A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Month: March 2006

Newspaper flat wrap home delivery trial

I was fortunate to see a presentation from Simon Coulter, a newsagent in Queensland, on the trial he has been participating in with News Ltd in the delivery of flat wrapped newspapers. Simon was speaking last week at the Queensland Newsagents Federation state conference. Simon has declared flat wrap a success and he’s sticking with the $15,000 flat wrap machine to prepare newspapers for his home delivery customers.

Simon compared the flat wrap machine to a half fold machine and the more traditional tightly rolled machine. The flat product, while slower to deliver, resulted is considerably superior consumer experience. The newspaper is delivered to the home as good as it was coming off the press.

The key issue is one of cost. Flat wrap is more expensive in terms of equipment needed and the labour required at various points along the way. The current newspaper home delivery fee structure controlled by the publishers does not provide enough for most newsagents to make money with the lower cost rolled model let alone coping with the higher costs of the flat wrap model. If the fee structure can be addressed consumers cold be closer to flat wrap newspapers arriving on their front lawn.

I’m glad that News Ltd has facilitated this trial. It’s now time for action of the delivery fee structure so that newsagents with larger deliver areas can make the move to a flat wrap model if they choose. It is anachronistic that publishers control the delivery fee newsagents are able to charge and that this fee is set at the state level.

The big questions about flat wrap home delivery of newspapers are:

Who owns the delivery package? Will newspaper publishers allow newsagents to deliver other items in the bag?

Where will flat wrap paper have to be delivered? Will the driveway or just inside the property be acceptable? Or, will a doorstop delivery be required?

Will newsagents be allowed to have overprinting on the bag?

Will newsagents be allowed to deliver more than one newspaper per package?

Will newsagents be allowed by newspaper publishers to charge more for the service?

I like flat wrap delivery of newspapers. As long as the rolled product is delivered I will not get my papers home delivered. As soon as my local newsagent bring flat wrap in I’m happy to sign up. To me, it’s all about the consumer experience.

Publishers ought to allow newsagents to generate additional revenue and to charge a premium fee and reward newsagents based on sales growth. The right commercial levers will see flat wrap as a success story in suburban situations where it’s use is most appropriate.

Will flat wrap sell more newspapers? I doubt it. However, it improves enjoyment for consumers and this will stem sales losses and facilitate switching casual purchase to home delivery.

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Newsagency challenges

More UK lad’s magazines moving to the top shelf

The National Federation of Retail Newsagents has now published its guidelines for handling magazines with covers which may be offensive. Given the negative feedback some newsagents have received from customers on Explode, Picture, People, FHM and Ralph, it would be appropriate for Australian industry associations to consider similar guidelines or to at least discuss the situation with publishers. I’m not sure what I would do. I have had customers complain to me but then if I hide the titles I know sales will tank. It’s a challenge but cannot be ignored.

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magazines

An update on the Australia Post magazine rumor

The rumor I first reported here several months ago speculating that Australia Post is investigating publishing a weekly magazine has made its way to me again. This time the suggestion is a monthly targeted at women – maybe leveraging an existing title? I think the rumor is part of the Australia Post strategy to gain magazine publisher interest in carrying magazines in Post Offices. Someone in Minister Coonan’s office needs to read the Act again, especially the section detailing what Australia Post can do.

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Newsagency challenges

Another publisher says embrace the internet

Mike Burgess, the wireless editor of London-based Emap Interactive, is quoted in this MediaWeek story (subscription required) as saying that an online strategy is crucial for magazine publishers. He outlined three key areas of a successful multimedia strategy: community, customization and user-generated content. This is exactly what we are seeing in Australia with successful online strategies from magazine publishers of titles such as Vogue, Explode, Better Homes and Gardens, ZOO Weekly and FHM.

I know of some newsagents who would rather magazine publishers ignore any online activity. My view is that it’s important for the brand and in most cases will not, in the medium term, take sales from retail. In fact, watching online activity is providing my shop with opportunities for in-store tie-ins since we have an internet terminal and can use this to connect the online with offline.

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magazines

Newsagents and magazines

Helen Kingsmill, Executive Director of the Magazine Publishers of Australia, has written a good piece for The Australian today about new magazine management guidelines for newsagents. The MPA project is important in that it provides newsagents structure for magazines in their shops. Given the vast range of titles in newsagents (compared to any other retail outlet carrying magazines) structure is crucial. The project also breathes life into the range which retailers competing with newsagents choose not to carry. The challenge now is to get newsagents to embrace the strategy and reinvent their magazine story. I was the first to implement this strategy when it was a trial in my store in 2004 and am certain is part of the reason for our above average success with magazines.

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magazines

Australia Post April catalogue pushes the boundaries

While the Federal Communications Minister, Senator Coonan, is busy promoting the government’s proposed media ownership changes, Australia Post, another of her responsibilities, continues to stray further from the functions allowed for under the Act. Their April catalogue (click on the picture below) offers a teddy bear, laser printers, home office stationery, pens and plenty of other items small business newsagents and small business photo shops sell. There is little in the way of postal related product.

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Government owned Australia Post retail outlets are hurting small business with catalogues like this and it is an indictment against the government that it allows its corporation to operate unchecked in this way.

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Newsagency challenges

In the US, 50 million now get news online

An insightful new report from the Pew and Internet Line Project. From the introduction: “Over the last four years, overall internet penetration rose from 58% of all adult Americans to 70%, and home broadband penetration grew from 20 million people (or 10% of adult Americans) to 74 million people (37% of adult Americans).” It would be good to have access to similar research for Australia.

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Media disruption

Activity masks Herald Sun price rise

A few weeks ago it was a huge sales kick from the Simpson’s Pins, for the last two weeks it’s been Commonwealth Games coverage and promotions, last week the new issue of Alpha, the co-purchased sports magazine, was published, this week the AFL sticker promotion starts and on Monday this week the cover price went up 10 cents. It’s been a busy time for the Herald Sun. Their marketing effort will ensure there is no erosion in sales as a result of the cover price increase. All the marketing activity ensures consumer habit/loyalty. Even though newsagents only get 2.5 cents of the 10 cent price rise, it is the first such rise for the Monday to Friday paper in seven or eight years. It’s no surprise therefore that customers are not fussed by the increase.

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Newspapers

We fail non-English speaking newsagents

Chinese, Malaysian, Singaporean, Vietnamese and Indians are buying more newsagencies yet suppliers, industry associations and newsagents fail to adequately embrace them. This failure leads to a disconnect with the channel, its best practices, traditions, and the community it serves. I estimate that more than 20% of newsagents are of a non-English speaking background yet my software company, Tower Systems, is the only industry supplier to actively embrace them and provide non-English services. (We provide Cantonese, Mandarin and Vietnamese speaking support and services.)

If industry associations, suppliers and newsagents believe that the channel is unique then they must actively embrace non-English speaking newsagents and bring them closer to the fold. This means offering access to services in languages other than English, employing staff to serve this need and spreading the passion of the traditional newsagency.

Failure to act fails not only the newsagents but also the communities they serve.

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Newsagency challenges

Newsagents: great for the seasonal experience

Easter is approaching fast and newsagents are embracing the season like any good retailer. It’s our connection with big seasons which bring people back in who may not have visited for a while and this is an opportunity to remind people about our magazine range and other points of difference. Take a look at one of our window displays:
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Newsagency challenges

Copying is flattering but not great for business

I’ve been chronicling here the success we have been having in my newsagency with the magazine club card which I developed and implemented a year and a half ago. This was the newsagency channel’s first magazine based loyalty program. It’s been a huge success and I’m aware of close to 100 newsagencies running the promotion. The newsXpress group, of which I am a Director, adopted the program in October 2005 and launched it a month later. I just found out that the Newspower marketing group is about to launch it’s own magazine loyalty program. While I wish newsagents well with the Newspower program, I would have liked to see them offer a point of difference in the loyalty stakes. The more the newsagency marketing groups copy each other the more diluted the offering becomes. If the Newspower offering is similar to what I created I’ll start looking for new playing fields.

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Newsagency challenges

Fairfax could learn from News Ltd

The doubts I expressed here about Alpha here months ago have proven to be unfounded. Sales are strong despite a requirement that it is only sold with the local News Ltd tabloid. Key to the success of Alpha is its placement next to newspapers and the $2.00 cover price. Even convenience stores are compliant with placement. Fairfax could learn from this strategy with Smart Investor. Placing Smart Investor next to the Australian Financial Review, The Age or the Sydney Morning Herald in addition to the newspaper display will boost sales. The challenge is to provide display units which create such space next to these newspapers. I’d also contemplate a lower cover price to make the purchase of two titles more enticing – even though this could be frustrating for newsagent employees at the counter.

The data I am seeing suggests that Smart Investor has a sell through rate of 20%. This is unsustainable for newsagents.

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Newsagency challenges

Vodafone cuts newsagent commission and expects help

Vodafone cut the commission newsagents earn from selling their recharge product by 37% a few months ago to 5% yet left Coles at 16%. Now they have a promotion with the Herald Sun and expect newsagent support in handing out this lanyard and guide to Melbourne for the Grand Prix.
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I heard of a newsagent who conveniently lost the box of Vodafone material. We’ll hand the stuff out in my shops, but begrudgingly. Vodafone has treated newsagents appallingly while sucking up to Coles. Vodafone customers need to understand how this phone company treats small business versus big business.

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Newsagency challenges

2006 AFL footy tipping competition

My software company, Tower Systems, is hosting an AFL footy tipping competiting and you’re wlecome to join. Entry is free. First prize is $500.00; Second $150.00; Third $50.00. If you want to join the competition follow the instructions below:

1. Go to the Tower Systems website and click on the footy tipping link at the bottom or go direct here.
2. Click on Join, at the top of the menu on the left hand side of the screen.
3. You will then be asked for a password to join, which is ‘tower’ and click on OK
4. Enter in your details and click on Submit Details. (Note you only need to enter information on the fields highlighted with an *)
5. Make sure you note down your username and password so you can enter your tips!

Each week go to the Tower Systems website click on the Footy Tipping, log in and enter your tips. Here are the rules:

1. Tips must be in by 5:30pm EST on the evening before the first game of the round. (Either Friday’s or Thursday’s) .
2. You must be a Newsagent, work at a newsagency, or be a friend of Tower or reader of this blog to be eligible to register.
3. All eligible users must register before the start of the season (the first game is on Thursday 30th March).
4. Have fun.

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Uncategorized

Zoo, FHM and Loaded moved to top shelf

The UK Home Office and the National Federation of Retail Newsagents have reached agreement that Zoo, FHM and Loaded should be placed on according to this report at M&C News. It will be interesting to see if self regulation works for these titles.

Here in Australia, Zoo, People, Picture, FHM and Ralph are regularly browsed by boys under sixteen and it’s a challenge for newsagents to police. While it’s not our job to be censor, that boys can so openly browse the material is offensive to other customers. Explode is another title posing challenges for newsagents. I hear of complaints each week from customers offended about it and while from a publisher perspective any controversy is considered good for sales, the reality is that sales are not good. Any title upsetting customers have to be profitable to remain in public view.

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magazines

Newspaper subscription promotion

I was surprised to discover The Age promoting subscriptions in my shopping centre this week with a giveaway of their newspaper. blog-age.JPG
So, on this same level, The Age is available from our shop, Coles and Safeway at full price, Starbucks for 50 cents and from The Age subscription offer stand for free if you sign up for home delivery.

While I am grateful for The Age promoting home delivery I don’t want to lose an existing full price direct customer to a cut price indirect deal (meaning less money for me). I also wish they were providing something else as a gift rather than the newspaper.

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Newspaper marketing

Newspapers and online classifieds

Ben Compaine has written an excellent piece across at Corante (an excellent unbiased source) discussing how newspaper companies may respond to the continuing fall in advertising revenue. Of course, newspaper companies are responding. One only has to look at their spend in the last year. Locally, Fairfax and News have been very active with their cheque book. Their acquisitions make sense for them. I continue to worry about newsagents in that their channel was created by the publishers and continues to be treated in a servant like manner in key areas. Newsagents ought to have the freedom to develop their own entrepreneurial skills and they ought to be rewarded for success.

The Corante article is interesting in the context of the AAP story yesterday reporting that SEEK feels that online employment revenue could pass print in 5 to 10 years. I’d put my money on less than 5 years. Current online employment advertising is expensive. My companies have used SEEK exclusively for more than six years and while the service is excellent, a charge of $135.00 plus GST does not respect the operational cost model of the Internet fairly. But that’s a discussion for another day.

While newspaper publishers continue to pour resources into their online classified models, they would do well to invest in reinventing the print model if only to slow the impact of online. Australia, through its unique newsagent channel, would be an ideal place to experiment with an alternative newspaper classified offering. Engaging with newsagents on this could leverage a needed viable life extension.

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Newspapers

Newsagents not interested in home delivery consolidation

I’ve proposed merging my newspaper home delivery business with those of newsagents near mine along the lines of the business plan I posted here some months back. I’ve failed. The only newsagents interested in amalgamating territories in a shared equity model in Victoria are too far away from my territory. Disinterest among newsagents to drive change in newspaper distribution seems to be a national challenge for the industry.

I’m concerned that if newsagents don’t act to create a new distribution model in the next few months they will lose the opportunity and have significant business consolidation changes imposed on them.

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Newsagency challenges

Getting ‘cut through’ with newsagents

Suppliers to Australian newsagents often complain at the difficult at achieving compliance, traction, engagement, cut through – call it what you will. As a newsagent (through my software company) and a newsagent I see both sides of such communication. In a typical week an average newsagent receives more than 120 communications requiring some form of considered response. I do not include advertising flyers, invoices or statements in this list. No, these communications are phone calls, emails, faxes and letters asking for data or some in store action in relation to a product. While most are a necessary part of business there is a certain overlap which causes newsagents to duplicate effort. Further, being small businesses, newsagencies rarely have the manpower necessary to allow for delegation.

Having considered a full week of communication I suggest that suppliers could boost their ‘cut through’ by making communication simpler, provide context for the action requested, don’t over explain and focus on the payoff for the newsagent as a result of compliance.

I’d also like suppliers to work together on streamlining such communication – delivering this through a single channel rather than today’s complex and duplicated approach. Doing this would reduce time involved and free newsagents up for compliance activity.

I’m speaking from personal experience here. We achieve rapid compliance across 1,100 newsagents with software updates by following the newsagent communication guidelines noted above.

Some newsagents will not take notice of action requests no matter how efficient or clear they are and these are being left behind by others.

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Newsagency challenges

Bill Gates on the future of media: it’s all about the tablet

Bill Gates made some fascinating comments about the future of media yesterday as published in The Independent. Consider this quote from the article:

“The tablet is the place where it can all come together,” he says. “I definitely see the tablet, whether it’s textbooks going digital or the newspaper going digital or magazines going digital, I see the person with that very, very thin, – we don’t have it yet today – very inexpensive, high-bandwidth, wireless device… where a lot of the print and video consumption will take place.”

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Media disruption