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Newsagents invited to comment on ACCC plans to authorise magazine supply trial

The ACCC has proposed to authorise Magazine Publishers Australia to conduct a trial of an alternative magazine supply model.

As I wrote here in November, I think the proposed code of conduct changes are ill conceived and will not address the unfairness for newsagents compared to others with whom we compete.

I encourage newsagents to read the ACCC proposal and respond if they feel so inclined. Folks, this is an opportunity to have your say direct to the ACCC.

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  1. Peter B

    Unbelievable!!

    I thought deregulation happened years ago but after reading this “Code of Conduct” it is obvious the MPA (gotch and network really) are trying to impose themselves on Newsagents again.

    55%sellthrough is still gross oversupply and we will not be able to early return, will have to accept new titles of which there are hundreds that each and every Newsagent doesn’t carry.(this is where they will make up the distribution numbers as there is no mention of limiting the number of titles to the number of pockets we have)

    There is no consultation that I can see with Newsagents.
    The document talks of a campaign of educating Newsagents, of engaging and training newsagents and efficient operation.

    Do these people really think we can’t run our own business effectively!!!
    Are we all that stupid that we need educating!!!

    That is why we are reducing magazines all the time, if they don’t sell they are replaced by high margin product.
    We are happy to keep what sells, but cannot keep dead stock on the shelf, it doesn’t pay the rent.

    This code is biased to the Distributors and Publishers, because it was drawn up by them, with no REAL checks in place to reduce oversupply.

    10 likes

  2. Garry

    I agree Peter B

    They could fix the magazine over supply tomorrow. All they need to do is use the sale data they have and supply accordingly.

    Problem fixed.

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  3. Jan Levick

    fyi. I have just been sent an email from a supermarket chain offering a deal if I buy 3 woman!s day over eight weeks I will receive the 4th copy free

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  4. Hamish

    I would have this agreement should have included Newsagents from the outset and been submitted jointly with MPA and Key distributors.
    The reality is that this proposal hasn’t had any real input by newsagents, the ANF hasn’t stood up either – their input is mentioned but once…..

    “It is the MPA’s belief, supported by the Australian Newsagency Federation input, that
    newsagents will not engage in the proposed Channel Engagement and Retail Skilling
    processes (Pillars 2&3) unless they first see that product oversupply is being
    effectively addressed.”

    That is just stating the obvious, well done ANF! Glad i left years ago!

    Out of all of the changes proposed, limiting (to the point of ending) Early returns is the one that shows what this is really about.

    The one indicator that would show (near on instantly) if these changes actually work to reduce oversupply – would be the level of reduction in Early Returns submitted by agents, surely that makes sense.

    It might make sense but it doesn’t improve the Distributors bottom line and seeing as this is their proposal that’s all that matters.

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  5. June

    Hamish, early returns are the absolute key to this working.
    It is the one issue that causes cashflow problems with newsagents.
    I have never been able to reduce my returns to below 53% in 38 years so it is
    a planned attack by the distributors and
    unless we put in a submission to the ACCC
    (lots of us) we will get lost in translation again.
    It doesn’t have to be sophisticated – it just has to be meaningful, simple and it could be mightily effective.
    Please spend 5 mins doing this for all of us.
    I am going to do it now

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  6. rick

    If they think they can address supply issues with this code, what do they fear early returns?

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  7. Peter B

    Yes June, we will put in a submission and ALL Newsagents should.

    Mark is there a correct way to go about this?

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  8. Hamish

    We are putting in a submission.
    This is a chance to finally get a say on the gross imbalance that we currently endure.

    I think i have mentioned it before however the book industry is probably the closest model to compare. Under those contracts our sell through has to somewhere between 80%-85% on Sale or return products.

    Its a massive difference in comparison to whats actually documented as sell through targets under these proposed changes in the magazine model. Thats before you even think about the difference in base margins – which is basically double.

    Half the margin, double the supply and limited control over supply. Struggling to see how this is a good thing for a category under pressure from competing products and technologies.

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  9. Dean

    I couldn’t find the place to respond to the submission. If anyone can post the link i would appreciate it.

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  10. Mark Fletcher

    Do it through your local office as a letter of via their contact us page and note: A91472

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  11. June

    Dean, send it to Hannah Ransom
    adjudication@accc.gov.au
    put
    A91472 – magazine publishers of Aust submission in the subject column.

    3 likes

  12. Bill W

    Mark, thanks for the heads up on this issue. I have written to the ACCC and encourage every newsagent to do the same.
    What do you think about putting a survey together on the proposal. I’m sure more newsagents would respond that way and it could be sent to the ACCC.

    1 likes

  13. Mark Fletcher

    Bill the ACCC requires direct responses. Once before I submitted survey responses for a position on which they sought public comment and the officer I spoke with said they could not take on survey responses even with a name attached.

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  14. MARK RICHARDSON

    Ann Nugent ANF CEO QLD wrote to the ACCC on the 16Th December 2014 strongly supporting this proposed trial

    As Mark has pointed out we the Newsagents need to respond and respond now

    ANF do not represent the majority of Newsagents so we need to put our views forward

    As previously posted both Gotch and Network know our sales data supply could be adjusted to represent our actual sales ,but they refuse to act on their own data

    Does anyone believe if a code of conduct were introduced that over time the distributors would actually stick to it !

    If early returns were disallowed Newsagents would simply not survive in their current form

    IPS is a prime example of a system which in theory should work, but as we know at the coal face keeping IPS supplies under control requires plenty of effort on our behalf because again IPS take little notice of our net sales

    3 likes

  15. Jonathan Wilson

    Magazine suppliers need to do 3 simple things:
    1.Use the sales data they already have when deciding how many copies of a title to send out.

    2.Allow newsagents to explicitly set quantities for product (new product, new runs of an existing partwork, existing product, product they are ordering for the first time, old returned magazines being re-issued or whatever else) and override any sales based numbers

    and 3.Allow newsagents to explicitly cancel stocking a product they currently carry, not carry a new product (or new run of an existing partwork) or start stocking a product (whether it be one they have never stocked or one they have stocked in the past and canceled).

    2 likes

  16. Bruce G

    Wrote to them at 11pm last night. I hope it makes some sense.

    0 likes

  17. Bill Wareham

    There is no upside in this proposal for newsagents. The sales efficiency rates proposed are not dissimilar to what currently exists.
    A sales efficiency rate of 25% simply means you will be sent 4 times your sales on slow selling titles. It’s the long tail of slow selling titles which is causing all the issues, that’s why the chains won’t touch them.
    Your fixtures will be full of dead stock waiting to be returned. I agree with Mark, IPS sounds good in theory, however is not worth the effort on titles with greater than 1 months shelf life.
    There is no mention in this proposal of the number of titles a newsagent can be sent and no mention of what the stock holding of a news-agency needs to carry to support this proposal.
    I would like to know from others your ratio of annual sales to stock holding. Mine is 6 and I set it that way 3.5 years ago and have not had to worry about cash-flow since.
    No early returns for me would mean deleting any title which has a shelf life of more than 1 month as a minimum.

    5 likes

  18. June

    Bill, how do you set to achieve a ratio
    of annual sales to stockholding at 6?
    Can it be done through RETAILER or is there some other way.
    I don’t quite understand this.

    0 likes

  19. Bill Wareham

    June, take your total sales for the past 12 months and divide it by 6. This gives you a stock figure to work towards. Compare your stock on hand against that figure and I expect it will be much higher. How much cash can you the free up to invest in other areas?
    Then on a monthly basis if your target is to keep your mags bill equal to the cost of goods sold for the month you’ll maintain your stock on hand and achieve 6 stock turns.
    Still at 6 stock turns your return on investment multiple is only 2, still well below what is achieved on cards and stationery.

    2 likes

  20. June

    Bill can you use this approach for gifts, cards, stationery etc?

    0 likes

  21. Bill Wareham

    June, you should look at return on investment (roi) for you total store and by department. This will let you benchmark departments and know which are your hero categories. Margin is no good without stock-turns, however the problem with magazines are the overstocking drives down stock-turns and therefore roi.

    0 likes

  22. Mark Fletcher

    I’m told plenty have responded. Good to see.

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  23. June

    Thanks Bill – I’m checking this out

    0 likes

  24. Steve

    On top of all the other obvious flaws in this trial I’ve been doing early returns today and realised once again just how many titles there are which have been replaced by the latest issue but still have a ontime return date of next month for the old issue.
    If there are no early returns newsagents will be left holding this dead stock for another month,effectively moving millions of dollars of working capital across the channel from our accounts to the distributors.

    2 likes

  25. rick

    if they do manage to change the supply model, would it mean we have to re sign new contracts? i for one would like an opportunity to discuss a new contract, not an industry standard one either

    1 likes

  26. Bill Wareham

    Rick, there will be no one to discuss it, they will send you a copy and if amended in anyway they will return it with another copy until you sign. I still have mine, in case at some point I may need to highlight in was signed under duress.

    0 likes

  27. rick

    I think times are a changin, not sure that old bluff would work anymore, newsagents are much more savvy.

    0 likes

  28. Mark Fletcher

    The challenge is the magazine traffic. While newsagents are cutting space, very few are willing to give up the traffic.

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  29. BrettS

    If the changes were to take place as the publishers are proposing.
    I know I would not be able to pay the account by the 3rd month without early returns. And I doubt I am the only One in this boat.
    Times might me changing but I really don’t see them changing with the times (Publishers).

    0 likes

  30. Mark Fletcher

    BrettS this code has been developed in ignorance. At its core it does nothing to facilitate competition. As long as newsagents are treated worse than our competitors we are being held back. This is at the heart of what I will say to the ACCC.

    0 likes

  31. Peter B

    This code has been devised to get rid of early returns, and nothing else.
    They can then increase the supply of the mags that we now don’t get oversupplied with. All those titles that we currently don’t carry we will get them in loads, calling it a first issue so we have to carry them.
    The return dates could also be made longer, more delayed billing for longer periods as well.
    I could get over mags pretty quick if this all goes through.

    1 likes

  32. Hamish

    Mark is this something you would consider instigating? Some solidarity and unity between the Directors, CEO’s and members of the main newsagent marketing brands could potentially make a difference here. Its not going to come from the body that should be representing us all.
    The ANF need to be reined in on their wholehearted support for a seriously flawed and unbalanced distribution model. Members should be asking why their Association supports the removal of Early Returns from current Terms of Trade and instils, legalises and promotes outrageous levels of overproduction which can only add to oversupply problems with magazines.

    “A pre-decision conference provides the opportunity for interested parties to make oral submissions in relation to the draft determination. Conferences are conducted informally and while legal or professional advisers are able to attend they are not entitled to participate in the discussion.
    If you wish the ACCC to hold a pre-decision conference in relation to the draft determination you must notify the ACCC in writing by 2 April 2015.”

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  33. Mark Fletcher

    Hamish, there is no relationship between the marketing groups. Indeed, actions indicate the opposite. I am making a submission on behalf of newsXpress as well as one personally.

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  34. Hamish

    Its a shame Mark, especially when there are issues of real importance that impact the newsagent industry – It actually plays straight into the suppliers hands and there is no bigger issue than this.
    I just hope that every newsagent who has ever felt frustration over magazine supply takes 10 minutes to send in a submission.

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  35. ken

    We all know why the distributors don,t want early returns but why do those visionless fools at the anf want this. More division in a totally fractured industry at a time when unity is needed most. WHATS GOING ON ????.

    1 likes

  36. June

    Newsagents please go to No11 comment here and send in your submission to the
    lady named at the ACCC.
    It doesn’t have to be sophisticated but it
    needs as many people as possible to put our point of view, ESPECIALLY regarding
    early returns.
    It wouldn’t hurt to tell the ACCC that the ANF does not represent all newsagents – in fact – only a small representation of them as they are simply not in touch with the newsagents on the ground and their
    issues.

    0 likes

  37. Carol

    I have found it too hard to find copies of the suggested changes and where I can comment. I know it I couldn’t do early returns I would go broke but would like to read the entire submission before commenting. Where do I find it.

    0 likes

  38. Dennis Robertson

    Carol,

    If you click on the “proposed to authorise” link at the top of the page in Mark’s subject post that will take you to the ACCC website. Then in the last sentence of that page, click on the “public register” link. At the bottom of that page click on the “applications” link and finally open the pdf file named “D14+166844.

    Cheers for the email link June 🙂

    1 likes

  39. Stacey

    I was thinking about this whilst driving to work yesterday and a memory popped into my mind of the very first time I saw the Internet. I was about 8 or 9 and was with my uncle whom at the time was the editor for Chanel 7 news and I asked him what it was like? I still very clearly recall him saying it was like a trashy magazine. Fast forward 20 years and here I am dealing with the decline of print magazines. Facebook is my personal magazine and sites like Mammamia the trashy content. Profits are made not through consumer sales but with clicks. Print media is too slow to be relevant in today’s society. The only magazines that are in growth in my view is those that have adapted and hold content with credibility.
    With regards to this proposed agreement I see it being another nail in the coffin for print as holding cost outweighs profit they will no longer be commercially viable. Not to mention the warehouse I might need to store that crap 😉
    As mags decline they are no longer profitable without volume sales. I cannot think of another industry that allows or condones this level of bullying by a supplier. New titles should be on an “opt in” agreement rather that an “opt out” and their supply algorithms are absolute crap. If I the customer (because I am the suppliers customer not just some middle man) request 8 copies of a title then that’s what I should receive with an email invitation to increase if my sales justify. Of course none of this will happen as distributor arrogance will seal their fate. I’ll write my submission to the ACCC but clearly Network and Gotch view is that Early Returns are impeding sales.

    3 likes

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