UPDATED: Optus has appointed US distributor Likewise, as the sole supplier of goods to both their own and franchised retail stores, with the US distributor now trying to leverage brands off the back of their exclusive access to Optus, to switch all their distribution to other major CE retailers in particular JB Hi Fi to the US owned distributor.
Emails sent to brands and seen by ChannelNews reveals a blatant attempt by Dan Mussa Head Of Retail Products at Likewise to get brands to switch their existing distribution to Likewise in an effort to build his business at JB Hi Fi off the back of the next iPhone launch. Under threat is their existing supply relationship with Optus.
The letters sets out 50% minimum floor margin on stock going into Optus stores, 17% minimum LW Margin, O&A Promotional support during key retail periods and 6% Rebates on shipments made to Optus which are designed to cover Co JMF + Optus Franchise rebates.
The letters written by Mussa spells out in no uncertain terms that before a deal is cut for these brands to continue supplying Optus, they have to agree new terms with Likewise regarding their current distribution relationships with other distributors.
The move by Optus to appoint Likewise follows an investigation by the ACCC into the actions of several of their franchisees, with several people claiming that they are not happy with the decision with suppliers claiming that Likewise management is now bullying them in an effort to build their own business at JB Hi Fi.
The move has already upset franchisees and suppliers, with multiple brands who currently supply Optus stores, via either Cellnet or Force Technology telling ChannelNews, they feel “bullied” via the emails sent out by Mussa.
Likewise, management who appear desperate to build their own business of the back of the relationship with Optus and Telstra have not been favoured by brands in the past as their distributor.
Optus franchisees claim that ‘They know what is best for their stores” and the appointment of Likewise is going to cause friction.
The latest move by Optus gives Likewise who already have a relationship with Telstra, a stronger position in the carrier supply channel with suppliers claiming that their latest moves are “unethical at best.”
Existing distributors to Optus Cellnet and Force Technology face losing close to $20M worth of business from the loss of the Optus network.
ChannelNews understands that Force Technology, which in the past has been a highly profitable Company has looked at selling the business previously according to one carrier we spoke to. The latest offer for the business which has a turnover of around $38M was believed to be $6M.
Cellnet which is owned by German distributor Wentronic Holdings recently went from being share listed on the ASX to being 100% owned by the German Company.
One major supplier to both Optus and Telstra said, “Optus wants supply consistency across all of their stores and with the appointment of Likewise they get this along with the ability to squeeze suppliers, in an effort to build their operation in Australia.”
“We currently have an investigation into supermarket monopolies and pricing and the appointment of one distributor who will have the power to set margins in the mobile market is a major concern that the ACCC needs to review.” Said an Optus franchisee.
Currently Optus has over 380 stores and Telstra 270.
ChannelNews understands that the new arrangement will come into effect as of May 2024.
Dan Moosa from Likewise has not responded to our request for comment on the deal with Optus.
