Network Services should not have The Complete Guide Wedding Speeches to newsagents last week. We can source similar wedding speech guides through other suppliers and achieve a 50% or better margin. We can even achieve this with a sale or return model in some situations. Network has sent a title at 25% margin with an on-sale of fifteen months. Sure, we only received two copies – they will say that is reasonable. Well, no. When we do a wedding display, a little later in the year, we will carry more copies of wedding speech titles, enough for them to be noticed in the display. What are we supposed to do with two copies of a title which is too small for traditional magazine fixturing? Seriously! In our case, had we kept the title, we would be okay as we do not use traditional magazine fixturing. Go into most newsagencies with this title today and I think you would be hard pressed to notice it among the magazine mix.
Network Services needs to do a better job in deciding what it will supply newsagents. I understand the utter stupidity of that statement. Network will do what is right for network. The supply of this title and other titles shows that.
I’d note that some newsagents will have been happy to receive this title. They rely on the magazine distributors to keep them stocked of this type of low volume fringe product. However, there are more and more entrepreneurial newsagents who want to exert more control over the fringe areas of their businesses. There is good money to be made by buying well. Sock like this, sourced through the magazine distribution model, is not bought well.
We early returned this title.
I can’t display all titles we recieve. I do not have enough space. It cost so much just to arrive and immeadiatly return unwanted mags. I thought the data we send to Network was so as supply could be managed but we never receive a reduced supply. Increase are made even if we our sales are droping.
At the end of the day Network can only send dud products out if
1. There is a need for the service
2. It is economically viable to do so
Although a cohesive rejection of a product is not allowed. Switched on newsagents will reject the product. I wish that there was some report you can make to indicate the rejection / return rate for a particular product in your client base. You can educate publishers that the magazine distribution model may not be ideal way to get their product out there when other companies and distribution models may be more suitable.
Factors that influence their decision as you’ve mentioned
• uncompetitive remuneration to newsagents who actively want to sell the product
• The amount of stock damaged by distribution
• The low visibility their product will get with newsagents not concentrating on books or category based marketing
I can only hope that the people who are in charge of selecting distribution methods do their due diligence and look into the channel and distribution models they have to service the channel
We can all bag Network but at the end of the day it is a business and Network will continue dong what they do as long as it makes economic sense to.
more stuff distributed = more $$$
what else matters.
Jason,
I’ll elaborate on what Ed said and point out that it will almost always be economically viable for Network to send dud products. They get paid based on how much they distribute, not the performance of a title.
The fact is that there is not a real viable alternative to the major distribution companies. When a duopoly exists there are two main ‘solutions’ to the inherit problems that stem from such a situation. One is to introduce increased competition (something that is not really viable as evidenced by the closure of NDD). The other is to introduce ‘rules’ in some legally binding form that protect the customers (retailers) from being unfairly treated.
And this is the problem with the model.
Different publishers operate off different models. Not all live only off retail sales.
Distributors live off a full trucks model. They are paid to distribute stock and they are paid for stock returned. Sometimes, they are paid on sales, but I suspect not as much as they claim.
I understand that different products have different revenue models. At the end of the day someone has to pay for something, whether this be customers for goods or advertisers for eyeballs.
The biggest problem is the fragmented nature of the industry as a whole and power and direction of the associations.
For sale based revenue items newsagents have direct influence over these products. Just choose not to stock them. Most newsagents have enough systems in place to identify bad products and intuition to back that up. If enough of you do that, it will become economically unviable for the actual supplier of the product to use Network or Gotch to dispatch their goods.
For ad based revenue items newsagencies have little influence over because as you said the publishers gets paid either way. I believe that associations can go far in educating marketing companies to get the best deal for the clients. If you were advertising your business and they told you circulation is 100,000 but sales is actually 10,000 and of the sales only 2000 might actually read you advert it you’d think twice about advertising in that publication.
I believe Tower Systems and participants in their benchmark can provide a good indicator of how many effective their ads are at reaching their target market. Make the information freely available for companies who advertise. Let them make an informed choice on where to put their ads instead of relying only on inflated circulation figures.
Consider the impact a concerted effort by the industry to stop financing bad products.
You are right in saying the duopoly will exist and newsagents can’t negotiate the terms which they operate but you are in a position to disrupt their business.
Inaction is the industry’s biggest enemy.
Jason,
There are hundreds of marketing firms already servicing the needs of advertisers. Their job is to get all the information and make recommendations to their clients.
My understanding is that the terms circulation and sales were generally the same thing (bar newspapers where large amounts are sold in bulk to organizations such as universities). The large difference is usually between readership and circulation and advertisers already know the difference (if they don’t then I’d say they have some serious problems at the core of their business strategy).
Even if newsagents were in a position to disrupt publishers businesses I doubt it would change the strategies of distributors. They still make more money for distributing more. That concept doesn’t change if some publishers start pulling the publications.
Action can’t and won’t happen on an industry level. It can and may happen at a marketing group/franchise level where a cohesive strategy can be implemented and there exists the economic levers to assist such a strategy.
Jarrod, there is a move for publishers to request a per copy sold distribution fee from distributors. it is common place in europe and the uk. distributos make afee as a % of the rrp for the sales made. It forces both parties to look at their distribution strategy more.. Money is bled if the sales are poor and a stack of copies are put out.
Joe,
This would no doubt be more preferable than the majority of distribution arrangements in Australia ATM. There would still need to be a range of issues fleshed out in such a system but the potential for it to be better is there. However my preference is still for retailers to set the variables by which they are supplied. If we know, understand and control the variables then we are better able to plan and control outcomes.