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Newsagents talking magazine distribution with head of Gordon & Gotch

Screen Shot 2015-10-14 at 3.55.40 pmNewsagents at the newsXpress national conference in Sydney Monday got to spend an hour in a Q&A session with David Hogan, head of Gordon & Gotch.

The planned thirty minute Q&A extended to an hour as David and newsagents talked through allocation processes, partworks, Gotch profitability, US title pricing, the damage of ignorant early returns and other topics.

Nothing was off limits and all questions were answered.

On early returns, one example was given where hundreds of newsagents did themselves out of guaranteed revenue because of early returns.

The conversation was interesting as it provided context to challenges around circulation such as with the partworks model where Gotch is as much a victim as newsagents when faced with a runaway success such as Art Therapy. I know many newsagents in the room were surprised by the lead time.

It was good to have a magazine discussion based on facts. For example, one newsagent wanted to know how to stop a magazine for more than a few months. David shared the answer. The newsagent wanted a guarantee to never get the title again. David explained why that is not ideal.

There was no yelling at each other, no anger – just a good professional discussion looking for mutual benefit.

There was a good discussion, too, about floorspace allocation for magazines in newsagencies and work being done by Gotch to drive efficiencies that should benefit newsagents.

With several newsXpress members engaged in the MPA trial there were some questions on that – with ensuing discussions helping more in the room understand what is happening.

What was fascinating was a discussion led by some newsagents into the type of magazines newsagents feel they could sell. This discussion flowed from comments about adult colouring books. With Mychelle Vandenburg, the Retail Sales and Group Marketing Director for Pacific Magazines, in the room, newsagents, the head of Gotch and a senior publisher representative had a terrific three-way discussion about ideas to help everyone benefit not only from this craze but to explore how similar crazes could be explored cooperatively. I found this discussion specifically valuable.

What happened at the conference is an example of what newsagency marketing groups can do outside what is usual for a marketing group.

I am grateful to have been a participant in this discussion.

With magazines continuing to be an important traffic driver for our channel, it is important we explore ways to transact with the category more profitably. Achieving that requires respectful and engaged publisher and distributor relationships.

Footnote: I reached out to David while he was overseas at a distribution conference and he accepted the invitation immediately. He arrived back in Australia on the weekend and was with us on Monday.

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magazine distribution

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  1. Leon Tonna

    I think ignorant early returning is caused by not so ignorant oversupply.

    4 likes

  2. Paul

    You hit the nail on the head Leon. TBH I doubt I’d believe anything anyone from management in either Network or Gotch said as they will say whatever they have to to keep their jobs

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  3. Mark Fletcher

    I have seen day of issue early return data for a range of titles where supply was fair and based on newsagent sales data – and where newsagents early returned so many that they had less than half the stock they needed to achieve the usual sell through for the title. This data is not lying.

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  4. Chris

    Its a 2 way street where there are Newsagents who are early returning incorrectly and suppliers who are oversupplying. But we have to accept that there are newsagents who do the wrong thing and it does leave an impression on the suppliers.
    GG and NDC are important stakeholders in my business so I want to have a working relationship with them. It means better business for me and for them. How you manage your magazine supply must be based purely on business and not on spite towards the suppliers.

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  5. Mark Fletcher

    Chris I agree with you. Each misbehaviour – early return, over supply etc – has consequences for others engaged with the channel.

    This discussion was useful as it involved Gotch, their biggest publisher and newsagents all in the room talking.

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  6. Paul

    And Mark how many other titles were they grossly over supplied on at the same time or were oversupplied the month before and probably trying to make sure that they could cover their payments ? I really feel sorry for someone backed into that corner.

    I agree with you that they shouldn’t have early returned effective money in the bank but I bet David didn’t bring examples of his own companies rampant oversupply and of course they can’t guarantee you that they will never resend you a title in the future otherwise they might get to a point where so many newsagents have removed the title that to keep that titles business they would be supplying once again blatantly overdemand amounts to the few who do want the title.

    And what of fair compensation for selling magazines? 25% no longer cuts it at all. If you look at the newsagents costs even at straight CPI levels versus the cover price increase of many magazines you will find (as I’m sure you already know so sorry I’m not having a dig ) that mnay are behind even the CPI rate menaing a deminishing return.

    It’s time newsagents took on the two distributors. We need to share oversupply data across newsagencies to prove to the ACCC or state authority that what are claimed often to be accidental oversupplies actually aren’t but are systemic deliberate oversupplies generated to ensure revenue for the distribution companies at the cost of the publishers and the retailers.

    2 likes

  7. Mark Fletcher

    Paul you are highlighting something I have written about extensively previously – that plant of early returns are done because of misbehaviour relating to other titles. Personally, I think early returning stock you will 100% for certain sell is dumb.

    On the broader issue, for years I have outlined the process newsagents can follow to take on oversupply fort which there is irrefutable evidence. Until a newsagent acts on that any complaint is a waste of time.

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  8. allan wickham

    I thought David was excellent. A no nonsense, no BS kind of guy. His insights to magazine publishing and distribution was very interesting. Some figures he gave out were a shock to most Newsagents in the room. I congratulate David for talking with us…..if only more suppliers were brave enough to do the same.

    4 likes

  9. June

    Alan I think “brave” is not the right adjective – I would use “prudent” or “professional”

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  10. Mark Fletcher

    June when I invited him I said it was an invitation to the lion’s den in that I knew some of the questions he would get. Making himself accessible was good in that both sides learnt from the experience.

    1 likes

  11. allan wickham

    June, whatever the adjective…..I would like to see more interaction from our industry “partners”

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  12. Jim

    It’s all very well for G&G and their counterparts to talk about the damage of ignorant early returns but these blokes get daily sales data so surely if they detect an early return that is not supported by sales data they could flag it with the newsagent. It might be too late to stop the early return that month or week but could put the agent on notice for future issues.
    It is obvious that the sales data is not used to the newsagents’ benefit at the moment but perhaps this might be one way of extracting some value for OUR data.

    Given the rampant mis-allocations (both over and under supply) perpetrated on a twice weekly basis by all distributors they are obviously not able to use sales data for want of systems to analyse it or, worse, deliberately ignoring it as they continue to empty the warehouse.

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  13. Peter B

    In this post there is mention of ignorant early returning, misbehaviour, and newsagents are doing the wrong thing.

    As far as I am aware we as newsagents have full control of our OWN businesses and can make any decisions we want. While it seems ridiculous to return magazines that will sell, newsagents obviously feel that they have the right to, weather it be in spite or not.

    There is certainly no sympathy from publishers and distributors every Monday and Thursday morning when the magazines arrive!
    As for the talk by David Hogan, we were told what we knew already.

    2 likes

  14. Mark Fletcher

    Peter I label it ignorant when the newsagent returns to a level so as to reduce guaranteed sales. Why a newsagent would wilfully harm their business is beyond me.

    The alternative is to not call out the behaviour, and, maybe, the publishers go elsewhere. While some newsagents would cheer, the majority would not.

    Magazines in our businesses are ours to lose.

    4 likes

  15. shauns

    Well today I am finally happy with GG my 3d partworks orders have finally started coming in . After weeks of lies after lies telling me “Yes” your order will turn up next week bla bla bla NOW if only I still had those customers !!!!!!!!!

    3 likes

  16. Steve

    Mark, what was the G&G title David used as an example of “ignorant early returns”. It’s hard to know how much truth there is to this without being able to benchmark it against our own situation. Who knows I may have displayed it for the full on-sale period and had zero sales, in which case I could be accused of ignorantly NOT early returning it.

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  17. Mark Fletcher

    Steve plenty early returned the first issue of Art Therapy, an issue that sold out in almost all locations. Others early returned the anniversary issue of marie claire, an issue that also sold out in most locations.

    I know of one instance where a newsagent early returned 50% of their Frankie supply without considering their average sell through of 80% – for an issue where supply had not been increased.

    The marie claire example is a stand out as the gift with purchase was one of the best every for this category of magazine. From then first day of the on-sale plenty of newsagents were clamouring for more stock while a small group of newsagents sent back stock they could have sold.

    I get that early returns are an important part of managing space and cash flow. What I do not get is early returns where evidence shows you will sell the allocated product in a reasonable period of time.

    Unfortunately, the poor behaviour of some publishers results in good publishers being victimised.

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  18. Steve

    The Art Therapy #1 early returns were obviously wrong though the stock would have gone back into the channel. On the other hand if you were heavily invested in the adult colouring space before the Mag publishers got on board you might reasonable argue that 25% on a $2.99 product that cannibalises other sales is something you don’t need.
    I received 4 of the Marie Claire anniversary issue and sold zero, don’t know why because they were full faced for the entire on-sale, just goes to show what works well in one situation is a dud in another. The latest issue of Frankie has already sold 3 and I’ve ordered extra’s but usually I battle to sell more than 1.
    Ignorance comes in many forms, I could argue that a CEO who takes a one size fits all approach to criticising his customers without appreciating the myriad differences between those customers is equally ignorant.

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  19. Mark Fletcher

    Steve the issue is more one of timing. Day of early returns are what hurt newsagents and publishers the most from what I understand.

    On Art Therapy, it was pitched on TV with our channel the main beneficiary. Further, my experience is it did not cannibalise art book sales at all.

    At the forum, David Hogan was presented many different scenarios. He admitted Gotch was part of the problem and had to be part of the solution.

    1 likes

  20. Steve

    Mark I don’t in anyway doubt there are a lot of early return which shouldn’t happen, my point is that there are also early returns which from the outside look ignorant but on further analysis are probably justified in that particular circumstance.
    If a TV advertising campaign promoting newsagents means we should jump on board then everyone should sign up to Blueshyft, Ladbrokes have engaged in a massive TV campaign promoting newsagents. But I haven’t signed up because the local business which has the Toll agency operates the same hours as me (I’m the first person to see him at 6.30am) and I don’t want to be a clearing house for gambling, especially as its another low margin product.

    0 likes

  21. Mark Fletcher

    Steve,

    I appreciate this discussion. We need more of these in our channel.

    I don’t see a connecting with Blueshyft in that to take that on one needs to decide to get into soft gambling, give over counter space and add an agency service where otherwise there may not have been one.

    When it comes to magazines we all have these.

    What I don’t want to see is a self fulfilling prophecy – magazine sales declining because we make it so because of decisions – to a point where another channel steps in.

    2 likes

  22. Steve

    Mark, I just think newsagents should push back against the use of terms like “ignorant” when discussing early returns. With the MPA trial we face an attack on our right to early return and the use of words like ignorant delegitimises that right. When members of the MPA accuse us of ignorant early returns we need to hold them to account for the broken supply model that causes it and show it’s their problem because they caused it and it can only be fixed at their end of the supply chain.

    5 likes

  23. Paul

    Well said Steve !

    Mark, do you really think that another channel would step in and take magazines like we have now ?

    I doubt anyone would be so silly given the current margins and conditions and were it to be the big supermarkets you can bet they wouldn’t touch all of the smaller titles meaning several publishers would be obliterated in one sweep. Not only that they would be on better margin, better returns conditions (like they are already) and would have complete say over what they would and wouldn’t take. The distributors don’t want that so unless something else surprising happens such a shakeup is unlikely to happen. The only reason the distributors and some publishers are worried about the newsagency channel is that we are so poorly represented and managed that they can dictate to us and any other option on the board would have the opposite happen.

    3 likes

  24. Mark Fletcher

    Paul I don’t know if it will happen and have no knowledge of active consideration. That said, in this time of extraordinary disruption and if I were a publisher, I’d be looking. If that did happen, newsagents would scream.

    I;d rather us be part of the conversation about the future. Hence me inviting David Hogan to this discussion with newsagents.

    1 likes

  25. Bill

    Mark, our newsagency magazine sales are the same size as yours. we receive 60 of Art therapy No1(to your 150) and sold out in less than 3 days.
    Attempts to order more were futile.
    If accounts were early returning this title then GG are as much to blame as the newsagents for their poor allocations.
    After receiving 19 copies of part 2 I advised David he could cancel my future allocations. Is that ignorant?

    3 likes

  26. Peter B

    Why do we need distributors?

    In this computerised world we could all deal straight with the publishers, as the transport chain is already there now. The only part of the chain that is dispensable is the distributors.

    Cut out the middle man, order from the publishers and magazines could become more appealing.

    2 likes

  27. Peter B

    I wrote point 26 because of a radio discussion I heard today on my way to the transport company to drop off my 10 boxes of magazine returns.

    Evidently a battery capable of holding enough energy to power a house has been developed and in the interview they said within 10 years half of all residential properties could be off the grid.

    The price gouging energy companies will only have themselves to blame when they are cut out of the chain.

    0 likes

  28. Mark Fletcher

    Bill – I don’t think I’d label what you did with Art Therapy as ignorant in that you did not early return to reduce sales of stock already in store.

    Peter the tesla power wall. It could revolutionise the power grid. Scares the shit out of power companies. Very disruptive.

    3 likes

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