I was talking with a newsagent today who is facing combined Gotch and Network charges for September of $35,932.00. Total magazine revenue for the same month was $38,965.78. The real estate occupied by magazines cost the business $7,920.00 for the month. The management of magazines cost the business $1,500.00 for the month.
The cash flow shortage of $6,386 was created by Gotch and Network yet they will accept no responsibility for this.
Had this business been supplied n a sell through model of 65% they would have been cash flow positive.
The cash flow crisis being faced by this newsagent is not unique to their business. One only has to look at the year on year decline in magazine sales and then look at the year on year billing for magazine stock to understand that newsagents are carrying a considerably higher financial burden for the magazine distribution network today than two years ago.
The reports in the newsagency software show the blatant cash grab in broad daylight. Listing magazine sell through rates by title, newsagents can see gross misbehaviour by both distributors. While they both have excuses, none are legitimate in my view. They cannot and should not try and justify why they consistently supply on a model which is cash flow negative for most of the year.
No wonder we have seen record newsagency closures this year.
The only reliable mechanism newsagents have to control their magazine cash flow situation is to early return stock but this has costs which are unreasonable. I suspect that many newsagents will be looking at their shelves over the next few days to claw back some cash of next month’s bill.
The alternative, a magazine account payment strike by newsagents, would be illegal.
There is so much good news in newsagencies, new traffic and high margin good news, that it is frustrating that these old departments can be so harmful to our businesses. It is even more frustrating that we are not given reasonable business levels with which to control these parts of our businesses. This makes dilutes our competitiveness.
my network and gg has double since ndd closure. i have to pay them twics of my sept turnover. this coming oct. statement i think i will pay $0 , cause i have returned not only those they send me last month but even more . i really fed up with them and iam returning more than ever before , i usually keep most to display but not this time.
let’s us play cat and mouse gg, acp!
“The alternative, a magazine account payment strike by newsagents, would be illegal.”
what if you act independently? and just so happens everyone thought if same thing independently?
speaking of illegal, unsolicited goods is also illegal.
Delayed billings management is making the process of early returns even more difficult…would be great if the software could handle that…wait until those items avalanche monthly payments.
I might be reading wrong but shouldn’t those $$ be a hell of a lot higher for that size rent for just magazines . are you sure the rent figure is correct? the way i am adding it up is that he was behind before he started
my bill for GG last month was double what we took. GG let me pay half on 20th then reast 8th of next month, maybe we all should do that.
Jeff why should you be put in that situation. I tried to reduce seasonal with supply with gotch and the system would not let me.I tried to cancell supply of a mag because we sell only one sometimes and 0 is below my average sale so I can’t stop supply so how can we manage out supply other than massive early returns which cost us money to handle and therefor we loose on.
Shaun it’s in an expensive shopping centre.
Carol, I have found both distributors will respond if you get to the right person. The problem is that there is a creep which kicks in and you get back to where you were.
As an aside, I see with interest tonight that Aust Post profit is down 66 % – less letters being posted and a downturn in foot traffic.
In December 2008 my Magazine dept was costing me 3.8% of my total gross magazine turnover to have in store (to sell a Womans Day for $4.00 cost me about $4.15).
Go forward to 09/10 FY and that figure is now very close to 10% ($4.40ish to sell the $4 Womans Day).
My mag dept is in the process of being halved in size. Bugger being the “Magazine Specialist” at that price. I’ll be focusing on my best 500 odd selling titles and and converting the newly freed up space to other product.
My figures show clearly that Pacific and ACP are not the main problems, its the smaller publishers and overseas crap costing me $$$$.
Glenn, my experience moving, temporarily, from 1,200 magazine facings to 750 is that 750 is viable in a shopping center whereas 1,200 is not.
It is a fine line between carrying a supermarket range and a broader range which attracts the kind of repeat business on which we rely.
If the distributors were smart they would realise that the 25% model was developed before shopping centre rents got to where they are today and genuinely engage in dialogue on an alternative.
It seems drastic, but on the 20th of the month we return every single GG title on the shelf, and then a week later we send back every single Net title on the shelf.
Each month we start fresh and the shelves always have stock but if the mag is not sold within a few weeks of hitting the store it is returned. After the first month we caught up with the oversupply on the last week of the month and now our bills are under control, sure we are losing a few sales later in the month but I am no longer sponsoring the Dist. companies at my expense.
Weekly mags and fast moving monthlies make up the bulk of our sales and these are uneffected as they sell within a few days of arriving.
We had to find a cheap transport company so that the returns costs were kept to a minimum but it is worth it to our cashflow.
Aaron this seems to be what has to happen i do this also , not to the extreme of taking everything off but a lot of it does go back
It is vitally important with early returns to do so within the context of what sells in your store. There is no point in early returning something you will sell.
mark , that is a valid point BUT i feel the battle between newsagents and GG/NDC re oversupply is really starting to become a very personal war. We are now starting to mass early return more just to try and prove a point, that being, we have had enough and we wont take it anymore. We will start sending evrything back early until the mags companies sit down and negotiate, in good faith, a more equitable system for all(even at the expense of lost sales) This early returning will of course hasten the decline in mag sales, but its either him or me at this point in time. I am also prepared to act independently and hold back my mag payments, was thinking I might not have the money to pay my DECEMBER account as cash flow is very tight in january after i pay GNS for xmas stock/BTS. Im sure lots of newsagents would also struggle to pay their dec mag account for the same reason. maybe we should find out who would struggle to pay their dec account as cash is tight at that time of year
Rick, I do agree that the ground has shifted considerably this year. I see more newsagents under pressure than ever before because of magazine cash flow challenges.
In my last comment I was wanting to caution about early returns – do not go so hard that you deny yourself genuine revenue opportunities.
To all deading these commenst: go back to my post about Network and NDD, use that entry point to the ACCC to make a submission about this. http://www.newsagencyblog.com.au/2010/10/15/accc-investigation-into-network-take-over-of-ndd-titles-still-active.html
Mark 7. Could you let us know the Gross Rent per sq. metre per annum of the example you have given. I think it’s vital to the equation.
Thanks
This original post made me seriously look at our September figures…These correlated with the original post as we had $36K in sales and $38K in supply costs. This was after $18K in returns. So something is seriously wrong and we now will also have to basically return all distributed product near month’s end. I suspect this will ultimately kill the channel for mass magazine selection, but newsagents’ survival may depend upon this in the cash flow stakes.
Graeme I don’t think you need this number. I have documented what the magazine space costs the store.
I asked a generic question, Shauna sked a similar We both got a M.Y.O.B. answer. No credibility in that Mark.
Thanks Mark for the transparency we can now al see that your figures are meaningful but not necessarily justified.
Graeme, The post documents the rent cost for the magazine space in the store. This is quite transparent.
I am not going to give you the gross rent because you will then want the measurement of the magazine space and so on.
I am absolutely certain of the data I have published. Now you can continue to pursue me personally or you can understand that the magazine supply model is a problem for newsagents and spend your energies on that rather than your tiresome personal vendetta.
This blog post is not about me. It is about a serious challenge for newsagents. Please get back to that.
Not much point when you control what information you select to make your claim, and when asked one basic generic question you pull rank.
It’s your blog so don’t pretend that it’s not you have just validated that.
Sahun also asked the same question and got the same answer -nothing-Your answer that I will ask more questions shows that you don’t want to dislose your claims well okay if that’s so you could, if I asked more questions, say no to the new questions.
Some years ago, someone with some prior business experience purchased a newsagency with great potential. This purchase was undertaken as a means of bettering one’s self and doing something different while still staying as a business owner. All the due diligence was done and on the whole, the owner was not disappointed with what was purchased. However, the owner didn’t forsee the ongoing issues with over/under supply of mags, lack of accountability with newspaper suppliers, etc which continue to haunt and frustrate newsagents. The income side of things (ie customers) are great – growth in foot traffic, lottery, etc increasing year on year. The debit side of things however are completely different as stated above. We have become “firefighters” – forest rangers who are constantly running around putting out spot fires as they occur in our patch. Every day, this forest ranger has plans to nurture his patch by planting new growth but is constantly distracted by these spot fires and when he returns from fire-fighting duty, he is either too tired or its too dark to plant those new seedlings….. an exit strategy out of his patch is being developed as there must be better ways to use his business skills/energies in other less-frustrating ventures….
Graeme,
Do you ever have nice things to say ?
Instead of asking one question like that, how about you supply the answers to the broken magazine supply model.
I am listening
I am off to do my deliveries after the papers arrived late and then I will do my magazine returns if I have enough boxes.
Chris,
Very well said. I feel like that most days.
THERE IS A DEFINATE CASH FLOW problem with magazines, i go through it every month just like every one else does i am sure . it needs to be fixed yesterday but i don’t even see any talks going on about it and if there are we are all closed out of that one . But getting back to old mate with the huge rent ,time to move into a smaller shop . looking at those figures he will never be able to beat the mag system . even if the GG and NDC of the worl were a bit kinder to us he just covers the rent with those figures not to mention making any money out of them .
Chris , love it .never heard of it put like that before
We all hear you Chris, but like any good firefighter you need to backburn early and cut your losses on the unsavable areas in order to save the populated areas.
Cut out as much deadwood as you can before it engulfs everything, cut back on the problem departments and let the new stuff grow. You will still get spot fires but you won’t lose the family home.
I’ve got a headache now from all fire talk so I will get back to mag returns fun for me.
Mark ignore Graeme Day and keep bringing attention to this problem.
My mag bills which I have to pay next week come to #41,000. My magazine space rent is $8,000. My magazine sales for last month were $43,500.
Even with a lenient approach from Gotch I have a problem.
My mag bill for the month beforer was $12,000 less.
I just had a quick look at my NDC and GG bills.
With NDC my returns were about the same amount as my final bill.
With GG my returns were about 125 % of my final bill.
Blind Freddie or blind Graeme can see oversupply there.
Just like Luke I am going off to do my mag returns
1ST THING. i just got off the NDC website to try to control the allocations i get.
here are my findings:
1. NDC purposely delays updating their database when it comes to our early returns. what i mean is, if we sold a magazine their database almost immediately (probably not minutes but maybe a day or 2) updates their record to show a sale. Nowm if we return a magazine, it takes MANY ISSUES of that magazine to show up as returned.
what is the significance of this? means that all those JUNK (NDD TITLES) we pretty much cannot cancel until many months down the line because of their ridiculous “you cannot cancel a title with no sales history” rule. therefore we all have to burden the cost of recieving, packing and sending back absolute junk (yes NDD titles you are all junk) until they update their databse.
If NDC can update sales data, why cannot they update returns data at the same time so we can cancel the titles sooner. like everyone has said in this thread, after closure of NDD …there is an absolute avanlanche of titles coming in.
NDC if you can read this, please have some business etiquette. change your system where we cannot cancel a title if the average sale is greater than 0. it is very flawed, we would have had a random sale of an odd titles 10 issues ago and no more after that and cannot cancel because the average will always be greater than 0.
i’ve already sent back quite a few ndd titles before and was just waiting for the chance to cancel my allocations. they make it so hard.
2nd thing is to Graeme Day:
you have always been quite critical of Mark, maybe sometimes you have a legit point, other times as far as i can see, there is no point.
you sell newagencies, my question is, would you prefer all these “dirty laundry” that we are exposing here be hush hush so that unwary people come in and buy newsagencies faster? i mean if i were a potential buyer of a newsagency, after looking at numbers and all and they are good, and then suddenly i came across this forum while doing research and found out that I “the new business owner” have absolutely no control over a major aspect of my business. that ditributors apparently have the “right” to send me 100k of magazines even if my sales is 10k only and then have them demand payment on time.
im sorry if i misterpret your reason, but i am just a tad annoyed at your constant arguing against some of the things being discussed. as i have pointed out in another thread to you, we are speaking from a newsagent point of view. the saying “walk a mile in these shoes” applies.
For the true believers I am not trying to be unfair or unkind. I am simpy asking for the hidden part of the equation for at face value it is impossible to figure out. That was the post. As for over/undersupply I understand there is a problem from one month to another and I also understand that mags are down in retail sales from 4%
to 14% this exasperates the problem.
I have not once questioned this.
I asked a perfectly reasonable question of which either you know the answer to or you are the blind freddies reacting in the dark. Once the question is answered you will then know how to go about the problem.
It isn’t an easy solution to downsize premises when you have a lease or maybe you own the premises. There maybe other solutions but one can’t help solve thm if only half of the equation is put forward.
Howver most reasoning would work that through so I shall leave it to you followers on this one for I have got my answer and it doesn’t compute to the one demonstrated here.
I am hapy o leave it at that.
Best of luck with progress in this matter.Regards to all.
Graeme, your question is irrelevant since all of the necessary information to understand the cash flow situation relating to magazines in the said store is there in the post. There is no hidden part to the post.
Supermarkets and all major retailers assess the performance of their businesses at a department level. It is appropriate we do the same.
My response has nothing to do with rank, it has to do with appropriate information.
Graeme, I would expect you to know that large shopping centres contain confidentiality clauses in their leases regardingthe disclosure of rental figures. Mark or ant one else giving details of their rent would be in breach of their lease so pull your head in a bit. The figures Mark gave paint a clear story without him risking a breach of lease relating to the business referred to. While I find some of your points valid, a lot just seem to be made to be contrary for the sake of it. If you were actually operating a newsagency today you would have much more credibility with your views.
Well we are getting upset ,just send the bloody stuff back .Your system should tell you how much of each you have sold each time add 10% and send the rest back in the next return, it is not going to change .When we cut the number of mag pocket all you are doing is sending it out to all we realy do not want mags .My God all this doom and gloom ,lets just ajust your mix ,i have been doing it for 35 years.Seems to me some one would like to see the prices pushed down.Do not forget woolworths are cutting their range and moveing them to the bottom of their front racks ,Coles are trying to work out which way to go they have tried 3 ways so far ,this is not the U K and the agents here are not a poor corner store or a bottle shop selling a small amount of mags if coles can not make money they will give it a
way as for the post office check out the fin page 7
My God the bloody fruit shop is still selling fruit and the butcher sells more meat in a day then our coles sells in a week .We sell 265 to280 sunday paper coles sell about 80 and they have them at the entry. Our mags are up 4.5% in the last 2 months and it it is not the weeklies our Lotto is going well and our instants are up 12% on the rest of the group just work harder people
ever tried to piss on a bushfire??????
Why drop your bundle Allan
Brendon
You do not know what generic means and you certainly don’t know what you are talking about. What confientiality? there are no names and no store is mentioned We are talking figures here not names or places. Get back on track. This was supposed to be a business discussion.
By the way for your information
Lease documents are common property anyone can make application to view a registered lease.
I
Mark,
I believe the application of the information you presented here -the case in question -is flawed.
If yu and followers are not willing to debate it with all the facts I am not going to bother any more. What is the point when it is not the truth one is seeking just the justification of cause.
Graeme,
I have been watching your comments on here for some time now, and I was wondering.
Why do you hate Mark so much?
Seeing that you hate him, why do you bother reading or commenting on his blog?
Why don’t you start your own blog, then you can put anything you want on it and not have to worry about Mark.
Just in case you were wondering, I don’t agree with everything Mark writes, in fact some thing I strongly disagree with. As I am distribution only, I see things differently than Mark does, and some things he writes about don’t affect me.
But what I will say is, agree or disagree with him, Mark is doing more for the industry than what our associations are, at least VANA and ANF I don’t know about the other states.
So for that alone he does not deserve to cop the crap he gets from you. It makes you look like Mark’s friend over at POS.
Graeme where is the case flawed and how can the gross lease figure alter what you see as a flaw?
My work some in 2005/06 on the magazine cash flow model was shared with publishers and distributors and while they did not like the results, they did not disagree with the methodology. This is the same methodology I have used in assessing the business mentioned in this blog post.
Graeme – today we will see the canonisation of Mary MacKillop. With what appears to be your ‘holier than thou’ attitude are you sure you are not the one performing the ceremony. I think there are a lot of us tiring of your comments. Mark continues to bring forward issues that affect us – you are welcome to disagree BUT if you must be so negative GET OFF THE BLOG and as Dean has commented – start your own. You keep writing that you ‘won’t bother any more’ but you just can’t help yourself
My god, what garbage this Graeme bloke throws in. This was a discussion based on magazine sales v supply taking cost of sales into account. I, like the rest of you have been hammered by G&G and NDC in the past month, an increase of 25% without any evidence of increased sales, in fact a decrease in sales of 8% has been noted over the past 4 months. This is the lot of newsagents in country Victoria. In order to reduce magazine levels, you have to jump through hoops and god help you if you are a day late in making a payment, NDC start ringing you threatening supply and couldn’t care less if you are forced to close the doors.
I think I might put this place on the market with the shit figures that I now have, please advise which company this Graeme Day works for, so I will know who to avoid
Dumb question time here, but what’s stopping you, creating a ‘sales history’, so you can then cancel stuff.
Scan 1 mag you want to cancel, it had no history until the scan, once you’ve bought it yourself, you could stop it being delivered…
Got me thinking that if every newsagent did it, then they’d change the goal post’s.
I will say it again and call me a conspiracy theorist; but GG has a break even point for most stores. they know what they have to send to keep themselves profitable. Early returning and cancelling titles doesn’t work because different titles with the same quantity turn up within 2 weeks.
I have been going through this for 5 years and my supply figure is worse today (taking out ex NDD shit) than it was 4 years ago…….and yes i have early returned and cancelled many many titles.
I am surprised that no-one else has this theory??
Vaughan, The magazine distributors are big businesses with hefty operating costs. I am sure that they have a budget which preducts what they will make from newsagents. This budget is driven primarily by supply.
I agree with you.
Vaughan, you’re a conspiacy theorist! And you are dead right, it’s simple maths for our business partners at NDC & GG. How this is not a clear case for the ACCC is a complete mystery to me.
I was thinking about this whole mag shit fight…..the main problem i see (and i must say ive only been in one for a bit over 5 years now) is that the newsagency group is to fragmented/individual…i mean is there a couple of BIG dogs who owns 15-20 stores who could dictate terms back to these pricks…..most other industries are dominated and lead by a couple of Big Dogs….especially the profitable ones
john kirkham,
last thing you want is to buy a copy for yourself so it shows a sales history. you will never be able to cancel that title ever with network once a copy has been sold off your shelf.
Jim, not sure what you meant on 37???
TALKING OF MAGS anyone else missing tv week and zoo today up in QLD ?
by the way i was the one that brought up the rent space question only because i was blowen away from how much he was paying in magazine rent space and i am still blown away from it
We would prefer to have complete control over our magazine supply than the “increased” margins for increased sales that are on offer at the moment. Supply control will make more money than extra margin.
Graeme, and you are doing exactly what NANA and ANF have done for years… arguing amongst yourself rather than getting anything done… Then when we come to sell you value the businesses low and explain it away by poor mag model, newsagents cant manage their cashflow etc.. And you preach from your experience a hundred years ago… If you think you know better DO SOMETHING ABOUT IT rather than bloggig all day.
Well said herewegoagain just talking down the sale price ,if some wish to sell for less do so but do not stuff the rest of us up .If i was buying in to our industry all this on here would turn me off it is not helping at all
” And you preach from your experience a hundred years ago…”
ahahahahahaha.
but who am i to talk, i don’t know anything about these matters. i just find this blog an amusing and interesting read. never knew running a newsagency was so expensive, considering all the work put in day in and day out.
Graeme,
you are an oxygen sucking bore.
You are like the piss head uncle that has to be invited to the wedding for political correctness but no-one wants to sit near because you bore the shit out of everyone.
Get back on your medication and get off ths site
Give Graeme some respect!
You do something about it, Graeme asks questions, you write to Vana or NANA like that.
I know what he is on about, he just wants to know intricies that are not really relevant.
Take your rage out on who is destroying the Print channel.
Gus,
Bit harsh I reckon!! Without open and frank discussion and alternative points of view being aired how can we form considered opinions?
I dont agree with all that either Mark or Graeme say, but they are at least putting out constructive points for consideration and debate. Your comments do no-one any service and are a blight on our industry. We need to at least respect the contributions of others regardless of whether or not we agree with them!
Poor form, IMHO!
59 blog posts and we have not got anywhere. Mark posts a blog on magazine cash flow. Shauns (4) indirectly raises a second serious point ie. $35932 revenue = $8983 gross … less some expenses ($9420)= $437 loss.
His reaction is ‘the figures must be wrong’
Mine is that not only is the magazine distribution model broken, so too is the magazine profit model (for many newsagents). Noone takes this up.
Enter Graeme with a seeming irrelevancy to the topic and the whole blog degenerates into a sh**fight.
What a shame…2 great points…no solutions…lots of wasted energy.
I would love to be able to offer some answers but like Dean, I am most interested in distribution.
Tony,
Part of the challenge is the extraordinary diversity in the newsagency community. The differences between shopping centre and high street, city and regional, regional and rural, retail only and distribution, new newsagents and old … are considerable.
I regularly raise magazine supply issues here to try and get newsagents to think about the issues beyond complaining.
In the four days since the blog post I have spoken with more than 60 newsagents about magazine management and, in particular, what they can do to better handle early returns. I have also personally emailed 1,700 Tower Newsagents with early returns advice. Plus I have engaged in emails with another 20 or 30 newsagents who have questions.
While early returns is like cleaning up AFTER a car crash, it is just about all we have available today. Hopefully this will change
I know of at least fifteen newsagents who are now making formal complaints to the ACCC backed up by evidence which they sought out as a result of what they read here.
While these efforts are not solutions, they are progress.
I remain hopeful that at some point the magazine distribution model will be reviewed. Since deregulation in 1999 we have been half pregnant. We have been left with a model which improves competition for consumers buy hog ties newsagents to a pre deregulation structure.
Mark,
Your last paragraph summarises the situation very well. There would be a lot more newsagents watching this thread with very keen interest, as you would well be aware.
I can’t believe that the Associations are totally silent on an issue like this. I can understand why perhaps but I can not believe it. I resigned from the ANF some time ago but perhaps if someone is still a member would they please advise if they are in fact doing something in the area of oversupply and trading terms for newsagents or is it something they are “constantly working on”.
Good on Mark for at least stimulating some of us into looking further into our own situations. Whilst some of us suspect may something is wrong it is a very healthy practice to constantly relook at what we get per square metre of retail space paid when all is said and done. I, like many others don’t like what I found and want to do something about it.
Gus, pull your head in. No one deserves to be spoken about in those terms no matter how much you may disagree with them.
we as newsaency have paid for the businenss. yes we signed an agreements with the magazine companies. How come we dont have the right to order what we want from these companies! yes we can spend hours deleting from our order and there are still orders we can not change.
This not how captialisim works no one company has the right to send you goods that you do not order and still are expected to pay for . Thus tying up your captial and hard earn money in items that actually make you no money. I have had enough of this sending double amounts of magazines that I never sold before .
Thus holdinging up my capital so can not purchase things that i sell. Entising everyone into my shop and getting a sale of mag plus an other item that makes me more than 25%. I have had enough if you fill the same please let me know.I don,t want to feel i am the only one! thanks M
the whole business is corupt by the mag companies and watch the papers
I don’t think you are alone Miriam, we are in the same boat BUT I have made the choice that the suppliers that offer more sales get paid first, if that means my mags are left until last then that is just business.
Can’t get blood from a stone no matter how hard you squeeze.
We have been in a situation before where we have had to buy mags from someone else at full price just to have them on the shelf, but good pr will keep 99% of people happy.
Everyone needs to look at where the most sales and profit is coming from and make sure that area is always fully stocked, if it is mags then thats fine but if it isn’t then no point robbing Peter to pay Paul if Paul is a thief and not giving anything back.
Magazines should only be a part of your business not the be all and end all.
Just my thoughts Miriam.
Did anyone else get an email from GG this morning stating time and date for credits to be included in this months statement…..ive never recieved one of these before…anyone else
I think you will find that this is as a result of interest by the ACCC in the matter of floating and secret end of month cut off dates.
Well done Gotch for fixing this.
i emailed them yesterday requesting it to be put on gotch connect . Oh what a good idea years later
We had our first instance of oversupply from Gotch yesterday. We were supplied 10 Chat when we have been selling ony 4-5 per issue. However, in light of Gotch providing details of return deadlines I am inclined to give the magazine a chance to sell up till the deadline rather tha immediately early return what I feel to be excessive stock. Hopefully this is a win win scenario with the ability promote and sell more of this title up tp the return deadline and then early return excess stock by the return deadline.
A positive move by Gotch for all patries I feel.
And there you have it one email from Gotch and its positive.
They will still oversupply they will bill until the end of the month and send a heap of crap on the last day of billing with no chance of recieving credits on your next statement.
Good start from GG but I think I will still do them this week to make sure, better to be safe then sorry as before you needed to give them at least 5 business days or you missed out.
Again it is a good start by them.