Magazine distributors and newsagents supplying sub agents with magazines are assessing the potential impact to their distribution model as a result of the newspaper distribution changes being introduced on the Eastern Seaboard.
The changes being driven by News and to be followed by Fairfax will see the number of distribution newsagents fall considerably. The new ‘super territories’ may not be an appropriate model for magazines.
The best newsagent / subagent relationships for magazines are those involving high engagement between the businesses, sometimes more than once a day. The labour cost of managing this from a distribution warehouse compared to a more local and close distribution newsagent situation, as is the case today, could be a challenge.
I’d expect magazine distributions and newsagents to be thinking carefully about how they handle subagent arrangements in a new model. I suspect distributors will want fewer direct accounts rather than more.
Do they maintain current sub agent arrangements? Would a newsagent who is no longer handling the distribution of newspapers want to do this?
What happens with magazine distribution in areas currently managed by a newsagent in the future is just one of several knock-on effects of the newspaper changes yet to be considered to a conclusion by the various stakeholders.
Keh ? What engagement. We are an upper middle size distribution and retail newsagent (with 15 significant subagents)
We’ve seen an ACP rep once in 2 years, we’ve never seen a Pacific or Gotch in our store. We only hear from Network if we’re 2 and a half seconds late in paying the account (which is never anyway).
Our magazine merchandising support and inspiration is driven by ourselves and our buying group – who are both fantastic by the way !
Our experienced view is that you could not have more passive and less engaged suppliers than the magazine publishers and their distributors.
Or is there a paralell universe in the magazine business ?
KMc, I think you are missing the point that Mark is making. Put simply, will you keep supplying a subagent magazines if you are no longer the distributor of newspapers to them. this was not a comment on our relationship with NDC and GG but on our relationship with our subagents.
on your point – We have a great relationship with our suppliers (most of the time). We have an ACP and Pacific rep come and see us around once a month with updates and anything we need. All you have to do is ask. They have told me they only want to service the stores where they are welcome.
Nexus from Pacific and Connections from ACP are both terrific campaigns funded by publishers. Universal has offered an excellent business growth initiative to newsagents. EMG are reinventing their model and delivering more value to newsagents.
My post is more about the structure of the subagent relationship in the new newspaper model world.
Hay! Where’s the love Mark? Haha.
I luv ya Alf.
I gave away my newspaper distribution business years agao but retained the magazine supply to the sub agents. The magazine distribution model is loosely based on the newspapers distribution model but to my knowledge there is nothing in writing to that effect.
I guess with the deregulation came with it the responsibility to win and retain your own subagents.
This newspaper reshuffle may cause some newsagent to newsagent fights on magazines and may allow some stores to significantly enhance their offer.
I agree with you Brett. We sold our distribution round and shut one retail
shop (allied to the round) and now we
just run one mall based retail shop.
We are direct to the magazine companies
and it was our experience as distribution
agents that as soon as we got a subbie
up to speed and getting good sales the
distributors would suddenly go direct to
them WITH NO COMPENSATION TO THE
AGENT WHO HAD STARTED AND BUILT
THE RANGE UP.
This happened to us so many times with
our large subbies that we decided that retail only was the way to go.
Now the boot will be on the other foot.
The distributors will NOT be wanting another lot of drops so they will want to
“rationalize” and that will mean fewer outlets as they realize that the retail only
stores that they have traditionally had
their best outcomes from, might be their
best way forward.
Why should SS and convenience stores
be able to have access to all of our product?
We can’t sell groceries or petrol.
The saddest thing about this being the outcome, will probably manifest itself
as harmful to the original distribution agent and that is not a good outcome
albeit we have been warned for 12 years
or more that this could happen.
It doesn’t make life any easier for the agent who still gets up at dawn and throws papers (often now at a loss).
I don’t like the idea of my business gaining
from their forced closure but that is what
I am forseeing in the near future.
Brett, another thing I forgot to mention was that the magazine distributors have
always “piggybacked” on the newspaper
distribution thereby hugely reducing their
costs to reach their customers (us) .
Having to pay all the costs themselves will
possibly mean they have to cut across the
board as I alluded to in my previous email.
Just my opinion and i dont want this to be a generalisation of the industry as a whole because hopefully it isnt that common but what about the subbies that never have been supplied properly (and if you are honest with yourself you know there are many)?
If magazine sales are going to grow then you need pro active agents WANTING to supply subbies and WANTING them to grow (most will never achieve full agency staus) ?
I have over the years been approached by many subbies asking me to supply them as their main agent wasnt doing the job properly or was just too hard to deal with, but as a retail only agent i have had to decline…….now if i was allowed too (and believe me i would jump at the chance)…..then what do you think would happen to mag sales?
Cheers
Al
Al, how would your fellow distribution agents feel if you were “allowed” to distribute to their subbies in their paid for
in blood, sweat and tears, area???
I agree with your sentiments but we can’t
go ahead holus bolus at the expense of our fellow agents.
If you had to pay out the agent for the
right to do the delivery then that would
be ok so long as it was fair and equitable but why should you (or me) be allowed
to deliver into someone else’s area just
because we are better at it.
Have you ever been a distribution agent?
I have and it aint easy.
Getting up 7 days a week to deliver is a
hard life and I cannot decry their right to
a respectful income and a respectful sale
of the territory to which they have purchased the delivery rights.
Having said that – your approach is purely
pragmatic and workable – just not to be
done at someone else’s expense.
I always remember having to tell my retail
subbies WHY they couldn’t have the full
25% and when I pointed it out (nicely) that my family worked 7 days a week from
1 am until 7pm most days the retailers agreed that they didn’t want to do my family’s job.
Unfortunately retail agents think that the
distribution agent ONLY drops off a bundle
to his shop for half of the commission.
It is not that simple and we need to respect what distribution agents do.
Obviously the publishers are now panicking
because they have had a boatride with dist. agents doing a huge amount of work
for them for, in some cases, very little return. Now, with papers in decline the very easy “piggyback” that the mag companies have enjoyed might be at risk.
June, i hear what your saying but my sole point here is the subby that cant get supplied properly…..shouldnt he or she be allowed to increase his or her sales?
I have not been a delivery agent but i was a “dirty old subby”.
I am not saying i would deliberately go out and chase a fellow agents subbies but if they approached me to deliver them a better service helping them to make more money as well (after all thats why we are all in this small business caper) then shouldnt i be allowed to do exactly that? and more importantly….shouldnt they???
Cheers
Al
I am sure I remember a clause in the magazine contacts like the papers to allow them to make you deliver to there said subs. Could be wrong but I think there is something.
Al, I really don’t have an issue with improving our bottom line (and the subs)
but I feel we should have to purchase the
delivery from the dist. agent for a fair and
equitable amount (agreed between them and not with associations or publishers/dist being involved
June, if they cant deliver fair and reasonable service, why reward them?
June, i dont think anybody wants to say it at the moment but……and this is only my opinion……if Distributors and Publishers want to grow sales then it will only happen one way……”open slather”….and may the best man or woman win !!!
Like with newspapers let’s not jump the gun. But we aware that changes must follow the newspaper changes.
Sorry Alf – I LOVE Morrison Media and the traffic you bring my way!
Guys, as a sub agent I would not want to deal with one newsagent for papers and one for magazines. It would be all or nothing, I could not justify dealing with two suppliers for such a small part of my business
Guys,
In large SA distribution business’s the largest threat is not newspapers, BUT sub agents. Even in SA where many newsagents process mags and deliver with the morning paper, magazines are the highest cost centre to manage and the lowest profit margin area. We have stopped magazines in 7 subs recently – simply they can’t pay the weekly accounts -rent, wages & electricity are killing the small corner store.
We have toyed with the idea in our depot of one account for NS & GG to service all the subs from the 5 Newsagencies – about 200 subs. Even this model (dedicated staff, using XIT allocations and XIT full returns system) is marginal after full allocation of costs. We have several Newsagents who have completely closed their NS & GG accounts – and they claim GP up and a better lifestyle!
Regards John
I have to agree with your sentiments Allan. The idea that someone should be paid out is somewhat anti-competitive and keeps this old idea of protectionism alive. If this were any other product, multiple distributors would compete in the same market for business. If one were a poor distributor they would loose business to their competitors. If we are to improve the channel as a whole, removing protection for poor performers is inevitably the path that must be taken.
We still deliver magazines to 2 subagents because the agent who sort-of took on our old territory (we handed if back a few years ago and the adjoining agent took on our Fairfax/News subagents) won’t deliver magazines early enough (both subagents have a busy early morning trade). We get consistent under-supply of Fairfax/News titles from the same agent, so one can only imagine how well he would manage supply of magazines! We know he also blatantly disregards a number of the requirements in his contracts with both paper companies. Should no one be allowed to compete with such a poor performer? Do we really want to encourage barriers to improving the industry?
Jarryd, since when is selling a part of your
business “protectionism”. There will always be good and bad operators in our
industry but it doesn’t mean that they should lose their investment, surely?
Well said Jarryd, i too still get under supply of Fairfax (the only thing left in our relationship) from my main agent.
June, calling what some of these type of agents have an “investment” is not quite correct……they think more of it as a “right”…..
Al
June,
If multiple businesses can’t compete in the same market then that is a text-book case of protectionism.
Why should the investment of a bad operator be protected from competition? People should protect their own investment through innovation, best practice, good service, a USP and all those things that every other business does to maintain a successful operation.
Retail newsagents are not protected from competition. They must vie for market share with other newsagents and retailers. I believe we see the gap between ‘poor’ and ‘good’ retail newsagents grow wider every year. Those who haven’t kept up, been pro-active, innovative and diversified will likely succumb to market forces. As cruel as it may sound, shedding these poor operators will make the industry stronger. Magazine supply to subagents should be no different.
Jarryd, what about cutting the supply completely to subbies who are not newsagents – like SS and convenience
stores and small delis (if there are any
left).
Wouldn’t that invigorate the industry?
Those of us who were left would surely
see an increase.
The magazine companies have caused a lot
of problems themselves, by allowing any
Tom, Dick or Harry to have access to their
product at the expense (quite often) of
a nearby newsagent.
Rationalisation by the companies is the
only way to go IMHO.
Two things need to change. Newsagents need to have absolute control over what stock they get and they need the same terms for returns.
June,
Such as move might help boost sales for the retail part of the industry. But then there would obviously be no market for newsagents who distribute magazines to subagents. Thats a huge amount of lost income for some distribution agents.
Newsagents need to seperate the distribution and retail sides of their business (or only have one so they don’t have to actively seperate them). The two simply don’t work cohesively together.
A big chunk of magazine sales are mass market publications (anything not niche). For these titles retail is a numbers game. Fighting this reality will get us nowhere.
I would also like thew same deal as the duopoly Supermarkets, which from what I can see is a substantially better deal than our deal. I also totally agree with Mark’s comments in post 25.
Peter
maybe we should make the subbies do the home deliveries in their area if they want direct relationships with suppliers cant have your cake and eat it as well. Those that sold off their territory knew what they were doing and what the consequences would be
Rick,
Most of the discussion here is related to magazines and subagents. I’ll make the assumption you’re refering to newspapers in your comment.
Newspaper subagents aren’t asking for direct relationships with publishers (although an indirect relationship through Connect that allowed subagents more control over the stock they received from their distribution newsagents would help solve a number of problems). The consequences of selling off one’s territory (or simply no renewing contracts as many have done) is to receive significantly less profit from retail sales of newspapers. The consequences should not be constant undersupply from a distribution newsagent who is either a poor operator, deliberately breaching their contractual obligations or engaging in anti-competitive behaviour by restricting supply … if not all three.
I have just been reading the comments on exchangeIT and the original comments re monopoly businesses and how they treat their customers. Guess what the owners Network services treat their customers exactly the same way with that 1derful take it or leave it attitude. I had the audacity to underpay my account because the credit for magazine returns didnt arrive before the last 2 working days of the month.(29th June couldnt be credited depite exchangeIT) I said the credit should have been put thru and so no payment. they said “DONT CARE” pay or we stop supply. I said but you OWE ME. “DONT CARE” thats the rule. I will say the lady was very polite but firm. So I agreed to pay. The goodwill this has created is ZERO. I will now return all magazines as soon as possible only keeping those I will sell cos “I DONT CARE”. The publishers will be the losers and I would say to them complain to your distributor about the lousy service or get somebody else. How can i get $9000 worth of magazines and return almost $5000 per month. My profit for the year after all the labelling and returns of this labour intensive category makes me seriously consider quitting the category. No doubt they “DONT CARE” anyway.
It is strange that the only suppliers I see as the enemy are GG and Network. All my other suppliers are my friends and I like dealing with them. If I treated my own customers the same way I would be out of business. Thats my Sunday whinge but I am still fuming. The losers will be the publishers as they get the tops off all their magazines and returned “ONTIME” for ME
I didn’t get mt Network returns that i put through on 29 June either. Gotch advertise a date and time for their cut-off, does anyone know if Network does, or is it at their whim??
Early returns mess up my allocation figures something fierce, so I avoid doing that if at all possible.
It seem like ALL of us are on about 50% sell-through for Gotch, perhaps a bit better for Network.
Publishers need to be active their end too if they want their product distributed. The number of outlets must be decreasing daily!
ACP have sacked their merchandisers. SO thats one less service we have. mWOndering if there will be a better deal as a result of the cost saving there.
Azeem, we had an ACP appointed Merchandiser in store today for the first time ever. Not sure she will achieve much as we havent ever relied on one before but none the less she was there.
Al
I’m starting to get a bit that way too Wally with magazines, particularly with Network supplied ones. I’ve been seriously wondering and starting to run the figures in regard to only keeping the top 50 magazines by sales plus around another of the 100 specialty titles that turn well and returning everything else unless it has a firm customer order.
There are good reasons that Coles and woollies don’t keep a larger range of titles and if there is a good business case to follow suit ( Marks often remarked point of difference for newsagencies to be mag specialists may be a valid argument against ) why not ? It would have to be case by case based on individual businesses operating cases but why not look at it if there may be benefits to walking away or reducing traditional lines ?
Al, count your blessings. We recommend a proactive and constructive approach.
We worked very well with ours, her input to display and layout helped us to inprove sales of magazines. Plus she was our only link to the publishers and always supported us with her connections in ACP management. We will miss her.
sacked merchandisers ? i recieved an email just on friday stating that i will be getting a visit from one soon (for the first time ever i don’t think they realise where i am)
Azeem, I had an ACP merchandiser in my store today fro the first time in about 8 years! Maybe they have just rearranged the deck-chairs and put them in different places for a bit. Lass said she’d see me next month, and she put up two Zoo posters. She said she didn’t know much about her job yet, or magazines. it was a 3 minute visit.
shaun
might be the same one that is going to visit me, i got the same email, be interesting to know where they are based tho.