Month: October 2010

Last week, I wrote to the ACCC to outline my concerns regarding magazines from Express Publications and that their changing of barcodes and title codes could deny newsagents the opportunity of reasonably managing their financial exposure relating to the magazines affected.  Here is a copy of my letter for those interested.

RE:  EXPRESS PUBLICATIONS PTY LTD ACN 057 807 904

Tower Systems currently serves in excess of 1,700 newsagents by providing and supporting newsagency management software.

I also own two newsagencies: newsXpress Forest Hill and Quayside Newsagency and have a 50% share in newsXpress Knox and newsXpress Watergardens.

It is from these various perspectives from which I write to you today about a serious matter affecting newsagents around the country in relation to magazine supply.

Express Publications appears to have changed its handling of its magazines sent to newsagents in an effort to deny newsagents an opportunity to properly control supply of and cash flow relating to these titles.

Express has done this by changing the barcode and title code for all of their titles – a rare change for any magazine publisher and unprecedented for all titles from a publisher.

This change by Express means that their titles appear as new titles to newsagents. Unless newsagents are vigilant, they may miss the ‘new’ title and thereby not connect this with the existing title for which they have sales and other history.

A key way newsagents manage magazine supply is through early returns. Their computer systems, like the one from my Tower Systems company, identify at the time of arriving stock, quantities which could be returned early based on sales history.

The only reason I can see for Express undertaking their recent changes is to try and block newsagents from early returning their titles.

I write to ask the ACCC to investigate the actions by Express and specifically whether these changes have been undertaken to block newsagents from early returning their titles. Any such investigation ought to research the supply arrangements between Express and their magazine distributor and in particular the trading terms of such arrangements. This will help the ACCC understand the economic value to Express should they have taken this move to reduce early returns by newsagents and should such a move be successful for them.

A barrier to early returns by newsagents, such as that which they appear to have engineered, would not be an issue if Express supplied stock to newsagents at a quantity which was commercially viable for newsagents.

It is my experience that the Express titles perform poorly, delivering a sell-through rate of below the industry average of 50%. The company does not appear to adjust newsagent supplies on the basis of sales, I have seen sell through rates of Express titles of 20%. Many newsagents feel powerless to address this gross over supply situation.

I would be happy to provide the ACCC with magazine sell through evidence from my newsagencies as well as a range of newsagencies using Tower Systems software – with the permission of the newsagents involved. This data will verify my claims about the performance of Express titles.

Given that this matter is most current, occurring mainly in the last couple of weeks, urgent attention from the ACCC is sought to address harm to small business newsagents which appears to be happing right now.

Sincerely,

While there is a risk in being public about my letter to the ACCC, I wanted to be transparent about my communication with the ACCC.

I understand that Express has decided to not continue with the change process. While there are some magazines in production with new barcodes, Network will not change the title code (the bipad).