| Electronic Distribution | | | | cards, increase the likelihood of fraud. The biggest |
| How Electronic Distribution Works | | | | problem seems to be at the point of sale where |
| | | | easily concealed, high-value airtime cards can be |
| Introduction | | | | the target of both retail customers and |
| One of the most significant developments in the | | | | employees alike. To prevent comsumer theft, |
| prepaid telecom industry in the last few years has | | | | retailers often put cards under lock and key but |
| been the emergence of electronic distribution | | | | still suffer losses due to employee pilferage. In the |
| technologies, such as Prepaid Wireless Direct | | | | conveience store industry, it is believed that as |
| point-of-sale activaton (POSA) will completely | | | | much as 80 percent of the store's shrinkage is |
| reconstruct the way in which prepaid services are | | | | attributable to employees. Retail employess often |
| sold. | | | | feel underpaid and rationalize theft as a way to |
| How Electronic Distribution Works | | | | make up for what they're owed. As prepaid |
| Prepaid Wireless Direct electronic distribution | | | | wireless airtime cards often range in |
| systems enable any prepaid sevice to | | | | denominations from $10 to $150, employees can |
| electronically transmit their services to virtually | | | | easily conceal thousands of dollars of product in |
| any retail location. Prepaid Wireless Direct provides | | | | their pockets or purses. |
| an integrated POSA solution comprised of flexible | | | | Cards are also attractive because they can be |
| and compact point-of-sale terminal equipment, | | | | easily converted to cash on the street by |
| proprietary software, transactional | | | | offering them for sale at a discount of their face |
| communications, protocols, and professional | | | | value. Because they're close cash equivalents, |
| services to assist retailers with implementation. | | | | prepaid wireless cards have become tantamount |
| Once in the retail environment, consumers simply | | | | to an underground currency in some places |
| select a product from point-of sale signage or | | | | including Europe. Because of the proliferation of |
| displays and make the approprate payment to | | | | theft reduction is the number one investment |
| the clerk who then inserts a wallet-sized thermal | | | | priority among convenience store executives. |
| card into the POSA terminal. After pushing a few | | | | Additionally, each of the supply chain participants |
| key corresponding to the desired product, | | | | lacks efficient inventory controls and reporting |
| terminal prints a prepaid PIN along with usage | | | | while battling fraud. Because of the difficulties they |
| instruction on the card. Prepaid Wireless Direct | | | | face, and retailers that sell traditional hard cards |
| also supports PIN-less delivery whereby the | | | | are in dire need of cost-effective distribution |
| terminal makes a real-time connection service | | | | solutions. |
| provider. A credit is instantly issued to the | | | | Electronic Distribution Solutions |
| customer's account. Within moments of purchase, | | | | Prepaid Wireless Direct products and services |
| customers can use services. | | | | solve the distrbution problems of retailers that sell |
| The types of retail environments that are | | | | prepaid wireless (mobile) and other prepaid |
| beginning to switch to electronic delivery include | | | | services. |
| wireless shops, supermarkets, conveience stores, | | | | Retailer. Retailers are increasingly demanding |
| check cashers, food marts, university shops, | | | | electronic delivery for the significant benefits they |
| electronics stores, hotels and many more. | | | | derive. |
| The Problems of Distributing Prepaid Services with | | | | By delivering prepaid products electronically, on |
| Hard (Scratch) Cards | | | | demand, with point-of-sale activation(POSA) |
| Prepaid Wireless Direct has developed electronic | | | | techniques, Prepaid Wireless Direct essentially |
| distribution services to address the many | | | | allows any retailer to sell prepaid wireless or other |
| problems of distributing prepaid mobile and other | | | | prepaid service without carrying any inventory. |
| prepaid services through hard cards. Hard cards | | | | This eliminates prepaid inventory costs that acted |
| are also known as scratch cards because the | | | | as enormous cash barriers, prohibiting many |
| customer scratches a panel on the back of the | | | | retailers from selling prepaid wireless or other |
| card to reveal a PIN or other secret code. | | | | prepaid services. What once tied up thousands of |
| The current and traditional distribution | | | | dollars in inventory, now requires no up front cash |
| methodology of most prepaid services involves | | | | from retailers. Now virtually any retailer not only |
| the prepaid services involves the provider printing | | | | can afford to participate in selling prepaid services, |
| scratch cards, warehousing them and fulfilling | | | | but also can expand their product portfolios to |
| orders to distributors. The distributors purchase | | | | include phone cards, wireless, dail tone, credit |
| large quantities for providers, warehouse them | | | | cards, internet and more. In addition, they can also |
| and fulfill retail orders. And retailers purchase the | | | | afford to represent all of the popular prepaid |
| cards from distributors, manage the inventory | | | | wireless service providers in their areas. |
| and sell the cards to consumers. | | | | Also, because products are automatically |
| Each participant in the distribution chain encounters | | | | replenished at POSA terminals electronically in PIN |
| problems with scratch cards. | | | | or real-time formats, retailer never run out of |
| Retailer Problems. Under today's traditional hard | | | | inventory. With Prepaid Wireless Direct POSA |
| card distribution format, most retailers struggle on | | | | solution, retailers avoid the heavy costs of out of |
| several fronts to offer prepaid products | | | | stocks and resultant customer dissatisfaction. |
| Retailer have a difficult time carrying the | | | | Once installed in a retail location, the POSA |
| inventory costs of prepaid services. The recent | | | | terminal virtually eliminates theft by retail |
| growth and popularity of prepaid wireless | | | | customers and employess. Because only inactive |
| intensifies the problem. With prepiad mobile, | | | | products are on display, retail customers can no |
| airtime denominations are much more expensive | | | | longer steal valuable airtime. And because all retail |
| the phone cards that most retailers are familiar | | | | employees are assigned unique passwords |
| with. It's common for one prepaid wireless | | | | required to accesss the POSA terminal, the |
| provider to offer 5 or more different airtime | | | | system creates an audit trail that details all sales |
| denominations that range in price form $20 to | | | | activity by date, time, shift and employee. This |
| $150 each. To make things worse, prepaid | | | | audit trail provides a monitoring system that |
| wireless airtime is carrier specific, meaning that | | | | virtually eliminates employee theft. With the POSA |
| Verizon prepaid wireless customers cannot top up | | | | system, retailer no longer need to count and |
| (recharge or replenish) their accounts with | | | | reconcile scratch card inventory amounts at the |
| AT&T, Cingular or any other providers's | | | | beginning of every shift. |
| airtime, and vice versa. This makes it critical for | | | | POSA also reduces shelf space requirements and |
| retailers to carry airtime for all of the popular | | | | simplifies a retailers job by consolidating all prepaid |
| national and regional prepaid wireless carriers or | | | | products into one convenient POSA platform. |
| operators in their area, something that retailers | | | | POSA delivers operating flexibility to the retail |
| didn't have to worry about with phone cards. | | | | marketplace that traditional point of sale products |
| Today there is an average of six major carriers | | | | fail to provide. |
| or operators offering prepaid wireless in each of | | | | Retailers also have 24/7 online access to reports |
| the top 20 U.S. markets. Trying to inventory | | | | that show real-time sales activity by each of their |
| product for all six could mean that prepaid | | | | locations. Retailers can also print real-time sales |
| wireless alone could account for as much as 25 | | | | report directly for their POSA terminals. Reports |
| percent of a conveience stores total in-store | | | | can drill down to sales activity at individual retail |
| inventory costs. Many retailers simple cannot | | | | outlets by product, clerk, day, and time. Reports |
| afford the cash outlay required to successfully sell | | | | come standard but may be customized to match |
| prepaid wireless services. | | | | the retailers unique information needs. Retailers |
| Retailer trying to minimize inventory costs often | | | | use sales activity reports can also highlight sudden |
| create out-of-stock problems. In general, stock | | | | changes in sales at a particular location. |
| outages cost the average retailer 6% of its sales, | | | | Subsequent investigation often reveals a simple |
| resulting in loss of billions of dollars every year and | | | | solution to boosting sales such as replacement of |
| high customer dissatisfaction. | | | | signage that has been taken down by a window |
| To make thing worse, today's airtime hard cards, | | | | washer. Timely awareness of problems and simple |
| also know as vouchers, scratch cards, | | | | remedies often make a significant difference to |
| replenishment cards, recharge cards, and hanging | | | | the amount of sales at retail. |