I'm interested in how you guys compared year over year 2010/2011 on profit margins. I'm guessing that others saw similar trends due to the high cost / lower margin of iphones, tablets, 4g devices etc... but I'm curious to hear feedback.
Personally - For several years I had consistently fallen at year end between 33 and 34% (gross profit margin) and then this year 28.2%
If you just look at YOY gross profit, I was up also (60%) but this number isn't very meaningful because I had additional doors open 2011... and I had doors open q3 2010 and q4 2010 that impacted the overall growth.
My gross sales were up almost 90% 2011/2010 ... Sales went up alot, profit didn't go up proportionally which is why my 33 or 34% is down to 28.2%
I have seen our activations go up overall as far as volume in ALL of our stores, but we have made less profit per store or just about the same as last year. Our investment in inventory has gone through the roof!
It has also cost us more to staff the stores because of the higher volume. For the first time I am seeing that more activations are not necessarily producing more profits. With the higher smart phone mix more customers than ever are coming into the store with an android issue that usually takes 15-20 minutes to resolve.
Other things I have noticed go up is our investment in opening stores, it almost makes no sense to add doors given the risk, return on investment, and the lack of great locations available.
I just did some quick figures. 2010 I was at 31.1% and 2011 looks like 31.41%, so pretty much right on if not a little better. These are just rough numbers though looking at commission plus what I classify as cellular income in Quickbooks against all cost of goods sold.
If I take the business as a whole with all income and expenses, in 2010 I was at a 19% profit margin and in 2011 at 15.6% profit margin.
Wow. I'm surprised at your figures.... Do you stock / sell many tablets ? What's your iPhone take rate? Since the iPhones launch I have embraced it, even more so with ALP. Around 30% of my handsets are apple.
I attribute most of the margin decrease and box increase to the iPhone.
One thing to try and do is sell the accessories on the Iconic orders at the time of placing the order, instead when they take delivery. The order confirmation email and other emails feature prominently a pitch for discounted accessories with a clickable link. Yes, even when we bring them contracts, they still try and step in between us and the customer even before the customer touches the phone.
Despite the box increase this year, I would expect that to level off (if not decrease) on a same store basis due to the loss of the annual upgrades which will gradually impact our upgradeable customer base starting now. We don't track annual versus standard upgrades, but I am thinking it is somewhere around 10-15% of the customer base that upgrade between months 12 and 20. Anyone calculated the impact of this?
We've been doing a TON of iPhones since the 4S launched. It started off slow with the 4 but by July if picked up and we've been pretty strong. I'd say we sell almost just as many iPhones as everything else combined. This really picked up later in the year though. We don't do a lot of tablet. Only like 4-5 ever and those were in the last 6 months.
I agree about annual upgrades BUT one thing I'm seeing is more new lines because of this. We get people that just have to have the iPhone or some other device and it's pretty easy to get them to add a $9.99 line to get the phone at a discounted price rather than pay retail.
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