Last year we sold 30% of the 17 copies of the ABC Open Garden Scheme magazine. This year, the distribution experts at NDD have sent us 21. With a $16.95 cover price and an eight month shelf life, this title will never be cash flow positive in my business. The real-estate costs alone are more than $6.00 a month. I need to sell two copies a month to break even. Newsagents make 25% from this title. I am certain that ABC Shops and ABC Centres would make more than 25% from this title.
Beyond the issue of fairness of margin, I am concerned about the supply model itself. Why is the scale out quantity this year greater than last when the evidence suggests I will sell no more than ten copies? This seems to be a dash for my cash by NDD and by ABC Enterprises – maybe I’m helping them cover their loss on the Alan Jones biography which they canned earlier this year?
Small business Newsagents are used (abused?) in situations like this – where publishers use several retail channels to distribute a title – to build brand awareness. Newsagents attract more traffic than ABC Shops and a title such as this is likely to be browsed several times prior to purchase. Newsagents are the ultimate browsing destination. For this reason and because of its cover price and shelf price it would be fairer for the ABC to pay newsagents a stocking fee or, say, $2.00 a copy as well as a 45% commission on sale. Alternatively, they could supply product on a consignment basis with newsagents paying only when they sell a copy.
The 21 copies of the ABC Open Garden Scheme will cost me $266.96 this month. At best I will recover part of that over the next eight months through sales. The rest will come back to me in May 2007 once returns for the title and finally processed by the magazine distributor. This drain of cash makes it harder for small business newsagents to focus on the growth areas in their businesses such as women’s weeklies – New Idea, Woman’s Day, Take 5 and That’s Life.
If newsagents made a fairer margin or were paid a stocking fee I am certain that the ABC and NDD would scale out more carefully. The generosity of newsagents allows them to be lazy and puts newsagents at a disadvantage to their competitors.