In late 2011 the ANF invited me to be part of a magazine summit they hosted in Sydney with the state newsagent associations. The purpose of the summit was to develop a plan of action to confront the on-going issue of magazine oversupply to newsagents in Australia.
I was there for three hours to share my thoughts and provide an insight to the data available to support claims of oversupply. Others to participate included the magazine distributors although I was not for their attendance.
I understood that the ANF and one or more of the states would assist some newsagents through a test case to lay out a path for others. I have not seen any such action taken.
Here is what I proposed to the meeting.
ASSEMBLE THE FACTS
It is one thing to think you are oversupplied with magazines and another entirely to have proof. If you do not have proof that will stand up to scrutiny there is no point is pursuing the matter.
You can’t have proof that will be acceptable if you are not loading electronic invoices from the magazine distributors and scanning your returns with accuracy. This is important because at some point in pursuing your claim you will have to confront the other side, one or the other or both of Gotch and Network.
If your data is accurate and your processes are right then you can use your Magazine Sell Through Rates Report if you are using the Tower newsagency software used by 1,850+ newsagents or a similar report from any of the other software companies. This report shows the percentage of what you have received that you sold by title by month. This report shows if you have been oversupplied and over what period. The sell through rate calculation was developed through discussion with the magazine distributors to avoid a fight over data.
Before you start any action or complaint, read the contract you designed with the company you are about to go up against – read it and think about what you agreed to.
PREPARING YOUR CASE
If your data shows that you have been oversupplied you need to work out what you want. I am serious. If you are going to make any claim, in any forum, you need to be clear in what you want from a mediation or a case. A registrar, mediator or judge will want you to be clear in articulating what you want. So, if you are being oversupplied, what do you want?
MOUNTING YOUR CASE
Where you make your complaint will differ from state and territory to state and territory. My suggestion is to start with an entry level forum like a Small Business Commissioner. In Victoria I have used the office of the SBC to resolve a several issues. It’s inexpensive and informal. It also shows the other side that you are serious about resolving the dispute. Also, it can be a reasonable precursor to more formal action of the matter is not resolved.
Here are the entry point places where I’d mount an initial complaint for mediation / resolution by state:
- Victoria: Office of the Small Business Commissioner.
- NSW: Small Business Commissioner.
- South Australia: Small Business Commissioner.
- Queensland: Queensland Civil and Administrative Tribunal.
- Tasmania: Magistrates Court.
- Western Australia: Small Business Development Corporation Dispute Resolution Service.
- ACT: ACT Civil and Administrative Tribunal.
- Nationally. Australian Small Business Commissioner.
However, don’t rush to make the complaint. Make sure you have your evidence, that you know what you want as an outcome and what you will do if mediation fails.
I’d be glad to help any newsagent through this process. It’s important to me that newsagents and the channel approaches more broadly approaches the matter of magazine oversupply thoughtfully, professionally and without emotion. Mounting an ill prepared, undocumented and emotion-charged case will not help those involved nor the channel more widely.
Each case will be unique. It needs to be from you, in your own words. Your local entry point can usually help you prepare your complaint. Just lodging the complaint will pressure the magazine distributor involved to be present for a mediation usually in your capital city or nearby. In some jurisdictions the numbers of complaints against companies are noted in reports to parliament.
WHAT DO YOU WANT?
You never go into any legal or quasi-legal fight without knowing for certain what you want. When it comes to magazine supply, I suggest that newsagents want one or more of:
- Fair and equitable magazine supply.
- Supply based on sales data provided according to and in time with industry standards.
- Control over the level of indebtedness to magazine distributors the newsagency incurs.
- Levers with which I can grow magazine sales.
- Mutual respect in supply and return management.
SO, STARTING
If your reports show a sell through of less than 50% I’d suggest you might have a reasonable case to mount. If you decide to do this you will need to be prepared to fight for the long haul. You will need to be prepared to sit across the table from people better resourced and probably more articulate than you. You will need to have a thick hide and be prepared for them to play the person and not the issue. You will need to be prepared to be public about your fight so that other newsagents can support you.
Here are some questions and answers:
Why should individual newsagents mount their case? My experience in business is that
The distributors are bigger? For decades newsagents have felt and acted helpless. One day someone will act and show the way forward.
Will government won’t care? The organisations I suggest in this post have been established by governments to provide low cost and structured places where disputes like these can be resolved.
What is publishers hate me? Who cares? They are part of the magazine distribution process and play a role in oversupply.
I am too small why should I do this? If you do suffer from oversupply and complain about it, you need to have the guts to act on your complaint or stop complaining.
How can the magazine distributors Gotch and Network avoid this? Stop oversupplying. It’s a behaviour they knowingly engage in. This is my preferred outcome – that they voluntarily supply based on the accurate sales data we provide.
Why have the associations not done this? You’d need to ask them. Magazine oversupply is the issue newsagents rate as the most important they currently face.
FOOTNOTE: I will help any newsagent as much as I can to deal with magazine oversupply. Call me on 0418 321 338 or email me.
This is great advice Mark, I would be interested in a few months to know how many newsagents acted on this.
Not wanting to sound rude but I bet not a lot will.
I know I for one won’t.
Time is one of the reasons, I run the shop by myself and I am spending more of my time trying to do a better job in other areas of the newsagency.
The other reason is even though oversupply is a problem I cope. I am more concerned about lotteries going into supermarkets, but I’m not losing sleep on that either, if it happens it happens.
We have always had and I think always will have a problem with oversupply but we manage it with our software and apart from physically tiring ourselves at times topping all these returns, we cope.
Sometimes we get too much and it’s a shit day getting all these magazines marked, put out and returned, but it’s only 2 days a week now and I think that has helped.
If it was up to me to pick and choose what magazines we receive I would probably loose some magazine sales as I’m often surprised at what customers buy.
Under supply bothers me more at times as I see that as lost sales and if there is no more stock there is absolutely nothing that I can do about it.
And sometimes (currently) retail is just quiet and magazines like Better Homes and Gardens don’t move but next month might be different so why mess with supply.
Thanks jenny. This is why I offered to help. I want newsagents to now that there are resources available to help them navigate the paths outlined.
I agree with Jenny. In the main I cope and i early return and sometimes i gain “revenge” by early returning 2 days before the end of the month. I manage my cashflow thru returns. Sometimes to the detriment of sales because I have to.
I also manage my business and progressively I reduce pockets and reliance on magazines for my profits.
Magazines make up 25% of turnover excluding agency sales but less than 10% of gross profit.
Labour involving magazines both bringing in to stock and returns, labeling and claims cost, tops taken off, ridding the waste etc(we wont mention partworks) may well take 10hrs per week which in my case would take care of most of the profit. I am probably using magazines as a “loss” leader right now and scared to lose some of those customers I may upset by not carrying their favourite.
I see the problem as “theirs” as eventually we wont sell most of the magazines. We will pick the eyes out of it as Coles does and to hell with the rest. What the hell we are told that print is dead anyway so why keep on flogging the dead horse.
It is the publishers who need to address the problem if ultimately they want to sell magazines for a long period of time through their only existing channel. If they believe they have a viable industry then they need to address the issues of the only channel that supports them. That channel is progressively moving on because it is not viable in the long term. Oversupply is speeding up the process of making magazines non viable. The big guys will not be interested in selling their magazines. The distributors also need to look at their business as they will have no one to distribute to when they are only required to supply Coles and Woolies.
I wont be wasting my time on magazine over supply. I am fixing my problem by reducing my reliance on magazines.
my understanding is that the ANF does not believe there is an oversupply issue.
I know NANA invited all newsagents to supply the information so NANA would assist to take it further, but as usual, newsagent apathy prevailed. I think the offer is still there
Jenny & Wally, I hear what you are saying but why should we put up with this any longer. Imagine the time saved in your stores if you recieved fair and equitable supply. I would imagine that we would all probably have some enthusiasm for magazines if the right allocations were being delivered. Imagine the extra time we would have to spend on other areas of our shops. I like magazines, I think there is still money to be made from Magazines but I worry about their future with the current distribution model. I think its clear that the Associations, Distributors and even some Publishers arent going to fix this…….why not us Newsagents fix it then?
Allan, newsagents can make changes but individually, not as a group.
I also believe publishers should listen to newsagents and act because they are the ones who have more to lose at the end of the day.
Don’t get me wrong I love my magazines, I see them as one of the most important areas of any newsagency and like I said we cope, but for those who have a bigger problem with oversupply they need to follow Marks advice and do something about it, not wait for someone else or some association to fix it.
One reason I have published this advice is to show publishers that newsagents have options on dealing with this oversupply problem. When newsagents haul distributors to mediation is when we will see consideration for change in the supply model.
What I want to know is why advertisers (especially the bigger ones) dont push the publishers for a change in the payment model for ads so that payment is based on # of copies sold, not # of copies produced?
I feel that we need a united set of requirements for the distributors before they will listen to us. Whether as a group or as individuals we attempt mediation, we need a consistent message as to what our requirements are. I’ve started a group to discuss this in one place. If interested please go to https://www.facebook.com/groups/169383069926537/
This sort of thing is new to me but we need to take control of this situation our selves rather than leave it all to Mark and hopefully this provides a forum to come to some consensus on what we need. A united message may get through to the distributors and if not I would hope that a consistent approach at any mediation would prove stronger and more successful. Any one interested?
What magazine oversupply needs is for a newsagent to kick off taking the action I have outlined. It does’t matter what we think we want, until someone takes formal action it’s all noise.
It seems that the suppliers have a divide and conquer attitude. We are not a united group. For instance where else do we communicate regularly other than on this blog. No Newsagency chat on Facebook for instance. We have no way of being really in touch and airing our views on a daily bassis. There are so many ways we could be helping one another. Where to get the best buys etc. We even have newsagency against newsagency as I had recently supplying a super market in my area in a round about way and knowing full well where the paper and mags were going. ANF helped solve this issue but it just shows we are not a loving happy family.
Carol that’s what the good marketing groups facilitate. On this magazine issue, newsagents need to act individually as the associations are not.
I have just arrived my mags for IPS through xchangeit and noticed that they (without any phonecall from me) have increased my Best Bets and Winning Post for the Melb cup next week.
I requested an increase a year ago and this company can manage to ensure my supply for this year so WHY CAN’T THE OTHER COMPANIES DO THE SAME.
I find IPS the easiest company with whom to deal by a minute.
Their product is always well packed and the deliveries executed with very little followup needed
Surely magazines over supply is a direct consequence of excess production. Its basic economic theory that applies here I would think.
You just can’t blame the distributor for the excessive production by publishers unless the distributor overstates sell through rates in order to increase their business volumes.
Yes the distributors’ allocation process isn’t perfect by any means but I think the issue is the publishers printing excessive quantities to make their publication more attractive to potential advertisers in terms of reach or exposure.
Shooting the messenger instantly comes to mind here.
Do advertisers understand that probably 50% of their paid advertising is never seen? They are probably paying twice as much as they should be.
Publishers overstating the importance of their product and using that to entice clients into a contract would have serious potential implications I would think.
Mark…has NewsXpress gone down this path with its members?
Mark, personally I think your comments here are great, but as usual nobody wants to do the work. The BIG risk for anybody is that nobody will support anybody who does do the work.
What you have outlined here is great. The hard work has been done. It is a matter of going through the process properly, and as you have said, do not rush.
Your BLOG showed how united the industry CAN be at times of self interest. Fairfax Media’s attempt to introduce extra workload onto newsagents with “The Guide” is the perfect example. Interest is high when the issue effects agents at the time.
Unfortunately most agents / individuals have the attitude of its not affecting me right now, its not my problem.
If a single agent were prepared to take on a magazine Distributor or Newspaper Publisher those companies would run them into the ground and out of business.
As a group, changes can be made. Regional boycotts are possible, and other actions are possible. Results CAN be achieved instead of putting up with a bad situation.
I challenge other Newsagents to do something, and stop talking.
Ted, it’s not what newsXpress exists for. That said, newsXpress has had success in reining in magazine supply taking a structured approach with and for its members.
Amanda, the best thing is for newsagents to follow the process I outlined. The sooner distributors are in a formal forum the better.
Perhaps these sorts of issues are not what marketing groups exist for.
But, is this the only real way success can be achieved quickly?
The ACCC recently (Oct 17th) granted Office Choice members and franchisees the ability to collectively bargain with office products suppliers.
It would seem to me an avenue that marketing groups could go down.
Alternatively, what’s to stop a group of like-minded agents in a particular region doing the same thing using the process you have outlined above?
Collective bargaining is not mandatory. Oversupply has been here for decades. I don’t see a pint in chasing a quick fix.
I am not trying to be difficult here nor am I trying to control what newsagents do. The path I have outlined gets a newsagent and distributor into a legal forum with a structured process pursuing resolution.
I like magazines too and i think as Mark so often says they are our point of difference but to often it is just to damn hard.
Why do I see Network and GG as the enemy and yet most other suppliers as my friends?. There is an attitude there thats why. And may I say it is not the staff in those organisations because most of the time I have been treated well and politely by the individuals. There is a perception of arrogance that this is the way it is done and the way it was always done. the master and the servant. These organisations probably do more harm to magazine sales than anything else in the system. We are forced to deal with them. Individually we are all probably getting out of mags in our own way to avoid the constant confrontation. the publishers and the distributors need to address this for their own businesses sake.
Wally, one day the publishers will ask what went wrong? The blog posts and comments here will tell them. Indeed, we are all telling them today – but they are not listening. The situation could be so different.