A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Month: October 2006

Regurgitating magazines

blogfuel.JPGThe latest issue of Fuel offers evidence of how newsagents are dudded by magazine publishers when they re-issue product. The photo shows a two pack, an old issue of Fuel with a current issue. The old issue is on the front. Check out our barcode (circled in red in the top left corner) – directly underneath is the barcode from the last newsagency which handled this specific copy. Customers will see the old issue and ignore the pack.

Twin and triple packs offering old issues of magazines are used often by magazine publishers to ‘promote’ titles. Newsagents don’t like the strategy because of the additional real-estate needed to adequately display the stock, the crappy way they are usually packaged, that customers open packs so they can see what’s inside and because we’re getting hit for cash again for a copy which did not sell in the last newsagency to carry it.

Publishers tell me the twin and triple pack strategy works. If they are going to continue to use it they need to NOT make the Fuel mistake and put the old issue on the front, they need better packaging, they need to tell browsers what’s inside so the packs are not opened and they need to pay a bonus to newsagents for the extra real-estate and work.

I am frustrated about this because I lost an hour yesterday tidying up twin pack junk in our crafts, home and men’s areas – customers had rifled through trying to find what is in the packs.

By the way, the barcode I have circled in the bottom right corner is crap and does not provide newsagents the ability to accurately track sales – hence the need for us to barcode this product ourselves.

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magazines

News Ltd bypasses newsagents for BP again

News Ltd’s SA subsidiary, Advertiser Newspapers, has turned its back on newsagents with their latest promotion Ai2 Robots. The Ai2 offer commences October 29 and will be available exclusively through BP and On The Run fuel outlets. This continues News’ SA rejection of newsagents as their retail network of choice. While News executives say newsagents don’t offer the same compliance as BP I’d say prove it. I have been to SA BP outlets and their treatment of newspapers is appalling. Newsagents provide a more compliant front of house offering, better customer service and better in store merchandising. Fuel transactions can be slow compared to rap[id transaction processing in a newsagency.

Spurning newsagents in this way gives newsagents further reason to question the value of the News Ltd relationship. Either News is serious about the newsagent channel or not. In SA, I suspect not.

I appreciate that the SA distribution model is different with most delivery newsagents not operating a retail store. This is no reason to reject newsagent shingled stores from being the shop front for such offers. Newsagents are more conveniently located and provide better customer service than any petrol outlet. News Ltd needs to address this, nationally.

For the distribution newsagents dealing with BP is a challenge since they often wait 30 days for accounts to be settled from head office, leaving the newsagent cash-flow negative for the run of the campaign.

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Newspaper marketing

Exclusive 2007 calendar deal for newsagents

newsXpress is providing its 95 stores with an exclusive calendar deal which delivers the best margin for any calendar this season. Inside, customers find vouchers providing access to more than $90 worth of discounts – two for each month – luring customers back to newsXpress outlets. Priced at $2.95, the newsXpress exclusive calendar is well positioned in the marketplace. The calendar is being supported by a range of marketing collateral. I expect it to be a sell out. What makes this news is that it’s a first for the channel.

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This calendar deal is another example of the benefits of a group of newsagents as one on a commercial deal. Unlike deals negotiated by some industry associations, this deal more than doubles margin newsagents are used to. The deal also puts pressure on newsagent marketing groups – there is strong competition between newsXpress, Nextra and Newspower and newsagents are the winners.

Disclosure: I am a Director and shareholder of newsXpress.

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marketing

Australia Post masters spin in its Annual Report

blogpostlogo.JPGIn its Annual Report released to Parliament yesterday, Australia Post spin achieves new heights. The spin starts with:

The core products and services offered through our postal outlets include letter and parcel services and a wide range of agency-based services, including bill payment, agency banking, money orders, passport interviews, personal identity and verification services, travellers’ cheques and money transfers.

We also offer a variety of merchandise that complements those core products and services, including packaging and philatelic products, stationery, communications products, office and computer products, and gifts and cards.

This is nonsense. Visit any of the Government owned 857 Post Shops and you will see what they consider to be core. Stationery, gifts, imported crap from China. Postal products are the poor cousin of their retail story. Most Post Shops don’t look like letter or mail services. Indeed, if you want to use these services you have to queue for too long for mediocre service – all the while being tempted with their newsagent like merchandise.

The Annual Report has been written as it has because of the requirements of the Act under which Australia Post operates.

Australia Post is abusing the provisions of the Act to take business from independent small retailers like newsagents. That our Government is competing with us in this way makes a mockery of their small business policy.

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Newsagency challenges

Motoring and IT magazines declining

Erik Sass writes at MediaPost about the fall in motoring and IT titles which I have discussed here previously. Sass writes:

Figures for ad pages and revenue from the Publishers Information Bureau tell the story. For January-September, automotive ad pages fell 12.7 percent compared to the same period last year, from 16,182 to 14,129; and ad revenue fell 10.1 percent, from about $1.65 billion to $1.48 billion. Tech ad pages are up 2.2 percent to 8,157, and revenue is up 6.8 percent to $769 million. But most of that is going to mass-market magazines, including cell phone and home PC advertising, leaving niche titles out in the cold.

Technology is the challenge for these titles, technology which enables would be magazine buyers to gain for timely and often more cost-effective satisfaction using other media.

This is one reason why we reduced the real-estate allocated to computer titles six months ago and are in the process of doing the same with motoring titles at the moment. For example, how many Classis Cars titles do I need to satisfy that interest. Five? Ten? Most sales in this segment, as you’d expect, come from three titles. The other seven are cash depleting filler.

We need a magazine supply model which responds to these trends.

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magazines

Lottery companies holding newsagents back

Try as we might, it’s been impossible to get Tattersalls, NSW Lotteries, SA Lotteries, Lottery West or the QLD Casket office to agree to feed sales data to our Point of Sale system. In my own newsagency this means double handling. When I sell a lottery ticket I complete the sale on the Tattersalls terminal and then have to ring the same data up on the point of sale screen. If I don’t do this I have less control over the cash and I have no way of tracking what is sold with the lottery ticket – this basket data is crucial to any retailer. The lottery businesses cite security as the reason for not agreeing to a link. I say this is nonsense. All I want is a one way data feed of the sale value to save manual entry at the POS screen.

If such a link were implemented by the lottery companies, newsagents and others would have better cash management and better basket data – both leading to an improvement in business. Now why would our lottery suppliers not want those outcomes?

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Newsagency challenges

New card and gift group to launch

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Having helped develop the newsXpress newsagent group to 95 stores, I and my fellow Directors have been developing a second franchise group, sophie randall cards and gifts. This will be a complimentary retail offering which will appeal to newsXpress franchisees as an additional business as well as providing a model for existing and new entrants into the card and gift space under a new brand.

I mention this new business here because some in the industry are already gossiping about Sophie Randall. By sharing some details here I can exert some control over what you hear about this exciting new initiative.

sophie randall cards & gifts is a fresh approach to helping owners of card and gift shops to unlock greater value from their businesses. Using a franchise model, existing and new card and gift shops will have access to the benefits of a national brand without having to give up their own branding if they wish. We will provide access to product rebates hitherto unattainable by individual stores. We will also deliver significant operational cost cutting opportunities as well as access to products previously not available to individual card and gift shops. Franchisee stores will be supported with professional consistent marketing collateral and support materials designed to increase traffic and boost sales.

Sophie Randall, the inspiration for this business, is a forty-something greeting card and social stationery designer. Sophie worries that technology makes it too easy for people to stop putting their feelings in writing. She got into greeting card design because she felt the world was becoming impersonal and that people were losing the art of sharing their feelings. Part designer, part philosopher and part raconteur, Sophie is on a mission to help people express themselves, in writing. Sophie is feisty – never afraid to share an opinion. She is also caring and always ready with a word of encouragement.

Sophie Randall is a fictional character, created to bring this retail concept to life, to provide us with exclusive and valuable Intellectual Property. She is a character people, particularly card and gift buyers, will respect and turn to for inspiration.

We are naming the business after a person because it removes any barrier a product based name causes and allows us more control over the IP surrounding the whole concept. We own Sophie, who she is, what she thinks and how she acts. Her name makes our business more unique and valuable.

We expect Sophie Randall stores to provide an opportunity for newsagents to spread their risk – to establish second and third retail outlets and thereby not rely on the traditional newsagency model for all their income. It also provides tenants with greater leveraging with landlords – two stores in a centre is better than one.

We’ll have more details soon at the Sophie Randall website.

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Greeting Cards

Lobby power

Farmers have extracted yet more money from a willing government for drought relief while many newsagents continue to struggle with the impact of deregulation imposed in 1999. While I fervently believe in a free market, it is unreasonable that this was imposed on the newsagent channel without any assistance to adjust the 4,600 businesses for open competition. A key element of assistance ought to have been fixing the magazine supply model which continues to see newsagents supplied non top-200 selling titles on terms which are inequitable. These are titles those competing with newsagents refuse to carry. Try as they might, newsagents struggle daily with magazine distributors to achieve a net reduction in range.

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Newsagency challenges

Reuters opens news bureau in vitrual world

blogsedcondlife.JPGCourtesy of c|net:

Reuters is opening a news bureau in the simulation game “Second Life” this week, joining a race by corporate name brands to take part in the hottest virtual world on the Internet. Starting on Wednesday, Reuters plans to begin publishing text, photo and video news from the outside world for “Second Life” members and news of Second Life for real world readers who visit a Reuters news site at http://secondlife.reuters.com/.

Second Life was created by Linden Lab in San Francisco,. It’s a virtual world online with a community of 1 million and growing fast. To many, Second Life has been a game, even something to poke fun of. Reuters and others establishing on Second Life give it legitimacy and demand closer scrutiny. Maybe I should open a newsagency at Second Life. It makes sense since Reuters are there as well as other businesses.

What’s odd to me is that companies get into the Second Life virtual world to strengthen their connect with the real world.

I have enough trouble keeping up with the real world let alone even thinking that I should have another life in a virtual world. But then there is the opportunity to start over … tantalizing.

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Uncategorized

Newsagent wins kudos in business awards

Rod King and his team at Bingara Newsagency are the latest in a long line of newsagencies to be recognised in business awards. His country town newsagency is a finalist in the Champion of Champions Awards (Specialised Small Business category). I first noticed Bingara Newsagency when they were one of three equal winners of the Tower Systems Fast 3 Awards – awarded to the three fastest growing newsagencies based on year-on-year same store sales comparison. Well done Rod and the team!

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Newsagency challenges

Sudoku still #1 in crosswords, Lovatts too

blog-sudoku.JPGLovatts were first with Sudoku in Australia and they still lead the pack. Sales of their various Sudoku and Kakuro titles lead both segments of the crossword marketplace. The data I see show the crossword category up 13% year on year to September 30. Sudoku is the key driver of the growth. Try as they might, other Sudoku titles from publishers not well known in the crossword space don’t gain the same traction.

What I like about the Lovatts product is their support for newsagents. They pre-code their magazines so that newsagents don’t have to produce labels and sticker the covers. This saves time and makes the product look better. (The Lovatts website has more details.) I also like that in the Lovatts product I have an exclusive well branded magazine range backed by good in store material.

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magazines

News Ltd botches Steve Irwin fundraiser

blogwrist.JPGNews Ltd has botched its support of the Wildlife Warriors charity established by the late Steve Irwin and his wife Terri. News is promoting the sale a green band for $1.00 to raise funds for the charity. Newsagents in NSW report being provided too little stock to satisfy demand. Several I spoke with sold out by noon. With newsagents the only outlet, they ought to have been supplied more than the number of newspapers they sell. Instead, they were supplied less. Significantly less. Making matters worse is a slow backup stock system which means newsagents won’t have bands until Tuesday. Too late.

It’s in South Australia that News Ltd really stuffed up. They ignored newsagents and appointed BP the exclusive distributor of the bands. This is nuts. I’d expect they would have sold more bands and raised more funds had they used newsagents. The takeaway for newsagents has to be that News considers them less relevant than BP.

In Victoria, a week ago, the bands were handled better by the Herald and Weekly Times folks.

Newsagents are being paid ten cents for every band sold – to cover their administration costs. Newsagents I have spoken with would have been happy to receive nothing as long as they were given sufficient stock to make the fund raiser work for the charity and as long as others in the supply chain worked for no margin as well.

If News was serious about raising the maximum amount of funds it would have run the campaign on one day nationally and leveraged better PR as a result. It would have used newsagents and, indeed, all newspaper outlets. It would have ensured sufficient stock and a good backup plan. That’s if it wanted to raise the maximum funds for the charity possible. (I appreciate that marketing plans are set months in advance and not all states could agree on the one date – but this campaign was unexpected and important to Australians.)

Turning this fund raiser into a commercial strategy and cutting out your core distribution channel as happened in South Australia is poor form. I reckon Steve Irwin would have something to say about it.

Photo from Sunday Telegraph website.

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Newsagency challenges

Price increases of newspapers versus magazines

I like that magazine publishers adjust the cover price of titles. Whatever their motivation it provides retailers like newsagents with extra revenue to cover increased rent, labour and other costs. Newspaper publishers, on the other hand, continue to hike up advertising rates while barely adjusting the cover price. Sure there has been some movement this year. However, looking at data for the last ten years the shift in the cover price of top selling magazines is more commercially attuned than what I see for newspapers. Some titles have increased by 25% while top selling papers are up by 10% in the same period. Labour and rent for many newsagents have increased by more than 40% in the same period.

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Newsagency challenges

A new approach to greeting cards

A year ago we moved greeting cards from the traditional newsagent card aisle down to the front of our shop. This involved a $95,000 investment in new fittings, a new floor and more appropriate lighting for the 50 sq metres allocated. Several months ago we, working with our main card supplier, Hallmark, we extended the range, further tweaked the shop-fit and relayed cards and associated products. The result is a significant increase in sales. The first two photos below fit together to show the whole space.

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We have created a space people wander. Average browse time has more than doubled thanks to more product and more surprises on the journey through the space. Also, moving cards away from the high traffic area of the newsagency has improved the customer experience. Below is a picture of what we have done with wrap – lifting it off the traditional floor unit and displaying it horizontally. Newsagents have tended to not like this approach. Our feeling is that it is easier for the customer. We use a similar approach on another wall (not photographed) for our bags. Customers can see 80% of each bag and get a better feel for what they are buying without having to dig into the stock as often happens in newsagencies with bags.

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The final image shows the depth of the space and the range of stock carried. The aisles are wider than they seem. We often see five or more browsing our cards which, for our shopping centre, is amazing.

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The result of the investment of time and money has been a significant increase in sales. I won’t quote detailed figures yet because it is too early but I will note that for Father’s day sales were up 350%. What is interesting is the significant increase in multiple item sales. Whereas in the past the majority of card sales involved a single card, now the majority of sales involve multiple cards. We’re using data from our point of sale system to tweak the card space in pursuit of greater basket depth.

Without wanting to blow our own trumpet we feel that what we have done represents generational change for newsagents and cards. Moving cards out of an aisle and into a warmer specialist space in-store reflects a commitment newsagents ought to consider.

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Greeting Cards

2,500 jobs listed at Find It

Our Find It online classifieds site not lists 2,500 employment vacancies thanks to the first of several content partnerships which will build out content and boost traffic. Total listings are close to 5,000. All Find It ads are free and will remain so until early 2007. Newsagents are promoting Find It in a number of ways. Last week in Beechworth, for example, a simple A4 poster in the window of the newsagency resulted on ads being listed. We’re updating news about Find It at the Find It blog.

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Online classifieds

Taking on Big W

blogcook.JPGHere is the poster we have created for our COOK book promotion. Remember, Big W are selling this for $36.95, less than our buy price. Our store is being dressed with A1 posters surrounding our stock with a hope that the stack em high watch em fly strategy works. Big W are demonstrating a lack of creativity in their approach, but they usually do. While discounting will move the stock, the question has to be what does this do for the brand and for Big W. Deep discounting is like a drug addiction. Either you continue or, through intervention, you clean up and see that there is a brighter future. Our approach is rooted in a longer term view which respects the product and our own brand.

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Newsagency challenges

PMP in play

Bloomberg is reporting that Pacific Equity Partners is in buyout talks with Australia’s biggest printer, PMP. PEP last week announced the formation a joint venture to take over the Supanews Newsagent group. The joint venture includes Angus and Robertson and Whitcoulls stores.

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Newsagency challenges

Bitter association fight threatens newsagents

Not content with the challenges of a rapidly changing marketplace, some newsagents are engaged in a series of bitter and personality based fights which threaten to tear the channel apart. By newsagents, I mean the politicians, those elected to the Boards of the state associations and the national association.

In May of this year the ANF signed a Memorandum of Understanding with each of the state newsagent associations in Victoria, New South Wales and Queensland. Since then, in NSW and QLD, it’s been guns at 30 paces. The ANF has served breach notices on the states for the most minor of infractions. In Victoria, any minor infraction has been ignored.

The MOUs I have seen are convoluted and provide a basis of confusion for what was to be a harmonious marriage. I have seen breaches of the MOUs by both sides. It is nonsense to issue breaches when all newsagents want is robust membership on the issues that matter.

The battles, in my mind, are all about membership for it is membership which determines the make up of the Board and for some a Board position is all that gives their life meaning, or so it would seem.

There is a battle going between the ANF and one state at present which threatens to tear the fragile unity among newsagents apart. If newsagents knew the story they would lose all faith in their associations. State Associations must serve their members first and in doing so ought not be attacked by the ANF.

The participants need to pause for a moment and consider their various constituencies. How are newsagents best served by the time and money being spent on such a personal and spiteful battle? They are not. At the time the MOUs were being considered I said that immediately on signing all directors ought to have resigned and fresh blood brought in. That this did not happen has led to the current situation.

I was a Board member of the ANF in 2004. The concerns I expressed in my resignation letter of almost two years ago have not been addressed. They go to the heart of the current mess.

Newsagent associations are in need of strong experienced and independent thinking board members. Without this the current mess, which has provided for more than ten years of poor representation of newsagents, will continue.

Unless this mess is fixed in the next few days newsagents would be well served resigning from all industry Associations. The Catholic Church in Boston refused to address its scandals until it was affected at the collection plate. Newsagents withholding funds from their associations could have the same effect.

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Newsagency challenges

Kudos in the US for the launch of Hallmark magazine

bloghallmark.jpgHallmark’s new magazine has launched in the US with an expectation of reaching 550,000 sales. Hallmark is cleverly leveraging their 4,200 Gold Crown stores and 44,000 other retailers carrying Hallmark product – making this a unique magazine launch in the US. Fern Siegel is Deputy Editor of MediaPost has reviewed the first issue. Here are some excerpts from that review:

The problem is, many women’s magazines exist in a far-off galaxy where the goal of existence is twofold: achieve the perfect blonde highlights and wear size 4. And never, ever, age. These pubs, which apparently target zygotes, are obsessed with weight, men and sex. Their reality, like Congress’, is skewed.So it was refreshing to discover Hallmark’s emphasis on every-day life. And it doesn’t get any realer than a Kansas City reader whose beauty secret is “a bra that makes 40-year-old boobs ride higher than half-mast.” Of course, the catch is how you frame reality. Since it’s Hallmark, the focus is emotional. In a crowded category, one needs something to stand out. (Body By Victoria Shaping bras aside.) Enter the five focal points that double as the magazine’s section headers: Inspire, Renew, Nest, Connect, Nourish.

Read the full review here. I have not heard if Hallmark will launch in Australia. It certainly seems different to Better Homes, Women’s Weekly and Notebook – the titles it would most directly compete with.

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magazines

Screeching about Corporate Paedophilia

The report, Corporate Paedophilia
Sexualisation of children in Australia
from The Australia Institute has received worlwide coverage this week and, from what I have read, much of it sensationalised. After hearing reports about Total Girl and Barbie Magazine were presented as evidence I wondered what that makes newsagents. Should we take the titles off our shelves?

Looking to get behind mediocre reporting I read the report last night. While I disagree with some points, it is entirely appropriate that the report is authored and published. Poor reporting by some media outlets denies sections of the public from understanding the core thesis of the report.

It is unfair to target a single corporation or magazine title as being guilty of ‘corporate paedophilia’ ever if the label is used as a metaphor. The problem needs to be considered as a whole – magazine content coupled with online content, TV programs, fashion advertising and even news reports in a variety of media. As the paper says in its summary: There has as yet been no sustained public debate about the sexualisation of children in
Australia.
For this to happen we need more thorough reporting, beyond the screeching of the last few days.

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Newsagency challenges

Notebook bold in white

blognotebook.jpgThe folks at Notebook magazine continue to innovate with their November issue (on sale yesterday). The cover is white and among the sea of colour from surrounding magazine covers it stands out. Since its first issue, Notebook has provided visually stunning covers.

I thought the use flowers on the cover would run its course. It hasn’t. This latest issue looks fantastic. The challenge is where to place the title. For us, it’s selling better next to Australian Women’s Weekly than anywhere else.

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magazines

Big W and gorilla marketing

blogcook.jpgCOOK is an excellent new cookbook. 600 pages of recipes from The Australian Women’s Weekly. COOK is beautifully printed. The Recommended Retail Price is $69.95. I ordered 100 copies even though my newsagency is big in books – I was glad to have the opportunity to play in a new space – especially with such a premium product and in the lead up to Christmas.

Then gorilla retailer, Big W changed my plans. In my centre they are selling COOK for $36.95. This is less than our buy price. Even before COOK is advertised by the publisher, Big W (Woolworths) is ruining the market for everyone. Dymocks has COOK at $59.95. That makes more sense – it’s where we expected to be. I’d have accepted Big W selling COOK for, say, $49.95, given their focus on being cheap. $36.95 is nuts.

The Big W strategy is to grab attention with a loss leader regardless of the damage done to a product along the way. Their pricing of COOK at $36.95 is arrogant. But, I have to cop it – such is competition. It reminds me of why I hate businesses like Big W. They are a cancer in the retail channel. They screw with consumer’s minds. They disrespect brands. They kill off the creativity of their employees. They squash small businesses – the standard bearers of community among retailers.

Gorillas in the jungle would have better manners.

Now, let’s see if we can be smart in how we compete.

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Newsagency challenges

Is 14 cents a tipping point

It’s taken three years to build but newsagents now have a viable retail network for bill payment and prepaid recharge product. Like any new kid on the block, all stakeholders have worked together to ensure that there are no barriers. Our service costs the same or less (in the case of some billers) than that offered by Australia Post. There are no extra fees for payment type, until now. Newsagents have just been advised that from November there will be a 14 cent fee for debit card payment. While we’re not the first with such a charge, the challenge for newsagents will be the seamless implementation of this charge on to the customer so that newsagents themselves are not left funding this. It is something else to track, claw back and process.

I expect some newsagents to levy a fee which compensates for the extra work while others will pass on the 14 cents. I wonder how customers will react. My sense is that our network is not strong enough to sustain a levy like this. Newsagents are not expected to be as fee hungry as Australia Post.

We cannot afford the 14 cent fee to be a tipping point against the growth we have achieved so far in this area.

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Newsagency challenges