A group of newsagents met in Perth Wednesday night to hear a pitch that they invest money money, rumoured to be $3,000, to fund the importation of pens and some other stationery items from China for their businesses.
The pitch to newsagents is that the imported stationery can be marked up 200% to 300%. The promotional information mentioned the China products as competing with products from Pilot, Papermate, Bic and Uniball. It suggests newsagents consider increasing stationery sales and increasing gross profit.
While increased gross profit is enticing, it is not the only benefit newsagents should consider when assessing supply options. Newsagents are supported by the ilot, Papermate, Bic and Uniball brands with in-store collateral, in-store rep visits, out of store marketing, newsagency channel event support and other activities that support newsagents and drive traffic to their businesses.
The financial support for newsagents by branded pens and stationery is considerable.
This China import strategy seeks to replace the brand name products with unbranded products and give newsagents margin that would otherwise have been used to support their businesses in a variety of ways.
Newsagents considering the cheap China product need to think through the implications.
Newsagents will only grow stationery sales if they promote stationery. In fact, I suspect individual newsagents will need to spend more than the additional margin they will make to achieve the growth claimed that they could make. If this is right, newsagents will be financially worse off.
Some newsagents would not chase gross profit, they would price the China stationery at a lower price, hoping that this will increase sales. Anyone who has been involved in cheap China stationery in the past will know that products are cheap for a reason – poorer quality raw materials, cheaper manufacturing, less quality control, less back-end support for the retailer. this will matter to some newsagents, but maybe too late.
The best place for newsagents to own part of the supply chain is through ANCOL in SA and GNS nationally. It’s a newsagent-owned business with a strong national footprint. Why newsagents would consider importing pens and stationery to cut out GNS(and ANCOL in SA) is beyond me. And why newsagents would think they can do better with an unknown brand against branded products also does not make sense.
Since we’re in a free and competitive marketplace, newsagents can do what they like. This post reflects my opinion. Please, contribute and lets have a good open discussion about this.
Footnote: I have no commercial agreement or arrangement with GNS other than as a newsagent who buys stationery from them.