What to invest in in 2012.

[Miro Bagrov]

So, what discount to wholesalers get?

I just go an offer 10.9 for R12 Vodacom
12/10.9 = 1.100 = 10%...

I am not a believer in high volumes and small margins.
The psychology of businesspeople does not work like that. I'm being serious, they get good profits. Cause some of them drive around to deliver. And 0.5% won't pay for you to even call a person. Some drive from Jhb, to Pretoria and they drive to their suppliers too.

Now then an airtime voucher is three things combined:
1. Aitime Number
2. Printed Paper
3. Advert Space
....Total = 8% disc.

So, I am not wrong to say if I take away the printed paper, I should a bigger discount.
Virtual airtime should be cheaper not more expensive. The wholesalers buy airtime either in virtual, then print it, or they buy it printed. They are either selling airtime space or they are not. They are not using banks, so they probably pay no transaction fees.

[Justloadit]

Hi Miro,

Firstly your calculation is incorrect.
1-(10.9/12) = 9.16% or alternatively 12 - 10.9 = 1.1 then 1.1/12 = 9.1%

Secondly in some instances the Service providers (MTN and Vodacom) undermine the wholesalers by giving a 1% better discount on the actual scratch cards and delivering it. The reason for this is that they offset the 1% against the advertising of the scratch card itself to push the corporate identity.

The wholesalers get this same discount as been offered, but as you can see it cost the wholesaler to now deliver on, so wholesalers don't bother with this medium.

If you feel you get better results this way, then go for it, in the end you will see that it is not sustainable, as there is a minimum you have to buy, and if you sell on, even to street vendors you need to pay for your costs, then go for it.

Many of the franchises like Trueworths and Edgars, etc sell certain denominations at cost, purely to bring feet into their door, since they make more than 150 to 200% markup on the other goods they sell. Ever wondered how they can give 50% discounts at 'On Sale' campaigns.

Good luck. Many have come and gone over the years, the secret is to o make this necessary evil be the least burden to you in your sales centre, because if you do not supply airtime in all the denominations, then you will not get the feet in the door to vend your other products that sell well and give you the decent profit.

P.S. Can you pass on the lead where you are getting this discount, so that I can make some enquiries.

[Miro Bagrov]

Hi Miro,
Firstly your calculation is incorrect.

You're right.

I am working on developing this guy as a supplier. Since he wants to sell R20 000 a pop, then I must use another shop to buy it. I only need R1000 - R2000 because my business can not sell more. I will buy it with my friend for his shop and we'll split it up. He wants to come to my shop and show me his stuff.
I can recommend you - are you in Pta or Jhb?

Ok, R10.90 ... I still think then they must be getting a R12 Voda for about R6.

[Justloadit]

Hi Miro,

I am in Jhb.

Been in this business for 9 years. My one supplier has been in it for some 15 years, and is the 4th largest MTN buyer in RSA, and my other supplier is the largest buyer of MTN. Been round the block a number of times, and seen many come and go. As I said before, this is a very competitive place, and we are completely at the mercy of the service providers. They change discounts at a drop of a hat, and could not be bothered with the impact it has on the supply chain. People need airtime, and will find it somewhere, who is willing to give away his bottom line. Customers change for 0.1% in the discount, so you can land up being high and dry with out even knowing it, until you notice the numbers changed.

R20K sounds like a lot, but I can churn this in a couple of hours. The big wholesales churn R1m plus a day.

[Miro Bagrov]

Tell me, how do you feel about airtime vending? as in static unmanned machines?

Another Question:
I am busy organising a small business for 1 employee to
I am looking for the cheapest possible pre-paid option - in other words I am looking to avoid fixed monthly fees, so that I can close the business any time without contractual obligations.
Among other options I am considering:
Vodacom, MTN .. etc..
Skype,
Telkom

I would actually like to know what's the cheapest option. Where can I find good pre-paid phones?

[Justloadit]

The problem with static machines, is their expense on the one hand, about R35K, and on the other hand, people become abusive with the machine when there is a problem. Now the way that some poeple carry their notes causes a problem with the note validator that can not read the note. Secondly you have to send some one to clear the money out of the machine, adding even more management burden, being cash money, it has a habit of disappearing.

I sell a portable hand hel machine for R3600.00 VAT included. You simply deposit money into our account at FNB or ABSA, and with in minutes you have a float on the terminal. You can then vend any voucher that is available provided that there is float to purchase with. When your float is down, simply bank again.Your return varies drastically depending on the vouchers you sell. If you just sell R5 vouchers at the prescribed rate, you will make about 1 or 2%, however if you add a value to it such as 50c to R1.00, then the return is pretty good. Most of the vendors are doing this on the small denominations. So you sell a R5 for R5.50 or R6.00. The system when you sell a voucher, takes the discounted amount from your float, leaving the profit in the float. You get your profit after selling the float in to cash.

If you sell the larger denominations, you can average about 4 to 5%. There is no contract, if you do to wish to sell you simply walk away. Unfortunately the terminal is your property.

Public phones is a different kettle of fish. A pain in the but, however, in about a month or two, the same terminal we sell you can be a public phone, with out the overheads of the current solutions. Using the same SIM card the terminal uses to purchases real time prepaid vouchers, it doubles up as a prepaid public phone card. In other words it works just like a prepaid car, but you get better rates on the airtime when you top up. What it does is it gives you more airtime than you have purchased. The client dials the number, and it charges the SIM card, say 72c if a local call, but the timer charges the customer 90c. So you have your profit immediately. We ware just finishing off our software for this application. You can stop anytime because it is prepaid.