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

Month: June 2006

Newsagents slugged with June 30 oversupply

Newsagents arrived at their businesses in the early hours of this morning to, in some cases, two and three times the usual Friday magazine delivery. Like fuel goes up on the weekend and on holidays, the quantity of magazines supplied to newsagents increases on the last Friday of the month. Magazines delivered today have to be paid for in full in three weeks. Any which do not sell (usually between 50% and 80% of what is supplied) are returned four weeks later and a credit provided (often) a month after that.

Today’s oversupply is seen by many newsagents as a grab for cash. Magazine distributors will say they have no control over when publishers release titles. It does not matter who is right about the reasons, the fact is that the last Friday of the month sucks a ton of cash out of newsagencies and newsagents are the losers.

The titles of concern are those well out of the top 200 sellers. They are titles supermarkets, convenience stores and petrol outlets refuse to sell, titles which newsagents are forced to carry because of the out of date magazine supply model which the government did not fix when it deregulated newspaper and magazine distribution in 1999.

The oversupply today drains cash and resources from small businesses newsagents. It makes it harder for newsagents to actively promote magazines in the top 200. Publishers like ACP, Pacific, Time, FPC and Emap suffer because of the junk newsagents have been overloaded with.

0 likes
Newsagency challenges

Government puts its desire for commercial profit ahead of small business taxpayers

On June 7 I wrote to the Communications Minister, Small Business Minister complaining about the increasing competition aimed at newsagents by Government owned Australia Post stores. A copy of the letter can be found here. The Small Business Minister has responded with a brief letter handballing the matter to the Communications Minister and reminding me that Australia Post must act commercially. My complaint was specific and legitimate, drawing attention of the reader to three key clauses in the Act under which Australia Post operates:

I refer to my previous correspondence on the matter of Australia Post operating outside the provisions of Sections 14, 15 and 16 of the Australian Postal Corporation Act 1989.

I draw your attention to the June Relax…at Tax time with Australia Post catalogue published by Australia Post and ask the government to consider whether the sale of these items promoted within that catalogue is within the provisions of the ACT

In the letter I list sixteen items I consider fall outside the provisions of the Act.

Government owned retail outlets are taking revenue from small businesses like mine. They have given over 80% of their retail space to carrying stationery and other items which newsagents have sold for more than 140 years. Australia Post has been in this space for ten or so years and they have leveraged their government protected Post brand into excellent retail sales.

Newsagents are losing revenue and the government is not taking any notice. Their ownership of Australia Post and permission of it to compete with newsagents in this way makes a mockery of their small business policy.

The government line that Australia Post needs to operate to ensure its commercial viability really says that the government puts its ownership of these retail businesses ahead of the needs of small business taxpayers.

That they do not even have the guts to discuss and or debate policy with the channel their Australia Post business targets every day demonstrates a profound lack of interest in mum and dad businesses in Australia.

0 likes
Newsagency challenges

The battle for the classifieds

CBS News in the US ran a story last night about the impact of the Internet on newspaper classifieds. The full text of the story is here. For an extended video of an interview with Jim Buckmaster, CEO of Craigslist, click here. Here’s what Peter Zollman, a consultant to newspapers on classified advertising, had to say on CBS about the impact on online classifieds for newspapers:

“Publishers are, and should be, scared witless,” Zollman says. “Classifieds globally is a $100 billion a year business. A hundred billon dollars a year, and every nickel of it is in play.”

Disclosure: I own Find It, a start up online classified business inching closer to beta release in partnership with a network of newsagents.

0 likes
Media disruption

More lads magazine trouble in the UK

The UK House of Commons has before it a bill which calls for all sexually explicit magazines to be hidden from children. The target, according to reports, is what are called the Lads magazines. We face similar challenges here with Picture, People and ZOO Weekly and while our OFLC has guidelines, retailers like newsagents are not required to isolate the titles. With more than 1,200 titles in an average newsagency, the best that can be achieved is that the titles are put in the right location. No one seems to know what the right location is.

0 likes
magazines

People like cheap stuff from China

We were offered some product from China, really cheap stuff. Some items a little off the usual newsagency range. and others a good fit. After months of saying no we took the plunge. In just two weeks we have all but sold out. With a GP of 80% and a sell out in two weeks it makes one wonder about whether worrying whether products fit my view of a newsagency matters. Of course, the temptation is to take the China product drug again and again after that. But where does one stop? I suspect when it is too late. My feeling is that I will resist the temptation to turn my newsagency in to a $2 shop and use this imported product at selected times in the year to lure new customers and reward regulars with a good deal.

Many newsagents would not agree with me. They are pursuing more and more cheap product from China. This dilutes what newsagencies are and devalues the network.

If too many front their shops with cheap product from China we will nose interest to suppliers as the premium channel we are today for greeting cards, magazines, newspapers and lotteries. Suppliers like us for our focus and an addiction to cheap imported product puts that at risk.

0 likes
Newsagency challenges

Super syndicate bonanza

Well, not quite. We leveraged the OzLotto and Powerball jackpots this week into a super syndicate providing tickets in both draws – a $35 million prize if we’re really lucky. The syndicate sold out in record time. So did the next. People like to dream and the key is to make the dream opportunity spectacular.

We love lottery syndicate customers as they browse longer and spend more on other product.

Footnote: OzLotto did not go off last night making another great trafic generator for newsagents for next Tuesday. Note suppliers – Tuesdays are no longer a soft retail day inn newsagencies.

0 likes
marketing

Magazine loyalty card success continues

magcard-blog.JPG Twenty two months after we launched Australia’s first magazine loyalty program it continues to power extraordinary growth for us. To the close of business yesterday (June 26) magazine sales were up 16% for the same June period for the same store a year earlier. This is extraordinary growth by any measure. What started in my shop is now offered nationally through the newsXpress retail group. It has also been copied by many individual newsagents and two marketing groups.

The Magazine Club Card I created promotes the whole category. The average redemption costs $5.00. The program itself has a cost of under 2% of total magazine sales so with growth of 16% plus add on sales in other categories we continue to be well ahead.

Customers reward themselves with the free magazine. They often tell us that without the program they would not get the free title chosen. Australian Women’s Weekly is the most redeemed title – customers tell us it’s nice to have the luxury of it without spending anything. In reality, with the way we run our loyalty program, they are spending more on magazines in our store. There’s no doubt we’re pulling some sales out of supermarkets nearby – but not enough for them to notice.

The keys to the success of this loyalty program are: it’s simple; there is no registration; if provides real rewards (and NOT points); we delight in giving away the free magazine.

0 likes
magazines

Perth Now the new Perth daily

Newsagents seem unconcerned with Perth Now, the new News Ltd daily which has launched online. Maybe ignorance is bliss. The move by News is further evidence of the shifting sands in the world of newspaper publishing. This weeks MediaWeek has a good story about Perth Now. As MediaWeek points out, Perth Now will raise the News profile in Perth. It also gives News a place to play away from the spotlight of the eastern seaboard.

0 likes
Media disruption

Tattersalls encourages online over offline

When asked, Tattersalls says that pursuing online lotteries sales is not a key focus. They tell their Accredited Representatives that their bricks and mortar network is their key focus. This email from Tattersalls last week to registered online players suggests otherwise. It illustrates their preference for promoting online purchase over the local Tattersall’s Outlet.

tatts-3.JPG

I accept that Tattersalls needs to promote the purchase model which best suits their share price. I would prefer more open disclosure to their outlets so that they, too, may plan their business development accordingly.

0 likes
Newsagency challenges

Social media beating old media

From the Church of the Customer Blog comes a comparison by Ben McConnell between traffic to the New York Times site and YouTube. The New York Times has been around 155 years. YouTube is six months old. The graph of traffic speaks for itself.

graph_1.png

As McConnell says: “comparing the two is like putting Pamela Anderson up against Margaret Thatcher”. Maybe. The reality is that YouTube is getting the traffic and advertisers like traffic.

What consumers want from the media is changing. They are seeking engagement beyond voting someone off a reality TV show or voting in a half-baked newspaper poll. Social media like YouTube is the new game in town and mainstream outlets will need to move quickly if they are to attract the kind of online traffic advertisers are looking for. Every day, legal issues notwithstanding, the News Corp. purchase last year of MySpace seems prescient.

0 likes
Media disruption

Magazines In The Digital Age

Staci Kramer, Executive Editor at Paid Content has written about the online strategies of new magazines. Staci asks: Does starting with a blank slate make it easier than integrating digital with existing magazines? I’d say, yes. Here in Australia magazine startups in the last year which have arrived with a well executed online strategy include Explode (magazine closed and website lives for now), Cosmos and Zoo Weekly. These new titles have developed their online models with ease not matched by more established titles.

Just as online needs to be a key part of a new title launch, it can also play an important role at the end of print life. Many small print run specialist titles could be more profitable for all concerned by moving from a print model to online.

0 likes
magazines

Reissue of magazines

Consider this for a business practice. A magazine title is distributed to newsagents and copies not sold are returned for a credit. Some weeks or months later, the same copies which were returned (or new copies printed) are reissued, even if the sales of the original issue were low. This happens regularly to newsagents. Occasionally sales are such that a reissue is warranted. Usually this is not the case. Reissue titles cost newsagents cash, real-estate and time. They are another barrier to newsagents spending time on the growth titles in their businesses. I saw an example of a reissue today where the newsagents initially received 20 of a title and returned 15. Now, a few months later, the same issue is back with 25 copies. Where is the logic in that?

0 likes
Newsagency challenges

Telstra/ACMA block access to directory data

Telstra is required to provide access to Yellow Pages data. We have sought access to this data and have been told by Telstra:


Thank you for your enquiry.

You may be aware that the Australian Communications and Media Authority (ACMA) will be promulgating an ACMA-developed IPND Standard which will replace the existing Australian Communications Industry Forum IPND Code. It is anticipated that, under the new IPND Standard, ACMA will be responsible for approving applications from prospective Data Users.

ACMA has therefore directed Telstra to not accept any new applications from prospective Data Users until the IPND Standard has been promulgated. Consequently, we are unable to progress an IPND Data User application at this stage.

We don’t care about the standard, it’s the data we need. A change to the standards will not, as we understand it, affect the data itself.

Having Telstra effectively in charge of access to the IPND data is like having the sweet tooth in charge of the candy jar.

0 likes
Uncategorized

Strong interest among newsagents for online classified start up

filogo.JPGOur online classified start up, Find It, has been attracting strong interest from newsagents with many already agreements in advance of our launch later this year. Many more have booked for launch events commencing next week. Newsagents are important to our business model as we see an opportunity to leverage their footprint to extend the reach of an online business.

Two or three of the 100+ calls from newsagents have concerned me. They say that every supplier is out to rip them off at some point so we must be no different. Our pitch is that they can become a Find It newsagent for no cost and they can opt out at any time. They see this easy approach as demanding a catch. While this response is in the minority, I had not expected it at all. One person I spoke with today says they prefer the sale or return over supply under supply tough trading terms approach of a magazine distributor because it’s what they have grown up with. They worry about Find It because “you want me to take initiative, at least with magazines I just put them there and if they sell they sell”.

While I am confident that Find It will deliver to newsagents new traffic and new revenue from a unique online classifieds model, the launch process is uncovering some newsagents who have lost the enthusiasm for building a business.

0 likes
Newsagency challenges

Mustang titles symtomatic the flawed magazine supply model

mustang.JPG Here are four of the Mustang titles we carry in my newsagency. Each takes a pocket of real-estate. Each has a sell through rate of 50% or less, some at 25% and even 0%. None is cash-flow positive. The performance of these titles is worse this year compared to last. Last year was worse than the year before. Through the course of a year I get more Mustang titles than these four. Consumer interest in Mustang titles is over satisfied based on what I, and I suspect other newsagents, receive. Given that there are three magazine distributors and no one taking a whole of market view of consumer satisfaction the Mustang and other fringe categories the problem will not be rectified. Newsagents carry the financial burden of this.

Car magazine sales are in decline. Newsagents would not know this based on the range and volume of titles they bare supplied. Magazine distributors have an obligation to adjust their supply model to reflect changing consumer interest. They also have an obligation, to work together to balance categories. While this would mean collusion, the alternative is what we see today and competition between distributors with each bringing in magazine titles of dubious value to newsagents. As long as magazine distributors profit from distribution rather than sales this problem will exist and newsagents will be the losers.

The more space taken on my shelves by oversupply in categories like car magazines and, specifically, mustangs, the less space (and time) I have for the main magazine game, the top 200 titles.

0 likes
magazines

Fairfax changes IT standards without considering newsagents

I own Tower Systems, software provider to over 1,300 newsagents. I also own one of those newsagencies. For more than 20 years my company, and other major IT companies in the industry, have been consulted about newspaper delivery fee changes well in advance of any change – to ensure newsagents can cope with the change. For the first time in almost 20 years Fairfax has released new delivery fees without consultation. The new fee structure operates outside the agreed IT standards. Either the software companies have to change their software to accommodate the Fairfax surprise or newsagents have to significantly bend their systems to cope. However, by bending their systems it means they use the system in a way that other data flowing from those systems back to Fairfax is unusable.

We are changing our software and providing an update without cost to our newsagent clients. We have taken developers off other work to do this. The total cost to us will be between $5,000 and $10,000. Given the lack of contact from Fairfax on this I see no point in asking for a contribution toward the expense they have imposed upon us.

The Australian Newsagents’ Federation announced the Fairfax delivery fee changes as they were involved in consultation about the matter for some time prior. It is a pity that they, too, did not consider that any newspaper home delivery fee change needs to work with well established IT standards.

If this were a change being imposed by Fairfax on a major trading partner then Fairfax would have approached the matter differently. It is disappointing that Fairfax and the ANF have been ignorant of the operational needs of newsagents.

It is worth noting that the folks at News are well organised when it comes to interfacing with newsagent software systems. Just a few months ago they took us into their confidence on changes before they were announced to ensure that existing systems work. This is how such changes should be handled.

0 likes
Newsagency challenges

Tattersalls feeds of newspaper traffic again

Tatts2.jpgTattersalls is a regular advertiser on the Herald Sun website. If you click on the Tattersalls ad you are taken to their lotteries online service. Newspapers and lotteries are by far the biggest traffic generators for newsagents and newsagents have returned the favour with more than 100 years of faithful low cost service. Tattersalls grew in Victoria on the back of newspaper driven traffic to newsagencies. Newspapers are repeating history in redirecting offline lottery sales to the Tattersalls online business.

0 likes
Newsagency challenges

Gotch pressures newsagents on trading terms

Gordon and Gotch has surprised many newsagents with a letter this week advising that they need to pay Gotch by the 20th of the month.

Historically, Gotch has been flexible when it comes to payment, acknowledging the challenges of cash flow for newsagents who have to pay for all stock received even though often half or more received and paid for by newsagents does not sell and is sent back the next month for a credit. Newsagents have been grateful for this consideration.

The letter from Gotch this week represents a change to the terms implied by Gotch’s own trading practices. Many newsagents will see this as an attempt to alter accepted business terms.

When you remove the popular Pacific Magazine titles (New Idea, That’s Life, Famous and Better Homes and Gardens) delivered by Gotch, the Gotch returns rate jumps to above 60%. We know from the magazine cash flow research that Gotch supplied (non Pacific Magazines) product is cash flow negative in 50% of newsagencies. Given this, it is unreasonable that Gotch takes away payment flexibility it has offered newsagents for years since it would force newsagents to pay for product they will loose money on.

At least Gotch ought to have approached the change to terms with greater sensitivity and at best they should not change their practices.

Newsagents make 25% from magazines. They lose around 3% in theft, 11% in wages and between 8% and 11% in rent. The numbers do not add up. This is why the pain of any change in trading terms will be significant.

0 likes
Newsagency challenges

Free Newspaper action

This story at Mediaweek about News International moves to launh a free daily afternoon newspaper in London.

Free Daily Newspapers reports that free dailiye have reached a circulation of 25 million this year, up 49% on 2004. In Europe circulation of free dailies is up 58%.

Australia’s most successful free daily is the News Ltd’s MX.

0 likes
Uncategorized

How to starve a newsageny – cut New Idea supply by 25%

My New Idea supply has been cut by 25% without warning. The new supply quantity is less than I sell on a usual week. We will be sold out from early morning today leaving us five days without New Idea on the shelves. Our return rate from the last 12 issues has averaged just under 20% so I can understand a supply adjustment of, say, 10%.

If newsagents are as important as Pacific Magazines claim, they would not use a supply model which inflicts such a supply cut. The more appropriate approach would be to advise us of a planned cut of no more than 10% and to allow discussion. I could point to last week when the Brad Pitt Angelina Jolie baby edition sold out on the back of 10% more stock. Had they asked my opinion I would have also advised that they delay any cut until after school holidays as we traditionally sell out at those times. School Holidays started two days ago.

Elsewhere in my shopping centre the supermarket shelves are loaded high with New Idea. Customers who cannot get their fix from my shop with go there and maybe I will lose some for good.

It is decisions like this which are killing the newsagency channel in Australia. The New Idea decision is starving my business of vital oxygen this week.

UPDATE (11am): Pacific Magazines responded quickly and delivered enough New Idea stock today to see the week out. They are researching the initial supply cut. I’m happy to have the stock on the shelves.

0 likes
magazines