There is a newspaper promotion running in one state at the moment offering seven day home delivery for $1.00 a week for twenty weeks. I am told that this campaign is successfully switching customers from long standing direct with the newsagent relationship to a direct with the publisher relationship.
The customer saves around $7.00 a week and is very happy.
The newspaper publisher has a ‘new’ direct customer and is very happy even though they are now subsidising the customer to the tune of around $6.00 a week.
The newsagent delivers the same paper to the same house for around $1.00 a week less and is very unhappy.
The benefit for the publisher is that they now “own” the customer. This helps with print run planning and selling advertising space.
The newsagent has to accept the loss and provide a service as good as before and deal with a new master. Now, they will get a call from the publisher if there is any mistake with the delivery with such a call usually involving more stress than those made direct by customers.
Imagine how a newsagent of many years standing feels when one of their long term customers makes the switch saying that the publisher representative told them that nothing will change. A more truthful representative would have told the customer that the newsagent was going to lose close to 33% of their gross profit.
I appreciate the value of direct customer relationships to publishers. However, it is wrong that they cannibalise the long standing relationships newsagents have with home delivery customers. It is wrong that they offer promotions which effectively cut the gross profit newsagents make by 33%
The home delivery of newspapers is a premium service. In real terms, newsagents make at least 25% less today than they made four years ago. Publishers and customers cannot expect the quality of the service to remain the same if payments to newsagents continue to fall. A better alternative would be to price home delivery as the premium service it is. This makes more available for improving the service and surely this is a better outcome for all.
This current promotion ought to stop. If a publisher wants to do a deal then they need to carry the cost of the deal. To rip 33% of newsagent’s gross profit out of an existing relationship a grossly unfair treatment of a defenceless small business.