Month: May 2007

My blog post yesterday about reports I had heard about NDD discussing moving their deliveries to First Fleet resulted in calls from various people who did want to be named. Some were wanting to find out what I had heard, others want me to name my sources and others had extra information.

I am confident that the report is accurate and that NDD is considering or has considered in this past week a commercial relationship with First Fleet. Whether it happens or not is another thing. I would have thought that newsagents and publishers would be against such a move as NDD and First Fleet would be the only stakeholders to benefit. For example, without the opportunity to share costs, newspaper publishers and others using trucks currently used by NDD would have to either pay more or make alternative arrangements.

While I accept that NDD must put its business needs first, the experience of 2004, when Gotch and Network moved to First Fleet, and the resulting fall in the quality of distribution services must concern them. In making the move they would lose a point of difference.

The report in the Sydney Morning Herald yesterday about the District Court case commenced by NSW Lotteries against a newsagent demands careful attention from newsagents.

It highlights the risks newsagents face in managing payouts, regardless of whether NSW Lotteries, or the lotteries operator in any other state, has robust procedures. Consider this from the SMH report:

Mr Bannon claimed that the newsagency was in breach of its contract with NSW Lotteries and therefore the lottery company should be indemnified against the loss.

I would have liked the SMH to explore this further and report on why NSW Lotteries considers the newsagent to be in breach and what the implications of such a breach could be for the newsagent if proved.

My understanding is that if such a breach is proved, the insurance coverage NSW Lotteries requires lottery agents to have could be considered void by the insurance company, leaving the small business operator to carry the cost of the fraud – unless their general business policy offers relief for the employee fraud they appear to have been victim of.

I am shocked that NSW Lotteries had a system in place which allowed newsagents to manage a first division prize claim. To blame the newsagent for a breach of contract, over a process which should never have been handled at the store level in the first place is nonsense. NSW Lotteries have acknowledged issues with the old process by making changes.

The case this week in the District Court is not the only matter involving major NSW Lotteries prizes, newsagents and the issue of breach of contract. Of course, Lotteries is safe if they can prove the breach in other cases. That only leaves the insurance company to void the policies – because of the breach – to protect their bank balance. Newsagents face the biggest risk in these cases and that’s the story I would like the SMH and others to cover.

Newsagent associations ought to be all over this case. I suspect that when they do become involved it will be too late for some of their members.

UPDATE: Today’s SMH has this story including this from the newsagent’s lawyer:

“The [newsagents] have been betrayed by a person they had no reason to doubt. They now find themselves in the position of being sued for half a million dollars plus costs by an agency of the government,” Mr Stevenson said.

As I suggested earlier in this post – watch for more cases on State Government owned NSW Lotteries suing newsagents.

I have been in Adelaide today meeting with newsagents who use Tower Systems software. Prior to the software part of the meeting there was a robust discussion about the many problems with magazines and with partworks. With magazines the most common problem seems to be with gross oversupply of the fringe titles – titles outside the top 200 performers. With partworks the problem is with undersupply – the cutting of newsagent supply by 80% after the first two issues.

The financial and emotional damage done by problems in the magazine supply chain costs newsagents a fortune every year. Suppliers and even some in newsagent associations complain that newsagents are their worst enemies when it comes to matters of magazine supply. Such comments are ignorant.

Take the group of newsagents I met with today. they are the best of the best – each following best practice in terms of magazine data management. This means they provide suppliers with sales data electronically every day. This sales data is not used in determining scale out – especially for the fringe titles. These titles consistently have a sell through rate of less than 50% and temporarily steal newsagent cash flow. Distributors see the financial cost their ignorant scale-out decisions wreak on newsagents yet they do not act on the sales data they fought hard for years to access. It’s as if compliance means nothing to newsagents.

In terms of putaways the problem is worse. Newsagents, through industry standard technology, let distributors know about fixed orders – putaways – for customers yet distributors consistently under supply so that newsagents cannot meet these orders. Instead they sent the product to others only to have the product returns and, possibly, mad available to the newsagents with fixed orders.

My point is that in both situations the distributor’s own technology and the technology used by newsagents – to the standards dictated by the distributors – can fix this and provide a more equitable scale out to compliant newsagents. The distributors ignore the opportunity. NDD is the worst by far. This was discussed today in Adelaide and the room concurred that some of the junk they are supplying to newsagents is appalling.

This is why we, newsagents, need a magazine czar. Our channel is open to any publisher who wants to pay magazine distributors to ship their product. For their part, distributors are covered. Newsagents are not. We have cash at risk, real estate in use, labour in use and theft to face. A magazine czar, on our payroll and on our side, could stop some of the crap we see today. They could also work on the perennial issue of gross oversupply as well as the problem of the partworks con where stock is not available after a couple of issues.

To those who are moaning that I am beating my usual hobby horse I’d say read what I have written. I want to sell more magazines. I know that if my suppliers used the data I and other newsagents provide this could be achieved. All it takes is a will, on their part, to sell more magazines.