEM’s e-commerce website. Alternatively, they may be searching on sites like Google Marketplace, or clicking through OEMs’ social media promotions or targeted online advertising, among many other options.
Sale said, “A seamless omnichannel strategy really allows an OEM brand to capture that initial intent, wherever it begins, and transform it into a sale — whether that’s taking the customer to pick up the item in an experiential store or direct delivery.
Samsung is one OEM brand that has worked hard to create a barrier-free omnichannel purchasing journey for its customers. For example, when it launched the Samsung Experience Stores in high-profile retail locations across the U.S., it needed to create an amazing customer experience that delivered on the promise inherent in the store’s branding. Along with impressive retail spaces and knowledgeable sales associates, this “wow” factor had to include seamlessly integrating its e-commerce offerings with the in-store experience. Charles Daramola, Head of Retail Strategy and Innovation, Samsung Electronics USA, told iQmetrix, “Across all of our ecosystems, we kept facing the question of ‘how do we create a consistent experience?’”
Samsung implemented its buy online, pick up in-store (BOPIS) flow, and worked with a leading provider of telecom retail management software to create integrations that smoothed out the customer notification process for when the product was ready to be picked up.
Daramola added, “We needed an end-to-end solution that could give us this foundation we could build upon so that we could provide not only the experience we wanted but deliver on those customer expectations. As we grow and evolve, we move from that foundational capability to more experiential capabilities in the future.”
Cross-channel purchasing journey
This is just one example of a great experience for customers shopping on an OEM brand’s site or in an experiential store. But what if, after doing their online research and selecting a device, the customer ends up choosing to purchase that device and a rate plan in their local wireless store, as is so often the case?
This represents both an opportunity and a threat to the OEM brand, in terms of keeping control of the transaction. If the customer isn’t buying directly from the brand’s experiential store or e-commerce site, the OEM needs to ensure the customer still chooses their device and doesn’t end up going with a different brand at the point of purchase.
Sale said, “OEM brands are looking to smooth the process from the customer’s intent to buy through to the actual purchase and the pickup or delivery of the item, wherever each of those stages may be. The smoother that process, the more it increases adoption for their specific device. For example, a customer may be doing online research on a device and deciding to buy it, but then going to a wireless store where they may be swayed by a sales rep or by the store display to go with a different brand, and the original brand loses control of the transaction.”
Another solution where OEMs can take control is when customers want to order from their e-commerce store but don’t want to wait for shipping, and there isn’t a nearby experience store for them to pick up their item.
Madison Bollefer, Product Manager of Brand Channel Management at iQmetrix, said, “Right now at iQmetrix, we’re looking at ways to enable the fulfillment of an OEM e-commerce order at the customer’s nearest wireless store, either for buy online, pick up in-store, or it could be shipped to their home with a shorter delivery time. Either way, it is about OEMs using wireless retail stores as local fulfillment centers to reduce shipping costs and wait times, to keep control of the sale, and improve the customer experience of their brand.”
Sale added, “Going forward, what OEMs need is the technology to take that same seamless omnichannel experience that we have between the OEM’s multiple retail channels and recreate that between the OEM’s e-commerce site and wireless stores. This would mean that a customer could order a device on the OEM’s website but pick it up and get it activated at their local wireless store. That would create the ideal experience for the customer, and for the OEM, it would guarantee that the customer doesn’t arrive at the wireless store and have the sales rep persuade them to go with a different device. That way, the brand doesn’t lose the sale.”
What OEMs need is the technology to take that same seamless omnichannel experience that we have between the OEM’s multiple retail channels, and recreate that between the OEM’s e-commerce site and wireless stores.
—Trish Sale, Senior Director of Enterprise Services, iQmetrix
Visibility Among Channels and Operators
For those brands that don’t wish to invest big bucks in experiential stores — and even for those that do— there are many other ways OEMs can reach the consumer on their purchasing journey. The strategies include:
Whichever strategy is used, ultimately it’s about joining forces with industry partners, whether those are retailers, distributors, or technology providers.
Gaining visibility in other retail stores
Tagliamonte said, “Going forward, I expect OEM brands to invest more in distribution, in promotions, perhaps in improving their shelf space, getting at the front of the wireless retail store. Also maybe in incentives for wireless store sales associates to sell that device, which the OEM pays for. OEMs could even pay for their own personnel to be in those stores and help move product. Those techniques work well and the costs are not prohibitive.”
When it comes to partnering with other retailers, a highly successful model has been the branded kiosk, or store within a store. Customers at big-box and major grocery retailers increasingly expect to see branded kiosks within those larger stores, whether those brands are multi-carrier wireless kiosk operators, or OEM brands selling their specific devices.
It’s about OEMs finding the right partners to work with — like a Staples, like a Best Buy, like a Walmart — other avenues to reach customers. There are some truly emerging retailers out there.
—Andre Tagliamonte, Vice President of Business Development, iQmetrix
Even when an OEM has successful experiential stores, the majority of its phones will still be sold by carriers, both via corporate and authorized retailer stores and through those channels’ e-commerce sites. This is where brand channel management becomes crucial to OEMs — they need visibility into sales and inventory, and some control over how their products are displayed, marketed, and sold.
Madison Bollefer, Product Manager of Channel Management at iQmetrix, said, “For example, just like iQmetrix is providing for carriers, OEMs need to be able to apply rules such as a new price or a promotion across multiple retail channels. This is a layer of technology that sits on top of the individual retailers’ databases, where the brand comes in and can authorize specific stores, let’s say, to be a part of a premium program. The OEM can then specify the products those stores can sell, and the prices and the promotional deals. All the data is automatically pulled from that centralized place and filtered down to all those stores, and to all those retailers’ e-commerce websites.”
Alternatively, you can have employee rewards programs that incentivize associates to increase sales of your particular brand’s products, which can really increase your brand’s visibility when compared with other brands, which is a huge pain point. If that store rep remembers to sell your device because it will earn them extra points, they’ll push that product to customers where it’s a good fit.”
However, it’s important to remember that there are often three parties here: the OEM, the carrier, and the authorized retailer. Each wants and needs to maintain control, but only one of those entities can control a feature such as pricing at a given time. Bollefer added, “There would need to be agreements between those parties as to who controls what, for each product. For example, the OEM could mandate which product images get used on carrier and retailer websites and displays, while the carrier controls a promotion being rolled out.”
Visibility into sales data and trends
A key missing piece of the puzzle is around channel visibility. This is not so much about functionality, but more about the data that is available to the OEMs. Currently, most OEMs don’t know how well their devices are selling — in fact, they have to buy that data from external sources.
Bollefer explained, “When a customer buys a device at a wireless store, the OEM is so removed from the customer’s purchase, they don’t get that data. The retailers don’t get their inventory direct from the OEM, they get it from a distributor. The OEM may have a great relationship with their distributor, who may share with the OEM how many devices they have sold on to retailers. But after that, there is zero insight into how many devices are selling from the retailers’ stores, and certainly no real-time insight.”
Unfortunately, that feeds into a lot of the waste that exists in the wireless industry, as by the time an OEM finds out that a product is no longer selling, they’ve been continuing to manufacture it and that creates an excess of product.
Bollefer added, “Because of this need, we’re working on technology that allows for full cross-channel visibility. This would mean the OEM can simply look at the retailers’ inventory and see what’s selling and what isn’t, what got returned, why it got returned, attachment rates, trends in different geographic regions, and so on — all in real time.”
The Retail Technology Revolution
Ultimately, what OEMs are attempting to achieve in the telecom retail space is the same as what all retailers are striving for, and what retail technology innovators are working towards: the overarching goal of enabling customers to Buy Anywhere.
Tagliamonte concluded, “As consumers, we have been programmed with expectations that you want a product and you can buy it where you want, when you want, how you want, and you can get it the next day, or even the same day. Retailers such as Amazon have set these new expectations, with massive distribution centers everywhere and just-in-time shipping. Other brands, including OEMs, are now trying to catch up with that great experience. All brands need to be part of the retail technology revolution — by which we mean enabling customers to Buy Anywhere, Pay Anywhere, Return Anywhere. And OEMs will find ways to do that, using the right technology and partnering with the right companies.”
All brands need to be part of the retail technology revolution — by which we mean enabling customers to Buy Anywhere, Pay Anywhere, Return Anywhere.
—Andre Tagliamonte, Vice President of Business Development, iQmetrix