Edition 50
Technical Trends - Profitable Repair with a Cup of Coffee
by Bryant Underwood, Public Safety Sourcing, Cassidian Communications

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In the past few months we have touched several times on the macro trend of how repair services are becoming more direct by moving closer to the Customer and in doing so are providing greater value and higher profit margins. One example we have outlined is the proliferation of local repair centers. These can be found as a kiosk in a shopping center or small shop in a strip mall. While these shops are clearly successful, a most interesting variant that is growing is on-site cellphone repair. The on-site cellphone repair business succeeds by performing the repair directly at the Client’s locations and can be found anywhere there is a population density sufficient to make the logistics of the service profitable. The pioneer and legend in this business is Demetrios Leontaris, AKA: the iPod Doctor and this Doctor makes house-calls.

Demetrios operates out of New York City and specializes in performing cellphone repair at the Customer’s location. Typically this is an office but can be just about anywhere including a coffee shop, restaurant, apartment or even a home. The attraction of the direct contact for repair is based on:
- Overall Value- Even with travel cost the pricing is typically lower than any other source.
- Convenience- Hard to beat having the technician and parts come to you.
- Security- This is based on two key elements;
- First there is less chance of identity theft since the repair is performed with the Customer nearby, if not watching the work.
- Second the reputation of the business allows the Customer to have a measure of trust.

The framework of how this business operates will be new to most Reverse Logistics professionals who tend to be more familiar with delivering bulk repair at rates of 50K units a month. The key to understanding how this on-site cellphone repair model works is in understanding the critical importance of trust and reputation. For these shops the Customer typically pays based on reputation of the supplier selected. Demetrios is a founder of this business model and has performed repairs for folks in Homeland Security, local police and other officials in addition to regular folks. These Customers then post glowing recommendations documenting their satisfaction on his website. This well maintained reputation allows trust to be recognized as having value and this is reflected in the pricing Demetrios and other high performing suppliers can recover. For the Customer the notion of paying a few dollars more to have the assurance and safety of dealing with a well-regarded professional is a bargin.

Integral to the maintenance of a strong reputation are the parts and materials Demetrios uses. He only uses parts he can purchase locally were he can personally verify the quality. Demetrios told me that he learned early on that trying to purchase parts direct from China was not worth the time or trouble. Managing the quality and the importation issues was just consuming too much time compared to the value it was providing. He has now cultivated local suppliers that he knows personally and trusts. In effect re-using the same business model he pioneered by leveraging local suppliers selected based on quality and trust.

So what are the nuts and bolts of how this business works? Most of the companies are one-person operations. Most use a web-site or answering service to help qualify and schedule the repair calls. From this information the supplier will try to build a parts list and drive route for the day. At a minimum the suppliers try to have 5 calls per day. If the timing works out, as many as 8 repairs calls can be closed in a single day. As you might guess this is a business model that is based on 90% Apple products. This is the result of a product that has very repairable design with wide penetration and good parts availability. Demetrios describes the Apple products as very high quality. Most all of his repairs are electromechanical and the result of a combination of ‘use and abuse’.

For me, this is an amazing business model and a huge opportunity. In the current state we have a business model where Customers gladly pay a premium for quality, parts costs are retail plus markup, has very limited dispatch optimization and no branding-yet is profitable. Sounds like opportunity to me.
Bryant Underwood manages Public Safety Sourcing for Cassidian Communications, an EADS North America Company in Frisco Texas.

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