Getting others to pay for your success

You have to hand it to low-cost mobile phone operator 2degrees. After hitting the market with its much cheaper prepay mobile phone calls, where phones and credit were typically sold from petrol stations and supermarkets, the fledgling operator has announced an expansion onto the High Street with its own branded stores.

Both Telecom and Vodafone have their own stores, in addition to franchise and reseller operations.

For the big boys, this has meant upfront costs and operations of varying success.

However, to become a 2degrees store operator, you have to pay for the store fit-out yourself.

"Once the dealer is approved they need to commit the capital to do the store fit-out and also buy the stock," 2degrees' corporate communications manager Bryony Hilless told New Zealand's National Business Review.

"After this the business is their own. We do not charge a licence fee, nor any franchise fee, do not ask for commission on sales, nor request any annual payment back to 2degrees."

So don't head to 2degreesdealer.co.nz tomorrow unless you've got a few tens of thousands of dollars on hand. Fortunately, 2degrees will provide training and other support, so the potential for a decent return is there.

I have seen comments that opening stores will impact on the low cost model of the company. But, it appears the retailers will be bearing the bulk of the risk, while giving 2degrees that much vaunted presence on the High Street to make it a more mainstream brand, up there with the big boys!

Clever 2degrees!