1/ Vi ends’ partnerships with around 25,000 retail partners, ceasing commission payments.
2/ Decision based on retailers' limited contribution to customer acquisition costs.
3/ Vi aims to save money in light of subscriber base erosion and competition from rivals.
Estimated Cost Savings: ~Rs. 70 Cr. - ~Rs. 90 Cr. per annum 💰💸
Cost Optimisation Impact:
1/ Cost Reduction: The primary impact is a reduction in operational costs. By eliminating commission payments to retail partners, Vi can achieve significant savings, allowing the company to improve its financial position and profitability.
2/ Revenue Market Share (RMS): Jio's revenue market share (RMS) stood at a strong 41.7% in the March 2023 quarter, followed by Airtel with 36.5% (no growth). Meanwhile, Vi continued to cede RMS, with the share falling to 16.6%.
Country: India 🇮🇳
Company: Vodafone Idea Limited
Cost Element: Commission to dealers and others
Cost Classification: Variable Cost + Marketing Overheads
Source: June 17 2023 | Business standard | https://www.business-standard.com/companies/news/vodafone-idea-cuts-ties-with-25-000-retail-partners-to-reduce-costs-123061600508_1.html
Commission to dealers and others in FY 2021-22 (Rs. in Cr.): 1,396.20
Total number of retail partners ~400,000 to ~500,000
~25,000 Retail partnerships cessation
Cost Savings (1396.20 * 25k/400k) (1396.20 * 25k/500k): ~Rs. 70 Cr to Rs. 80 Cr.
Reach us if you have any concerns regarding cost management accounting issues in your organization.
Partner, Chandra Wadhwa & Co. (Cost Accountants) | B.Com, FCMA, ACA, DISA | Certified SAP-CO Consultant | Executive Program on Management and Finance (IIM, Ahmedabad)
Address: 1305 & 1306, Vijaya Building, 17, Barakhamba Road, New Delhi - 110001, India Mail: email@example.com
Tel: +91-8800018190, +91-7503703599.