Month: September 2006

I often write here that the magazine supply model is broken. Below are selected excerpts from an email from a newsagent explaining their specific situation:

We are reasonably new to the industry (2 years tomorrow) and are having cash flow issues already.

As you suggested we contacted each of the distributors and requested a supply allocation order.
We adjusted this file extensively and faxed it back, we have not had any reply from any of them.

I read on your blog that you cut the bottom 200 titles from your shop. I am interested in how you do this when I cant get the majors to accept my adjusted allocation supply model?
(Or whatever they want to call it).

One distributor has advised us that they haven’t APPROVED it yet?? (But it is our cash-flow???). Another distributor says they have done something for us but we don’t see it working. Another distributor is ignoring us.

Mark, we are trying to learn as quickly as we can and love the newsagency channel.
Can you offer any advice? Are we talking to the wrong trees? If we can’t get them to cut adult mags that we have sold 1 copy of in 2 years, how will we get them to accept a cut of the underperforming 200!

Or are we getting the run around because they assume we are new(ish) and they want us to stay in the dark?

The magazines are killing us and taking our cash so that some weeks we have to delay paying staff until we bank the following day!

… but whilst everyone sympathises with the oversupply issues of newsagents no-one is actually there for new newsagents to show them the ropes and who to talk to – how to get around the system .

This is a common email from a newsagent. It reeks of despair. Only newsagents can solve the problem. It is their cash, their real-estate and their labour at risk in supporting the magazine supply model. Magazine distributors have their own challenges as do publishers. They must look out for themselves. So should newsagents.

To the publishers who write and say that they cold not afford to publish their titles if newsagents did not maintain the current supply model, it’s not our problem. Newsagents cannot afford any longer to support small titles. real-estate is expensive and it is unreasonable to ask newsagent to invest in small and new titles as is the case now. Look at Cosmos, my newsagency invested hundreds of dollars of cash in its launch and now it’s more about the online presence. Launches of such fringe titles is an abuse of a magazine supply model which is broken.

To the major publishers – ACP Magazines, Pacific Magazines, FPC etc. I say – you’re losing out too as it is the small titles which drag labour, real-estate and cash from attention to your product.

We thought we were special with the offer of a deal from the UBD street directory people (Telstra). Seems we’re not that special – Big W and Australia Post have the UBD street directories as well.

Big W must have a better price since they are selling for 25% less than us and Australia Post has a free DVD with theirs. We have a very nice coffee mug. The UBD actions with these different offers means confusion for consumers. Had I known about the Big W and Australia Post deals I would not have bought as many UBD directories as I did. Had we been the only store in by shopping centre with the deal we would have done better. As it is we’re stuck with several hundred.

Message to self – be more cynical when suppliers come to you with “amazing” deals.

Great to see Crikey pick up my comments yesterday about Australia Post and how far they have strayed from their mission to provide Australia with a postal service.

In the rapidly merging media landscape Crikey plays an important role giving oxygen to stories which Boardroom and other relationships cause to otherwise go unreported.

This is the new brochure from Australia Post and what a brochure it is. Hang on, am I mistaken? This looks like a newsagency brochure. Street directories, copy paper, calendars, ink, toner, files, folders, batteries, calculators, fax rolls, shredders. Gee my head tells me these are newsagency lines. Where are the stamps? Where are the other postal related products? Oh, that’s right, the Government owned Post Shops (the 865 Government stores) have the right to do things which are “incidental” to providing postal services. Silly me.

Here is part of what I have written to the Minister responsible today – Senator Helen Coonan:

Enclosed is a copy of the Celebrate the Savings brochure from Australia Post for your information. This brochure demonstrates further abuse of the Act. Every page of the eight page brochure presents products which used to be the domain of newsagents. Having my own Government competing with me in this way is offensive.

I would like the Government, as the owner of Australia Post, to explain to me how they can claim that the sale of the items listed below is incidental to supplying postal services:

UBD street directory … Reflex copy paper … Printer ink … Printer toner … Calendars … Post brand calculators (made in China) … USB sticks … Laminator … Shredder … Post branded stationery (made in China) … Post brand blank CDs (made in China) … Post branded CD-R (made in China) … Diaries …Fax rolls.

Government ownership and regulation makes Australia Post stores destination stores. My newsagency does not have this monopoly advantage. Australia Post is abusing this advantage to encroach more and more into space previously the domain of newsagencies, some supermarkets and stationery stores.

I cannot land consumers to my store for the same low cost of Australia Post.

I cannot leverage a national brand like Australia Post to buy competitively.

I cannot control my opening and closing hours.

I cannot get the rent discount of an “essential service”.

I do not have a government protected postal service brand with which to leverage the sale of unrelated items.

When farmers talk of the impact of droughts the government steps in with assistance. When auto makers talk of the impact of cheap imports the government steps in and helps. When newsagents talk of the impact of Australia Post the government ignores us.

Australia Post is our drought. For many years now it has been draining newsagencies of revenue. Many are close to death.

How many newsagencies need to close as a result of Australia Post competition before we see action?

I call upon you to demonstrate your commitment to small business by supporting an inquiry into the impact on independent small business of government owned Australia Post retail outlets.

I know from past correspondence from the Government that a likely response will be that the majority of outlets are privately owned. I am not as concerned about these outlets. It is the government owned outlets which are doing the damage small businesses like my newsagency.

Jobs are being lost in newsagencies because of the actions of Australia Post. Does anyone care?

Susan Murray, General Manager of the National Breast Cancer Foundation, has written to newsagents and apologised for not advising them sooner of the NBCF decision to sack newsagents as their retail partners for the Pink Ribbon awareness and fund raising magazine in favour of Woolworths.

In her letter to newsagents, Murray says, in part, “thanks largely to newsagent support, we have raised over $500,000 from the sale of just four Pink Ribbon magazines”. Not only this, but newsagent support has also raised over $500,000 from the sale of Pink Ribbons, pins, bands and other merchandise supporting the NBCF. This takes the total raised via newsagents to over $1 million.

The letter then goes on to try and justify why the NBCF decided to sack newsagents and replace them with Woolworths: “In summary, by attaching to the AWW we are able to increase the distribution of the magazine from 30,000 to a total of 160,000, therefore giving us the opportunity to quadruple the amount of people who will be able to get access to the magazine. Not only this, but any financial risks associated with publishing the magazine have also been reduced due to the fact that production costs no longer sit with the NBCF. This is an opportunity that we could not pass up, as our mission is to raise funds for research and to build awareness among as many women in Australia of the issues surrounding the disease.”

If the deal is so good the NBCF ought to publish the financial data.

Woolworths is a public company and as such its core business focus is its share price. The deal putting the Pink Ribbon magazine into its stores is, in my view, about buying social responsibility and this is good for profit and the share price.

Unfortunately, many charities now focus more on corporate deals than gaining support from individuals.

Here’s what I wrote to the NBCF today:

I refer to the September 21 letter from Sue Murray to newsagents published last week.

I am disappointed by your financially expedient decision and that you have rejected the more socially responsible decision.

By sacking newsagents as your retail partners you have told us we are not relevant. You have told the Australian community we are not relevant. You tell the Australian community that getting your magazine, even as a tip on, into supermarkets is more important than independently owned small business newsagencies.

Consider, for a moment, the retail experience in supermarkets. Roger Corbett’s TV ads do not reflect the reality of shopping in Woolworths. Rarely are you greeted with a smile and rarely is the experience pleasurable. Magazines are lowly rated product by supermarket management. They are at the checkout to help customers pass time. Rarely are the displays professional.

In a newsagency, on the other hand, you get conversation, a smile and local knowledge. Newsagents are magazine specialists. We cater to a diverse congregation. Newsagents provide a local community connect which supermarkets ignore.

Your refusal to distribute your magazine through newsagents says that you do not consider us magazine specialists. By partnering with Woolworths you are saying big business is more important than a community business.

As a charitable foundation your focus ought to be on the community and how you can more successfully engage with them to raise awareness and raise funds. Newsagents provide a better opportunity for such engagement than a supermarket checkout counter.

If the NBCF wanted deeper engagement with individuals and needed to boost fund raising then they ought to have undertaken some focus group research with newsagents. I am certain that newsagents would be happy to more effectively use their community connect to support charities like NBCF. Until now the NBCF relationship has been one of magazine publisher. They could have re-engaged as a social/community partner and achieved far more than getting their magazines at a Woolworths checkout.

While in the Federal Government owned Australia Post retail outlet yesterday I saw first hand how Australia Post is abusing the Act under which they operate, the Australian Postal Corporation Act 1989. I was there to conduct postal business which I can only conduct at Australia Post. The queue was long with nine people in front of me and four at the counter being served. Of these four, one was getting help on a shredder they purchased from Australia Post, another was asking for help with choosing a printer, another was trying to sort out which ink cartridge to buy and the fourth was buying greeting cards. Here is what the Australian Postal Corporation Act 1989 says about the provision of these “incidental” services:

16 Functions—incidental businesses and activities

(1) The functions of Australia Post include the carrying on, within or
outside Australia, of any business or activity that is incidental to:

(a) the supplying of postal services under section 14; or

(b) the carrying on of any business or activity under section 15.

(2) Without limiting subsection (1), the functions of Australia Post
include the carrying on, within or outside Australia, of any
business or activity that is capable of being conveniently carried
on:

(a) by the use of resources that are not immediately required in
carrying out Australia Post’s principal or subsidiary function;

or

(b) in the course of:

(i) supplying postal services under section 14; or

(ii) carrying on any business or activity under section 15.

Including the four at the counter, there were thirteen customers in front of me. Only one was there to conduct postal service business from what I could see. This makes a mockery of the Act. Australia Post and the Government, its sole shareholder, are Abusing the Act to take business from newsagents.

Federal Parliament passed the Australian Postal Corporation Act 1989 behind which Australia Post hides so it is up to Parliament to decide if they want the economic harm being wreaked on small businesses like newsagents by Australia Post to continue.

The Government has demonstrated disinterest through several ministers. Only the Greens through Senator Bob Brown and the Democrats through Senator Andrew Murray have demonstrated concern for how much Australia Post is encroaching on the business of newsagents.

The Act is where this problem begins and ends and only parliamentarians can solve that. Whether they do or not will be a test of their interest in small business.

The professionally printed sign on display at the Federal Government owned Australia Post store was an invitation I could not refuse:

Mobile phones freeze our computers. Please switch off.

After waiting in line for ten minutes the temptation was too much so I called someone on my mobile. It didn’t seem to freeze their computers. Mobile phones do not freeze computers in my newsagency or any other newsagency I know of.

There are many Asian newsagents now in Australia yet my software company is the only newsagent supplier I know of with consistent Cantonese and Mandarin assistance. Such language support is crucial from more industry suppliers and associations if we are to help Asian newsagents better assimilate and carry on the traditions of newsagents in their communities.