Australian magazine publishers who care about a viable newsagency channel through which to see their products need to act to ensure the viability of the channel.
The supply model being employed by our two biggest magazine distributors, Gotch and Network, is showing no signs of improving – despite the spin from both companies.
Oversupply remains rife, hitting newsagent cash flow and driving newsagents to react sometimes without reason against good performing magazine titles.
The problem with the model is that distributors are primarily paid to distribute, despite what they claim. Move them to a payment only for sales model and their behaviour would immediately change. Indeed with such a model all players would be compensated for the same common activity – sales.
Magazine distributors manipulate statistics, they wear complainants out with data and demonstrate little care about the amount of money made by their other so-called partners. Now they will say that I am wrong and that my allegation is unfair and hurtful. They are not in newsagent shoes. Nor are the in the shows of independent Australian publishers. They are in no position to assess the impact of their model on newsagents who rely solely on sales for magazines to pay their way.
Newsagents are cutting magazine display space because they see this as they only way then can control the volume of inventory they receive. This could get to a point where the magazine specialist channel is no longer the specialist.
Unless publishers act.
Australian publishers have an opportunity here to work with newsagents on fixing the distribution problems. Get these two sides with a common goal, sales, together and we can tell distributors what must be done.
This blog post is familiar as It have written words like this many times. I have done it again today because of a call from another distressed newsagent. Yesterday. $32,000 in magazine sales last month and magazine bills of $33,000. So much for a 25% margin.
While maintaining my views on our need and responibility to manage our returns, I still recognise the the unjustifiable over supply of magazines.
Lasy night I found many titles wher we had been supplied up to 3 even 4 times more copies than we usually sell. Returns are going through this morning before the cut off so that side is under coontrol and should keep the next invcoice reasonably in check.
BUT, the magazine distributors need to recognize and compensate us for the time this takes or better still supply as according tto quantities set by us with the best solution being what Mark is advocating, charge for sales oonly.
The time spent managing oversupply and returns would be far better spent on displaying and selling more magazines to the benifit of publishers and us. need to work with the publishers to maximize their and our efforts and remind the distributors that they are basically just freight forwarders serving publishers and outlets.
At least gordon and gotch have got there act together regaRding the cut off date for returns . Not a huge plus but still a plus
Brendan,
They always do this at the end of the month.
They seem to think that they can clear their warehouse of stock and sneak it into our stores at the last minute. I guess they think that we probably won’t have time to deal with it, as we are currently returning plenty of other oversupplied stock from earlier in the month….
I madly pulled out a WHOLE lot of mags out of this mornings delivery and put them straight in the returns bins (after checking previous sales on our system) so that I get the credit into this month!!
Shauns,
How have GG got their act into gear regarding cut off??
1) 1pm today (29/7/11) ISN’T the end of the month, Sunday 31/7/11 at 11:59pm is the end of the month. When things are computerised, why do they need to cut it off BEFORE the actual end of the month?
2)The cut-off time for this month is 1pm Sydney time, sometimes it is 3pm. Why the need to vary the times from month to month?
If you don’t happen to read the email properly when you receive it, and think “I’ve got until 3pm to get all this crap entered into the system and sent from Xchangeit” then you aren’t going to get your credit into this month, cause you missed the cut-off!!!
If Network can manage to get their system to do an end of month on the LAST DAY OF THE MONTH, then why can’t GG??????
On the best of months we will make 10% profit on mags (sales compares to bill at the end of month) most of the time mags are break even or run at a loss due to oversupply and moving return dates. We have never had a month were we get near the 26% profits we are supposed to get as the goal post keep on shifting.
It still amazes me the the GG/Net call the 20th of the month the cut off for payments and the last business day or there abouts the cut of for returns but they can bill right up to the last day IF it suits them.
Anyway I have stripped the shelves and returned as much as I can over the past few days and will wait to see the bill on monday, as we have no means of getting an accurate read on the what we need to pay based on sales.
Nice post.
People who do not acknowledge oversupply and react accordingly must have a good cash flow from somewhere else.
The only constant in this industry is oversupply and as Mark indicated it causes distress.
I would like to see transparency or insight from Publisher to Distributor.
I would like understand how they manage their financials if people are supplementry returning all the time. It does not add up.
subaru , last day of mags for the month is today so i have no problem with the cut off being today . i will not be complaining about that , i think it is a lot better than today being the last supply day but cut off yessterday which is what normally happens.
As i said not a huge plus but a plus anyway .
Be Warned from last month. I beat the cut of time was when I submitted my returns which I did before the cut off time. No they were not submitted in time. Th cut off time is decided by when their system finishes processing the returns.
G&G appear to have removed the ability to cancel a title from their website and will not do it over the phone insisiting you email or fax them.
At the end of this who owns our magazine pockets us or the distributors. They sure act like they do.
Peter , i spent about an hour on GG website yesterday and it was letting me cancel supplies (i hope)
I also cancelled a couple of magazines yesterdy from the G&G site. There system is more compliant to my needs than Networksk in this regard.
What makes me laugh is that they have our data – updated daily – and the problem is as bad as ever.
Unfortunately, the problem is theirs and they just pass it on. Their products are generally weak and only have about a dozen magazines that can be sold profitably. Until they recognise the need to provide quality rather than quantity, they will continue to treat their customers like they own us!
I have cancelled plenty of magazines in the past. They are happy to allow the cancellation of these mags.
But guess what, they increase something else very shortly afterwards.
It seems to keep our monthly bill at the same level.
I think that they budget that our bills will be a certain amount every month, and they do everything in their power to keep it at that level
100%agree with Subaru , a few months ago i cut back a heap of mags i am talking at least 100 plus tittles and guess what my account has not changed it always is the same amount give or take a few hundred dollars .
I have been saying the same as subaru and shaun for many years. I also think early returns stuff up the computer stats GG and Network use to allocate……….. being in the country I can return tops only which helps reduce costs undoubtably, I don’t bother with early returns. My Network returns are almost always 40% ( sell 60%) each month, GG was 50% but has improved slightly in last 2 yrs to about 55% sell through ( ie 45% returns), using raw dollar figures calculated monthly.
The most effective oversupply management technique I have is to make SURE one of everything marginal is topped. Even if I think it might eventually sell, if the computer sees that you always return one ( remember, computers only look at issues in terms of numbers, not in terms of “exciting issue covering special events”), it is biased AGAINST increasing your allocation. Not that this always works – if it’s a slow month, they will send out the junk to reach a certain dollar value NO MATTER WHAT. I calculate this as part of the business costs of a newsagency. We do after all have sale or return re magazines, which is not the case with other newsagency product.
Many points to agree with here.
I, too, am suspicious that the amount of the bill tends to not decline despite adjustments in orders.
The more we work direct with publishers the better our chance of driving change.
I don’t have time to sit on the GG website and “micro-manage” crappy individual titles, when they’ll just send other just as crappy titles in their place.
It is faster to just scan them into the returns bin within the month they are received, thereby reducing the final bill.
The only tool we have to fight this rediculous supply is EARLY RETURNS…but maybe i’m just a dumb, whingeing newsagent 🙂
Intresting h.
Subaru, One has to do what they have too if you want cash flow in your business. The GG site is not at all retailer friendly on supplementry returns.
I agreee 100% with your last sentence regarding early returns.
h, the issue with returning magazines even if it may sell is that it costs growth and you will never know if that return may have turned into 2, 3 or maybe more sales. For example, we have only sold 2-3 English Womens Weeklies for years but recently they have taken off. I have just increased our order to 9 with six now put aways. If I followed your example this growth probably would not have occured. I would rather grow sales than early return to the detriment of sales. I don’t disagree with early returns at all but they should only be returns of blatantly oversupplied magazines.
h, the issue with returning magazines even if it may sell is that it costs growth and you will never know if that return may have turned into 2, 3 or maybe more sales. For example, we have only sold 2-3 English Womens Weeklies for years but recently they have taken off. I have just increased our order to 9 with six now put aways. If I followed your example this growth probably would not have occured.
Brendan
One has to remember not all Newsagents are the same.
The quicker people understand this, h’s post would be understood.
The problem of oversupply is not just oversupply of one particular title, for example if you have 500 pockets and you are sent 700 unique magazines you have a problem.
Newsagents vary in size and location, Distributors and Publishers must also understand this although it can be difficult.
I am happy for you that you are growing your magazine range and it is working fromm what I am reading however we are all in different circumstances and you want to be a Newsagency specialist which is fantastic, not all are though.
Fair enough comment Derek. Being relatively new to direct supply I still myself as playing catch up and imagine that all newsagents have at least the rang I do. As you say, a smaller number of pockets does make it more difficult and horses for courses, mags probably aren’t of the same importance to all of us.
I’m just downloading tomorrows mags and thinking about some of the comments regarding distributors adding titles everytime we delete one. This does seem to be a strong likely hood.
We should have the ability to tell a supplier how many titles we are willing to range and have this set in their system. Any new titles would then be added at the expense of the worst perforing title on the list. This would make management a lot easier for us and assist in maximising sales efficiency for space.
I think Mark has made the comment before about this however can you think of any other business where the supplier has this much control over what you receive and excercises the control they do over what is sent to you with subsequent harsh penalty (read stop supply) if you fail to make payment on time? An industry where you must spend the amount of energy, time and cost to try and bring some sort of control over it?
If there are other industries that this occurs in then please let us all know.
You’re right Angelo. On the one hand we are help responsible for paying our accounts on time while on the other we are given little opportunity to control the level of indebtedness we incur.
To be constanty arguing with GG & Net re there over suppies is time waisting and exhausting. The only way they will listen is for every newsagent in the country with the help of our suposed national body sticking there neck out and making some noise!!!! Give us the same trading terms as woolwoths and the likes sales only there is a reason woolworths cut back there magazine titles in Dec and it wasnt because they sell so many and make huge $$. It is simply they are labour intensive time consuming and do not generate enough income for there real estate. And they a compensated for giving them front end real estate so why should we be compensated. Every time they over supply we get to deduct a fee given they recieve our sales data daily and it takes us time & money to return. They are paid on distribution of titles not sales they inturn give distribution data to publishers who in turn SELL this to advertisers i am sure if as newsagents we told the advertisers who spend millions of dollars to secure there product in the right target market that only about 50% of the data they recieve is true and they should be seeking compensation from false and misleading data initally supplied by GG & Net because they need there wharehouses empty. Perhaps our daily sales data would be best sent direct to the advertisers who are the ones spending millions of dollars to reach there target market.