News Corp. in Queensland has released details of a Hasbro games offer with the purchase of News Corp. products. This is timely promotion given the terrific growth in game sales in Australia this year. Engaged newsagents will promote other games at the same time as this promotion to make the most of the opportunity.
It is operating in NSW as well. Third party sales are the only way newsagents make money from News Ltd promotions. The paltry 15% commission (or even worse – 7.5% if you are not dealing directly with News but are a subagent as alot of newsagents are nowdays) is insulting. The amount of storage space that a newsagent needs to allocate to this particular promotion is ridiculous. Luckily I have adequate storeroom facilities but I wonder how other newsagents with limited space will cope with this promotion.
There are going to be lots of REALLY excited (not) kids this Christmas who receive this promotion for Christmas from their Grandparents.
News Ltd as I have said before are a legacy supplier who have not understood that Newsagents are moving on from promoting products that have low GP and focusing their efforts of areas that will actually make them money (without the stress involved in these promotions i.e. collecting coupons, irate customers who want the one from 6 days ago but will not buy the paper and don’t have the coupon) .
I hate whinging and this would turn into a positive story if News Ltd stopped insulting newsagent with the low profit and actually let us earn a decent amount from these promotions.
But as Mark said, the only way to get anything positive out of this is to sell other products that have a higher GP and also use this opportunity of potential new foot traffic to educate new customers of how you are not just a traditional newsagent anymore but a retailer with offerings they will need in the future.
Any yes, I have told my News Ltd rep exactly the same.
board games are the best performer of all toys.
Refused to do these. They aren’t worth the the time and money. And I already do a good business in board, miniatures games and hobby. 🙂
Gee I like the idea of 15%. We are on 10%
This promotion is also in SA. With every Woolworths and OTR (On The Run) also participating, I don’t see much upside for newsagencies.
I have not opened one yet, but the lack of quality is evident. Was very tempted not to take part. $3 for cheap cardboard is not where I want to be.
I gather the next promotion is Roald Dahl books in February. Imagination is not their strong point.
my problem is storage space, and woolwoorths and iga doing it. why is news ltd wants to do it with us as well?
Chris, any consideration around asking your rep or indeed talking to the Publisher directly around taking a higher margin on these products, on a firm sale arrangement? Yes, the commissions are low, though, as with papers, the Publisher takes the risk on unsold stock and the cops the marketing costs associated with driving sales and store traffic. How many gift categories are in ranging ( that do not market themselves) are you able to return to the supplier when unsold?
Surely there is a model that weighs up the costs of production, marketing, distribution and waste that can provide agents a better margin on the proviso they are prepared to wear some of the risk?
Jim – yes I have broached that idea at various levels in News ltd but it was quickly rejected so I am over trying when I have better things to work on. You are more than welcome to try and see how you go?
We need to get away from sale or return. It makes for lazy retailers and lazy suppliers.
I agree with Mark, it’s time to ditch sale or return. When this is suggested, a lot of newsagents turn ashen but is it realized that if we had a 50% margin selecting our own titles with no returns, we could have 25% unsold and still have a 25% margin. I reckon most of us would back ourselves to have an average unsold rate of 10% at most in which case we would have a 40% margin.
But wait! No newsagent gets a real margin of 25%. The 25% is only a notional figure that you would receive if you were to sell all the magazines you were supplied: no returns. For example, The 3 largest publisher sell-through rate is 67%; so for every hundred dollars, we invest in magazines we receive $89.33 from customers and $33 for those we sell back to the supplier: a total of $122.33 a real markup of 22.33%. That is a real margin of 18.25% on retail price.
It gets worse! The sell-through rate for the remaining publishers is 41% for which we receive a real margin of 12.02%.
However, since we have little or no control over what we receive, the only figure that counts is the margin we get for the whole basket of magazines we are sent, that is, 15.25%. So if you sell a New Idea or a Woman’s Day, don’t imagine you are getting the notional 25%; it is being dragged down by Underwater Knitting.
So, on the no returns, choose your own, 50% margin model; the average newsagent could have 34% unsold and be as well off as he is now. Better off really, by far, because we are only talking about gross profit, our expenses would nose dive and we would have so much more space for toys, gifts and all the other stuff that is finding its way into our shops. But, hallelujah!!! Magazines would be, at last, connected the to the marketplace and responding to customer demand rather than being cross-subsidized by other magazines and newsagents. The really nice thing for those of us who have a soft spot for magazines is that they would become proud contenders for optimal sites: what will profit me most in this prime space, Teddy or Women’s Weekly would become a serious question.
There would be spectacular savings for publishers as well. Assuming newsagents had an average of 10% unsold, then publishers would increase in actual sales. For example, the 3 largest publishers now have a sell-through rate of 67%, so for every 67 they sell now, they would have 77 sales: 67 that would flow through to customers and 10 unsold bought by the newsagent. An increase by almost 15%. They would also save the cost of the last 23% of magazines they are now producing and the cost of delivering that 23% to newsagents.
Environmentally, our industry must be one of the dirtiest with 46% of magazines delivered to newsagents predestined for the rubbish tip without a word of content read. I’m confident that newsagents could achieve the 10% unsold. This would be a 78% decrease in a predictable harm we are now causing the environment. Surely, this is worth considering.
(All the above figures were derived from an application by MPA and Gordon and Gotch related to proposed changes to magazine distribution.)
The truth is firm sale would decimate magazines as a category.
The truth is a soon as publishers went into Supermarkets, they devalued their product, their banners, and made the agency model redundant.
Hard decisions need to be made for the future of small publishers because picking off the volume cream and handing it to the majors and letting everyone else fend for themselves has proven disasterous for the smaller players.
Firm sale might work for established titles. But no newsagent would take new titles as firm sale. The sector would die without new titles.
This week I received a requested analysis of my last years sales and returns, Whilst the report is totally useless document full of disclaimers and errors. It does highlight I should immediately stop stocking over 50% of magazines as they have not sold at all.
On a firm sale basis. I reckon my offering would be similar in size to the local IGA. 75% would be gone.
On radio 5AA in Adelaide yesterday Newscorp promoted the games as available at Woolworths and On The Run.
No mention of Newsagents.
For the major chanel not to be mentioned as an outlet for Newscorp promotions is not an oversight, it is deliberate. Newsagents are dead to Newscorp. Seems OTR is their new focus in SA, they can have them.
Peter – an interview or ad?
A marketing manager at Newscorp sent the announcer at 5AA a complete set of the games for a gift. In return he read out all the games to collect and that they were available at woolworths and OTR.
Have heard that OTR have heaps left and this was probably a way of diverting customers to them.
OTR is the last place anyone would think to go and get these promotions.