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Are newsagents funding the Express Publications purchase of News Magazines titles?

Mark
June 29th, 2011 · 31 Comments

One  newsagent this morning discovered a 600% increase in Overlander 4WD magazine from Network Services.  They have gone from getting three copies to seventeen, costing an extra $104.44 in stock for this issue.

Another newsagent has seen their supply go from five to nineteen copies – also a $104.44 increase.  Extraordinary.

I wonder if Express Publications has targeted a channel wide increase in supply.  Imagine if just half of all newsagents face a similar increase.  That would give Express Publications a cash flow boost of $208,000.  This could come in handy given that the company recently purchased magazine titles from News Magazines.

While this sounds like a conspiracy theory, I can’t see any reason for such an increase in supply, especially when you consider that both Express Publications and Network Services, their new distributor, have access to newsagent sales history for the title.

Overland 4WD is the first issue from Express Publications, it is one of a batch of titles acquired from News Magazines.  It has also shifted to Network Services from Gordon and Gotch.  Network was provided the sales history by Gotch so that exactly this situation could be avoided.

What makes the oversupply even more frustrating is that it has occurred one day before the end of the month.   This would not be a big deal if it only happened for one title.

This increase in supply is like someone has decided to get newsagents to provide a short term loan.  By supplying newsagents extra stock many will just pay up and take the created when it eventually flows some months down the track.  It’s like newsagents at the ATM – except that we dispense interest free cash.

This gross oversupply of Overlander 4WD is a reason some newsagents early return titles without careful consideration.  I know of newsagents who will target Network titles in retaliation. While it may seem petty, you can’t completely blame them.

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Category: magazine distribution · magazines

31 responses so far ↓

  • 1 Ian // Jun 29, 2011 at 7:42 AM

    We have gone from receiving 2 (and returning 2) to 7!!!

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  • 2 shaun s // Jun 29, 2011 at 7:54 AM

    early return the whole lot -simple . ahhhh the beauty of early returns

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  • 3 Ian // Jun 29, 2011 at 8:12 AM

    Shaun- excess already done.

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  • 4 Luke // Jun 29, 2011 at 8:59 AM

    we received huge oversupply of a number of titles today, being the last delivery/billing day of the financial yr and no chance of getting credit until next month as returns have closed for the month. Someone is pumping up the bottom line for investors.

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  • 5 Chris // Jun 29, 2011 at 9:07 AM

    Remember to process all your early returns for Gotch by 1pm today for the credits to be on this months statement.

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  • 6 shauns // Jun 29, 2011 at 9:14 AM

    luke returns are still open

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  • 7 Leon Tonna // Jun 29, 2011 at 9:29 AM

    This is the plain & simple reason why we cannot lose the only control we have – early returns. It’s a necessary evil.

    End of financial year gauge, interest free loan or just poor control mechanism’s – who knows – but we pay for it.

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  • 8 Luke // Jun 29, 2011 at 10:21 AM

    Thanks Shauns and Chris, I have gone online and done my best to get as much stock back as I can without cutting my throat. Have returned over $2K worth of stock today and shelves are still full.

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  • 9 Paul S // Jun 29, 2011 at 10:37 AM

    Received ridiculous oversupplies of several different titles today. Several that I normally only receive 2 or 3 of I’ve ended up with 8-10 of. Then there’s one of the mags that I sell out of every month that they appear to have cut me back on.

    If you can hear that steady knocking noise off in the distance… it’s me banging my head on the desk in frustration ! 🙂

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  • 10 Wendy // Jun 29, 2011 at 10:48 AM

    Disgraceful, predatory behaviour.

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  • 11 shaun // Jun 29, 2011 at 10:54 AM

    Luke i’m in the same boat my shelves are full and i have returned a couple of grand just with todays supply -quite sad but hey thats life

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  • 12 Wendy // Jun 29, 2011 at 10:56 AM

    This is not limited to Express Publications. Disgraceful & predatory behaviour on the part of the distributors.

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  • 13 Y&G // Jun 29, 2011 at 10:59 AM

    #4 Yep, I reckon, too. And with those good figures to report, any leftover could be banked for funding the catering for the AGM, perhaps? LOL 😀

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  • 14 ex-newsagent // Jun 29, 2011 at 2:28 PM

    Mark, have you approached Express Publications for an explanation for these sudden and un-called for increases in supply

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  • 15 John // Jun 29, 2011 at 2:50 PM

    We have tried for too long to get the distributors to supply s fair quantity. Early returns is one of very few options remaining. When the publishers wake up to the fact they pay bucketloads to people who don’t give a hoot about the product, only then will we have a win.
    Call us dumb if you want but early returns is the easiest weapon we have.

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  • 16 Tim // Jun 29, 2011 at 4:06 PM

    isnt the above comment exactly what IPS is trying to eliminate by giving control of supply back to us? Do we want control over supply or early returns???

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  • 17 Fiona // Jun 29, 2011 at 5:35 PM

    @Tim, why can’t we have both?

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  • 18 mark // Jun 29, 2011 at 6:56 PM

    Ex, no. There cannot be any justification at all.

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  • 19 Carol // Jun 29, 2011 at 7:46 PM

    We don’t get delivery until tomorrow so we will have no chance of returns credit this month. They always load us up on the last delivery of the month. Thank goodness I have a fantastic lady doing my returns who really keep on top of them. As we have tops only for most returns I have boxes and boxes waiting to be picked up and dumped. What ever happened to our carbon footprint? What a digraceful waste in our industry. Perhaps if the distributors and publishers were taxed on their carbon……

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  • 20 Jarryd Moore // Jun 29, 2011 at 8:49 PM

    Tim,

    Im happy to forgo early returns if granted complete control over supply. But this is not the case with the IPS contract. IPS are giving newsagents some control over supply (more than we get with the other two major distributors) but are taking away early returns completely. Give a little, take a lot.

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  • 21 Long time supporter // Jun 30, 2011 at 9:01 AM

    Early returns are a sensitive issue for most publishers so the IPS model appeals to them, especially the likes of Express and Universal. IPS needed something to establish a point of difference in order to grow, and early returns is it.

    Unfortunately IPS don’t understand how no access to early impacts newsagents. The other distributors do, even though they still oversupply.

    IPS are new and what they need is the experience and knowledge of people from the other 2 distributors to help them along the journey..

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  • 22 Mark // Jun 30, 2011 at 9:14 AM

    Long time, The distributors use early returns to combat complaints to the ACCC about magazine distribution by newsagents. They also use early returns to excuse over supply.

    My view is that early returns makes the supply chain lazy. It takes our focus off making the distributor accountable.

    I think that we have to fight for fair and just supply regardless of the early returns opportunity.

    We need to develop a business case based strategy for dealing with the supply issues and pursue this professionally and in a unified way.

    I know that publishers hate early returns and are pressuring magazine distributors to block them. One publisher a few months ago changed title codes to try and hinder newsagents from early returning their stock.

    In the next year, focus will turn to environmental issues around returns. So, while newsagents may like early returns as a cash flow control mechanism, they will be in the spotlight because of the environmental cost.

    Magazines remain a very important department in our businesses. They generate excellent traffic and give us an opportunity to present a point of difference. Our asset is our channel. If we work together and leverage that maybe we can address the oversupply which drives early returns.

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  • 23 june carter // Jun 30, 2011 at 9:12 PM

    Don’t forget A&R and Borders used to get mags too. I guess the print run is
    the same as usual and we newsagents get
    to pick up the slack.

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  • 24 carrob // Jul 1, 2011 at 11:22 AM

    Hey Mark,

    I understand that this is frustrating for you, and I hate these crap magazines as much as you do.

    But I am getting tired of you saying that the cashflow that the distributors suck from you is somehow passed on to the publishers.

    IT IS JUST NOT TRUE. I have been on this blog many times and commented along these lines. The publisher sets the quantity (in conjunction with the distributor). The DISTRIBUTOR KEEPS THE CASH AND MAKES THE FINAL PAYMENT AFTER THE MAGAZINE GOES OFF SALE.

    How does this benefit Express? It is a bad thing for them. They have had to pay a printer to print what seems like a lot of extra copies, pay an increased distribution cost to the distributor and still wait a long time to get paid.

    Maybe these guys have a different distribution deal to any other publishers out there, but I doubt it. Then again media factories original business went broke owing $600k to the distributor and all I can say to that is WTF? We NEVER owe our distributor money. We supply they sell. The costs of distribution are subtracted from the sales and we get a cheque for the balance.

    The cashflow that is stripped from your business is to the distributors benefit. Not the publishers. I doubt if a bank would use this stock as collateral for any loans to purchase News Magazines.

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  • 25 Mark // Jul 1, 2011 at 11:24 AM

    Carrob, I am told that not all magazine publisher deals are the same. Sometimes, newsagent payments flow to publishers faster.

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  • 26 Long time supporter // Jul 1, 2011 at 11:30 AM

    Carrob

    The meduim to large publishers all get advance payments based on sales sales… the estimates are agreed with distributors. if the final sales are greater than esitmate then the distributor pays out the balence if they are less then the publisher pays back the distributor.. Newsagents are nothing more than a bank to publishers like express and citrus media.

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  • 27 carrob // Jul 1, 2011 at 5:38 PM

    lol.

    Obv I don’t know how to do a deal with a distributor. Becuase me, and every other publisher I know works to the same (roughly) terms. Some distributors charge a little more for full copy returns or per edition distribution. But it’s not massive numbers either way.

    Newsagents are not a bank to us, or any of the dozens of independent publishers I know. Obv I am not privy to an ACP type deal, but I do know a bit about the distribution business.

    Maybe a distributor could explain to me how a publisher can possibly owe a distributor money. No one has ben able to explain to me (even NDD for that matter) how NDD ended up being owed $600k by the guys from Citrus in their previous company.

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  • 28 Mark // Jul 2, 2011 at 6:50 AM

    Carrob,

    First up Citrus owed the money to Network.

    I have been told by people in some publishing companies of models where they are paid a portion of scale out on the day of on sale. It’s in the agreement.

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  • 29 Kyle // Jul 6, 2011 at 1:00 PM

    This issue has been ongoing for longer than the 20years I have been involved in Newsagencies. It seems associations have little power in negotiating with suppliers. Perhaps it is time the marketing groups of newsXpress, Nextra, Newspower, Lucky Charm etc got together as a group or “Alliance” to negotiate on behalf of it’s members. Perhaps if this alliancec turned around and said “this alliance” representing these stores will no longer accept titles from “express publications”, “Morrison Media” “News Publications”…. whoever…. unless it is under the terms “the ALLIANCE” has negotiated.
    It is generaly speaking the niche title suppliers whose stock we are over supplied with so they can step-up to the plate and negotiate better trading terms for the newsagents whom support them, or they can find their product is no longer displayed in these stores.
    An “alliance” could negotiate better commissions, terms, and return some profit to the newsagents pocket.

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  • 30 Mark // Jul 6, 2011 at 1:18 PM

    Kyle, the marketing groups are very different when it comes to magazines. While the idea of an alliance makes sense, I cannot see them agreeing on a common approach. I think you will see some do their own thing for their own members.

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  • 31 Chiang Lim // Oct 6, 2011 at 10:24 AM

    While I from NANA cannot speak for all of the other industry associations (ANF, QNF, VANA), I know that there has been significant efforts being made on this long standing problem especially over the last two months.

    This oversupply and undersupply issue appears to have been occurring for up to the last 20 years, but has become especially difficult of late.

    From NANA’s perspective, we have been recruiting newsagents across NSW & ACT to collect and analyse their inventory and transactional history of magazine supplies for each of the three major magazine distributors. These analyses are to empirically prove that there is/isn’t oversupply/undersupply that exceeds the legal contractual agreements between newsagents and each of the three suppliers. (Yes, there are newsagents who are not experiencing oversupply/undersupply.)

    Communications have already begun with each of the magazine distributors in order to solicit their assistance and commitment to resolve this matter.

    Previous approaches had been made by NANA and others to the Australian Consumer and Competition Commission (ACCC) as early as 2008. However, the ACCC declined to be involved.

    NANA and its Members are executing its plan to resolve this matter. This plan includes empirical analyses, process changes (if any), education and training, and also legal options.

    If you would like to be a part of this, please see:

    * the front page of http://www.nana.com.au about the oversupply/undersupply of magazines
    * the member’s only section of http://www.nana.com.au about more information about NANA’s plan

    NANA is mindful that to resolve this successfully, we need the participation and willingness of newsagents and magazine distributors to address this issue. We are also mindful of the existing legal contracts that describe the supply and returns between newsagents and magazine distributors. Hence, we retain legal counsel to guide us through this process too.

    Should you wish to be involved, you are invited to contact NANA or your industry association for further details and participation.

    I look forward to working with you on this issue.

    Chiang Lim, CEO (since 1 July 2011)
    Newsagents Association of NSW & ACT (NANA)

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