How Radio Shack Stays In Business
Have you ever strolled into a Radio Shack to buy a $0.99 plug adapter, spent 10 minutes looking for it, been the only customer in the store the whole time, and wondered as you checked out how this store could possibly stay in business? Well, the answer lies in residual payments for mobile phone service. Radio Shack makes a large portion of its revenues from recurring monthly commissions from Sprint PCS and Verizon Wireless for customers that they had signed up long ago. That's a beautiful business model: keep getting paid by customers every month, but only sell them once. This is the same model used for years in the insurance industry. The carriers find it worthwhile to make recurring commission deals because channels like Radio Shack and Best Buy bring in so many subscribers. However, carriers are also trying to find ways of reducing the ongoing commissions they currently pay, and are trying to shift more of their business to direct sales, such as online or call centers. Some carriers are also reducing their commission structure, but those deals are confidential. Either way, Radio Shack doesn't stay in business selling you $2.99 in batteries: true to their name, their selling high value radio services.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
