I was fortunate to meet with Adam Gray, General Manager of Fairfax Media Publication Solutions and Damien Wouda, National Account Manager of FMPS, today to discuss the transition from NDD to Fairfax. I did this as owner of Tower Systems, a Director of newsXpress and as a newsagent. They are meeting many people in the newsagency channel to canvass the best approach to further establishing their magazine distribution business.
I appreciated and enjoyed the questions they asked and the openness of the discussion.
Today’s meeting was not about conclusions. I am not about to publish here the details of the discussions since it is the decisions they ultimately make which will matter.
I cannot recall a magazine distributor demonstrating the level of genuine interest in options that I experienced today.
An interesting issue. The distribution newsagent in me would say that the existing distribution network should continue to be supported by Fairfax and all product should be distributed through distribution newsagents. There is an argument that some retail newsgants made the decision to be retail only and the risk they took was reduced margin which is presumably offset by an easier life style. Be interested to se where this ends up.
Craig I sold my newspaper distribution business three years ago. I retained direct magazine accounts for my store. This is a complicating factor for such discussions. I am happy with the consultation the people at FMPS are undertaking on this to understand all of the issues.
Fairfax would appear to be between a rock and a hard place. Presumably they don’t want to increase their distribution costs by too much, but want all newsagents to stock the product. Distribution agents need to make a reasonable return for the investment of their dollars and labour as do Retail agents.
CraigL
You make a good point Many of the newsagents that have given up there home delivery of newspapers make application to ‘keep” their sub-agents for magazine distribution. It could be seen from one side as “having your cake and eating it too” I am sure that the current distribution of mags from Fairfax will go a long way to sorting out the differences between newspaper and magazine supply to sub agencies.
As far I’m concerned distribution newsagents can keep the titles offered by fairfax, as they are loss makers anyway. We are retail only and will not be trying to get any of these titles delivered either directly or via the delivery newsagent.
What about your customers? Aren’t you going to give them a chance to purchase from you? You may be driving a customer to another newsagency and that could more than the sale of just one product-forever.
Magazines are only a very small part of the retail game Graham, and the offer from Fairfax is an even smaller part of the magazine game, we have not had an NDD account for some 5yrs now because of gross oversupply, customers gravitate towards newsagents that have an exciting overall offer not the ones that have the most mags sitting on the shelf gathering dust. If range was the key then I’m sure the pubishers would not be cutting back so much, it is all about having the right supply of the right mags at a time when the customer wants it.
It would be great to have every mag in existence on the shelf but to be a good retailer you need to know what you do have that will fill the customers need even if it is not what they come in for.
Graeme,
We’re not talking about high volume titles like daily like newspapers. Why would any retailer accept stock that offers no net profit and does not provide any other significant benefit? If newsagents gave customers the opportunity to purchase every product from them …. well then they wouldn’t be newsagents.
Luke,
I was only referring to impulse sales and there is no impulse where there is no stock. Also new fleging titles that came from that distributor wouuld not be available to the retailer.
e enjoy a sale or return process (and despite its faults) that allos us thepriviledge of letting the customer view new stock items This I thought and stand by is good retailing. If after a period of time and they are not working you can return them. However if we wish to be censor of what sells or what does not sell the it’s your choice I am only giving a point of not looking for a battle of righteous conduct or justification of one is doing. I believe it’s an individual thing. So “we’re not talking about” would indicate you representaing a number of newsagents. Would it not?
I’m sorry Graham but when did I say I was representing a number of newsagents? I only give my opinion from what I see as a current newsagent not someone that is no longer hands on.
Mark, is there any indication of when Fairfax will be getting on board xchangeit…. we are getting a few Mags and have no idea of a return date. Lets just hope they do properly.
Carl, They didn’t say a time but I suspect it will be at least a couple of months given the development time involved.
uke,
That part of the email was for Jarryd as I quoted his email 8 “we’re etc. Sorry to confuse the issue. The censor bit was a general comment meaning if you block any title then one is the censor of which by having the sale or return facility the publisher distributor is trying to avoid.
after a few conversations i have had i am now happy to give fairfax ago as long as there return policy is sorted asap because the last thing i want is huge bills from fairfax when i only sell 2 fin reviews a day and a brw here and there 3 best bets and a winning post or 2 . i am interested how it will be billed out as we cannot even enter mags in stock yet as there is no recall no cost price not to mention even a return method tops or fulls .But as i say i am still willing to give them the chance to prove that they can do it .
Why would you not keep Fairfax mags ,i have been selling mags for 35 years i still do not know what sells and does not . I find my sales change all the time , what sells this year may sell down the track
Graeme,
My collective “we’re” reference was in relation to all those discussing the fairfax distributed mags. The titles we are all talking about are not high volume titles.
The censor argument is irrelevant. If a newsagent doesn’t sell Coca Cola products because Pepsi are providing them with a higher margin product are they censoring? If so then by that logic there are many thousands of retailers engaging in such ‘censorship’.
Would newsagents accept any other product from a supplier at 12.5% GP? Every other industry would laugh in a supplier’s face if they presented such a deal. The bottom line is that selling magazines at 12.5% is neither profitable, nor sustainable.
Jarryd, retail only newsagents are already accepting 12.5% for newspapers and are placing this stock in the prime space of their shop. Many also already accept magazines at 12.5%. The precedent exists. I understand that with high rents the model may not be returning enough to meet costs. Do you have a suggestion on a model that would meet both the publishers and retailers needs? As an industry we need an answer that recognises all players. If we increase the cost of the publishers or distributors in a declining market i suspect that we all lose.
I can see Fairfax seperating the magazine distribution to the paper distribution it is the only way it can work
It is unprofitable to sell magazines at 12.5% in shopping centres with rents in excess of $1000pm. Surely the publishers and the distributors realise they are not getting the best space if they continue with this system of providing magazines to be onsold at 12.5% to the retailer Now is the time to overhaul the system and move ahead in magazine retailing and not be held back by the distribution system used in the 50″s.
I am in a shopping centre with high rents and fought like hell to gain full commission supply from the magazine companies, jumped through all the hoops, met all the sales targets (which some kept shifting), have done all the hard work to get sales where they are today…..why would i accept a decrease in commission now? I never handed back a paper run and my supplying agent didnt want the shop so why should i be the one to have taken the punt and put in the work only to have someone take money from me when as those in shopping centres know goes along way to helping pay the rent. I am very interested to see what comes to the table here, very interested indeed. Please keep us posted on this one Mark.
Cheers
Al
Craig,
Newspapers are a different story. Retail only newsagents accept 12.5% because these are a high volume traffic generating product. Without major daily newspapers many newsagents would struggle to survive. While they are not technically a “loss leader” they could be considered a “net-loss leader”.
Those select few magazines, distributed through Fairfax, that retail only newsagents accept are usually either Fairfax publications (which they obviously wouldn’t distribute through a third party) or publications that don’t have alternative competitor titles that can be offered to customers. The only mag we accept from our supplying agent is Best Bets.
No one is seeking to increase the cost to publishers. Newsagents are ideally seeking direct accounts with 25% margin … Which is the situation that is currently in place with all three magazine distributors.
Craig, many retail only newsagents have direct accounts.
I think having a financail threshold is one way of determining direect account status for magazines
In terms of Fairfax, we should let them continue their consultation process before we worry about what they may or may not do.
Correction Jarryd,
2 Major Distributors of magazines not 3 and 2 Distributors attached to newspaper publishers.
NDD has not yet been wound up Graeme.
Stop being pedantic We all know they have closed their doors, given notice to newsagents otherwise we wouldn’t be having this discussion about Fairfax- Fair go the question was about now dealing with 1.5% and whether newsagents wold stock the magazines at that price-deny the customer the right by acting as censor – is it good retail – you’ve answered yes- blow the customer.
It’s one way of thinking and maybe it will work-for you. Another way is to put pressure on Fairfax to understand their distribution model doesn’t suit magazine and try to negotiate with them that their model deprives the end user by restricting outlets. More than one way to skin a cat Jarryd
By your working Graham, I should stock every single magazine title available on the off chance a customer may want it, I should also stock every newspaper available including overseas titles on the off chance a customer may want to read what is going on in Germany today, you seem to forget that if a customer religiously wants a title then they more then likely will accept the huge discounts on offer from the publisher to subscribe directly or they read it online. Mags have become more an impulse item so customers are less likely to look for a specific title rather they are looking for magazines about a specific topic. Sell what you have instead of focusing on what you do not have and through good retail convince the customer that is what they wanted in the first place.
Luke, Firstly you take as much notice of the content I post and interpret it as much as you see my name and continually get the spelling wrong. You sure have a problem with comprehension. Re-read absorb and then get it right both the content and the name spelling. Graham must be someone else it ain’t me.
Graeme,
I am with jarryd. NDD is open and training, still supplying stock.
In terms of Fairfax, they are consulting publishers, newsagents and other stakeholders. As I noted, I met with them earlier this week. I liked what I heard in terms of the process they are undertaking.
Irrespective of any decision made by Fairfax, it (their decision) will not save the bacon of any newsagent. Sadly it would appear than no-one (including me) can come up with a better model that suits all. So we still have not advanced beyond a woe is me attitude. We are all frantically trying out higher margin product because we have no choice if we wish to survive. In a sense it becomes a self fulfilling prophecy with mags as we pay less attention to them. I’ll start the ball with an idea, which will horrify publishers. Perhaps we need to move to a consignment type model with mags and only pay for what we sell. We would maintain similar margin, although i like the concept of linking margins to volume. More sales means higher margin as well as the benefits of increased sales. Improved cashflow would lead to stronger businesses and encourage newsagents to hold a greater range.
Craig,
A model I would suggest is worth exploring is direct accounts for magazines where the annual account value is above a certain level and where the retail business represents to shoppers as a newsagency. The remainder could be serviced as sub agents.
Maybe I care for you that little I do not bother spelling your name correctly?
CraigL, Sales on consignment is a nice idea although it would never happen because that would mean its the publishers/distributors money tied up in the stock on our shelves instead of ours. Sure would tighten up the supply model quick smart though.
I dont agree with higher margain for higher sales though. You’re saying that a shopping centre newsagency turning over maybe $750k a year in mags deserves a much higher margain the the country town newsagent turning over $50k in mags per year. Its the “rich get richer” mentality.
Fluke,
I wish i was that newsagent near you.
No respect, no regard. you and your mob will be boarding up soon…
Graeme,
I’m not sure where your coming from. You seem to hold the perceived right of the customer to access whatever product they want in higher esteem than the right of a business to make sound commercial decisions.
And you propose that we put to Fairfax the idea that their current distribution model “restricts outlets” … Except you don’t want retail only newsagents to refuse stocking the publications … So ultimately there would not be a restricted number of outlets if retail only newsagents took stock at reduced margin.
Mark,
A minimum annual account value is an interesting idea. While it would cut out the smallest agents from direct supply, I don’t think we could ask Fairfax, on reasonable commercials terms, to supply to agents so small that the account was ultimately loss making. The big question would be at what level to place the threshold? And how is it determined if a newsagent will meet that threshold if Fairfax has no reliable data?
Hemi, me and my mob have been doing business in the same location for over 20yrs and will be around long after this little tiff, respect needs to be earned not simply demanded, we are the only newsagency in our city that has not been up for sale in the last 5 yrs.
By the way, I’ve been called worse then having my name spelt wrong.
Come on guys i want to know how we as newsagents are affected by this and how we can work toward resolving issues that matter, not name calling and the like. The only consistant criticism i hear about the indusrty revolves around “lack of unity”, well heres our oppotunity!!!! What do you say?
In case the question hasn’t been answered yet… And apologies if it has already.
Fairfax mag delivery dockets have a box near the bottom right, with a recall date, if it’s available.
I found it by accident while getting the world cup parcels ready to return.
Funny, I’d never thought to look for one there until then..
Thats fine Allan, all I stated is that I though very little of Mr Day and that I will not be stocking mags from fairfax.
Luke 37. So have I one is deliberate the other is ignorance.
Graeme Day you come across like an arrogant dinosaur who with little appetite for the opinions of others.
Everyone ought to get the topic on track. I am prepared to wait and see how this consultation develops.
The comment re Fairfax going to EDI is the one I am most interested in. At the QNF conference earlier this year there was some talk about this but also of it being some time away (I think it was approximately two years away but don’t quote me on that). While I have no real issue with Fairfax supplying magazines, margin is an issue but it is no good giving a 25% margin when the work involved in arriving and returning will eat into that and make the titles a loss anyway.
I reserve judgement until consultation is finished and a decision made.
I do however agree with the unity comment. If we cannot rise about immature name calling and show some sort of unity as newsagents then we will all be bound for failure. Everyone is entitled to their opinion however, in my humble opinion I believe there should be a certain level of professional respect shown.
B, my understanding is that at the moment this would be for the magazine product only.
Both GG and Network
have in the past gone direct to ANY subagent that they felt was worthy of direct supply. We have been in the position of paying to deliver to a subagent only to have them taken away when they reached a VIABLE position to become direct, so I agree that the distribution should be on a basis of retailers who are already getting direct should automatically qualify for direct supply for FF mags and those who are subbies should stay as subbies.
This seems to be the fairest way around it.
If FF reduce the NDD product to a shop that had a direct supply then I think I won’t be handling their product even though they have some quite
reasonable titles.
I’ll just put more stationery and more gifts in instead because I won’t be able to pay the rent if I take a reduced margin for mags.
I also think that FF would know this and would be trying to find a way through this maze and that has to do with Xchangeit etc so perhaps we need to cut them a little slack (8 weeks perhaps) before we go in for the kill.
i bet they have already had 8 weeks?
does anyone know why Fish and Boat have moved to fairfax ,great comunication from fish and boat no mention of changing over to fairfax