I met with a small magazine publisher yesterday to discuss how they could build a stronger and more mutually viable relationship with newsagents. As is often the case in discussions with magazine publishers, the conversation turned to early returns and the lost sales so often shown in the data.
Now before newsagents jump on this saying early returns are the only mechanism of control they have (and which i agree with), the conversation yesterday was specifically about early returns that cost sales – returning to a point where you have significantly less stock on the shelves that your recent average sales or returning to a level where you do not benefit is network-wide sales uplift because of a cover story feature or some other reason.
Early returning of magazines is at a point where some publishers are left wondering whether the newsagency channel is the appropriate channel for the sale of magazines.
Magazine range is our only point of difference. Lose this and the future of the channel will be seriously challenged.
In the meeting yesterday, the publisher asked how newsagents would respond to a model whereby they paid only for product sold … once a title is returned they would be billed for net sales.
I’d appreciate comments here on this issue. If you had a title with an on sale of one, two or three months and did not have to pay for stock sold until you processed your returns, would you keep the title on the shelf for the full on-sale?
Absolutely would keep the title on the shelf for the full on-sale (space permitting).
There are already some mags on delayed billing for the entire on sale period. The delayed billing titles are kept on the shelf when they have been manually marked DB (there is no indicator on POS labelling). Are we talking the same system via distributors or direct from publisher?
Through the distributor.
A complete delayed billing solution is coming through the software including labelling and back office management and tracking.
Agree with Wendy 100%
A code on POS label would be handy
I would be far more tempted to keep an Item on delayed billing though Shelf space Quantity sent and previous sales are all considerations. At present in puzzles we are being deluged with soduko and other puzzles. In this case delayed billing is not a big consideration as against sales and space.
Something on the labels for delayed billing would be great as well as publisher shown on importation.
sounds like a good idea, but will it address the issue of the distributors oversupplying, i think not. that is the key to solving the problem of early returns, i dont get why that it is an issue that the publishers dont seem to be able to get their distibutors to understand. your model sounds better that the current situation, but where do i store all these mags im hanging onto that are far in excess to what i can reasonably be expected to sell. while cash flow is a major reason for early returns, storage space is another reason. lets address the root cause here, not keep putting band aids on a broken system. surely the distributors work for the publishers, why cant the publishers demand that distributors use that sales data they have to only supply a reaonable amount, surely we can be exoected to order more if we dont think we have enough. or do the publishers also have a vested interest in a model that oversupplies, like circulation numbers versus advertising rates. maybe im just a litle cynical.
anyway this subject will be like a red rag to a bull and should make interesting reading over the next few days
I like the idea but just like everyone else we need to be able to identify when a magazine is delayed billing or not ..
Assume that the identifier will be on the label. But that’s the easy bit. The more complex – and this will be done – part of properly managing delayed billing to make your life easier.
Sales history is the key, if we have an appropriate amount allocated then the title gets a fair run. Right now we have distributors allocating too many copies and indeed too many titles, so space runs out. Agents are then often forced to remove a title to make room for a newer one.
If we achieve an approriate allocation with just a small margin for growth then a title will get its full term.
I’d note that the discussion was with a publisher keen for allocation to match sales potential. i.e. NOT oversupply.
mark why cant they match allocation with sales potential now if they are keen?
Rick this publisher actually does this now. Their allocations process would not change.
I agree, we do lose sales with early returns, though often it’s with overseas titles that are just too many sent to us to know which ones to keep and which to return.
The delayed billing magazines that we currently receive tend to be the ones that don’t sell well, and these magazines are over supplied.
If I give these titles 2 or 3 months and they don’t sell it doesn’t matter that I haven’t paid for them, it’s more important to give the space to a title that will sell and make money for me, so no i wouldn’t keep them for that long.
Publishers could help by supplying more POS material and not allocating all their stock so those who need extra copies can get them, as undersupply is also a problem.
if this is the case, i can only think of one publisher that tries to control allocation, then bring it on, its a win for newsagents for a change. i rarely early return one publishers stock anyway.
an identifer on a label fo delayed billing would be a bonus, but wont stop me early returning if im oversupplied. i dont think i miss many sales as i dont return more than i can sell plus keep a couple of extra just in case.
We would be involved in this hands down, and would give the title pride of place in order to max sales.
In saying that,
If magazine range is your only point of difference then your business is lost to start with as most niche titles are pushing readers away from newsagents with bulk cheap subscriptions that we cannot compete with.
Unless the publishers come to the party and start offering terms like this across the board as they do with other channels then we for one will be replacing more and more mag space with other points of difference that make us more profit and do not have such short used by dates.
We would love to keep offering mags but like cigs, if they continue to decline then we will get out and reuse the real estate.
A timely post for us at Lovatts as we introduced delayed billing on all of our titles from July. The response we’ve had from Newsagents has all been positive.
We feel delayed billing will only be effective if the supply is correct, so we work hard to that effect. Peter, you mentioned the oversupply of puzzles; please feel free to contact me directly via terryt@lovattsmedia.com if we’re in that oversupply mix (in fact, we encourage all agents to contact us any time with supply issues). It’s vitally important to get the message across so the delayed billed titles are easily identifiable at store level.
Network do have ‘DB’ on their labels, but it’s encouraging to read Mark comment that the software will make this identification easier in the future. If used correctly, delayed billing can turn a cash flow negative into a positive by agents being able to pay for the titles after you’ve sold them.
Terry Thelwell – Circulation Director
Lovatts Media Group
As others have said I would support it, but only if it doesn’t result in oversupply. It ultimately doesnt matter when I have to pay for a product if I only sell 2, have room on my shelf for 4 yet am sent 20 of an item.
Today I’ll literally early return 1/3 of my network delivery because I simply don’t have the space for some of the titles in the quantities sent and when I look at sales histories I’d probably have to have all of the newsagencies around me disappear to come close to the supply volume with sales.
Space is becoming the BIG issue for me. Oversupply is causing us to return many titles. The one I am looking at right now is a perfect example where we have sold 2 of 8 copies from the last issue and this isue have received 9. The solution???? Charge on sale AND SBR on all stock. This would leave stock in the warehouse for supply to agents as they need it. At present we are the distributors warehouse and this is expensive, wasteful, ultimately costs sales and is totally unreasonable. I have just been shown ANOTHER magazine by staff with a similar scenario. While I hold stock that probably won’t sell another newsagent may have sold out and can’t get stock. This is crazy and needs to be rectified along with terms of payment. I would gladly give more titles space but this space is abused by oversupply of some titles and weakens department within my store and I dare say many other newsagents are hurt in the same manner.
Broader range, payment terms as suggested in the original post and SBR over all titles would make us as efficient and profitable as possible and provide the best distribution solution for the publishers.
If you had a title with an on sale of one, two or three months and did not have to pay for stock sold until you processed your returns, would you keep the title on the shelf for the full on-sale?
YES !!
Mark only if the stock sold otherwise what is the point?
One of the most prevalent themes in these comments is SPACE. Delayed billing addresses one issue and one issue only – CASH FLOW.
If publishers at having problems with early returns then it needs to be determined why newsagents are early returning. If the problem is largely cash flow, then delayed billing will likely help. If the problem is space management, it won’t do a thing.
Our store has no issues with cash flow and a large portion of our early returns are done to manage space. Generally, if a magazine doesn’t sell at least 3 copies in a month we won’t stock it. No amount of delayed billing will increase the physcial space we have to display magazines.
My fear is that some publishers wil see delayed billing as a license to further oversupply.
Andy, the point is that is makes it a bit easier to maintain your USP of magazine range. Without this, you’re not a newsagent.
Further, this is not delayed billing as it has been practised up to now.
A better term than delayed billing, to avoid confusion, might be “on commission”. But the concept is relatively similar.
if someone at the distibutors end would actually admit that oversupply is a big issue, and it is, then we can then ask why it occurs, and then we can work out how to fix the issue. BUT we all know why this will never happen and why the distributors dont want it to stop. If publishers where really that concerned about early return, and i bet they are, then they need to deal with the way they pay for the way their products are distributed. We all know why oversupply exists, but the publishers wont/cant address the issue. The main players in the magazine space, the publishers as they make the product, and the newsagent, as the single biggest channel selling the product, are being held to ransom by a service provider, that is the distributor. Talk about the tail wagging the dog.
Guess which one is happy with the status quo
“Early returning of magazines is at a point where some publishers are left wondering whether the newsagency channel is the appropriate channel for the sale of magazines.”
is the newsagency channel the only one that early returns? if that is the case then why? do other channels have oversupply issues, are there different trading terms. Did they say what their preferred channel was if its not newsagents and what do they do differently and why?
Sadly, supply is only half the story. Sales, merchandising and margin is the real story. For the first two years, we went down the “range of magazines” USP, no early returns path with over 1,000 magazine pockets and a great deal of space dedicated. That only seemed to inspire the suppliers to send bigger volumes of more titles. Over the last two and a half years we have whittled our pockets down to 430 and early return anything not on our magazine layout planner. With better merchandising and shop layout, we sell more magazines today than three years ago, and it takes a third of the time to manage. We also have more space to inject new product lines with better turnover, margin, and less management time and cost. The magazine distribution model is broken and the current way it functions isnt assisting a product in decline.
Newsagents have failed for decades at the big picture,. Why not support this small step as a start.
As for merchandising, my position on doing a magazine relay is well documented: http://www.newsagencyblog.com.au/2012/02/03/how-to-do-a-magazine-relay-in-your-newsagency-business/
mark i think you are missing the picture, we all love the idea of a publisher controlling supply and only invoicing for what we actually sell. i say bring it on, more the merrier. i will make sure it has pride of place in my store if it sells, but if its about snowboarding i wont be too sure it will have a market in far nth qld. ie it has to be something we can sell to make a profit. if they gave them to me i doubt they would turn me a $$. so its about the right mag, the right supply levels and fair trading terms, not an unreasonable request. but as a starting point i support it 100% and cant wait for it to be an industry standard
Rick, well said .Even if that snow boarding was a free magazine that i would never have to pay for and it gave me an oportunity to make $10 a magazine it still will not change the fact that there is no snow here and it is taking up space for some other tittle.
We all agree – the current model is broken, lets have a go at this variation but as most have said, the title must sell and it must arrive in appropriate quantities as space is premium.
Can I also say a big thanks to Lovatts! Their product is great, their allocations are great and they even visited us in store! – many thanks team, sales are up 12% this FY of the crosswords and puzzles.
Brett , i also had a visit from lovatts not so long ago and it was great to see someone bother to pass through .
Mark,
I think most here support delayed billing or an ‘on commission’ style setup.
However the point being made is that such a setup may not solve the publishers early return problem to the extent that they would like. If space management is the reason for more early returns, delayed billing will no dout boost cashflow for newsagents, but won’t help the publisher.
It must also be said that if newsagents embrace delayed billing it does not mean there should be any change to their ability to early return.
Is there any reliable data on the reasons newsagents early return? If there isn’t, this needs to be the first undertaking by anyone who is affected by the issue. There is not point trying to design solutions to a problem if the root cause isn’t known.
Unfortunately, there is no formal data from newsagents on the reasons for early returns. That said, I have plenty for feedback. Reasons fall into the following categories: space, cash flow management, over supply, poor management (dare I label it stupidity).
The data I have seen now from six or seven publishers indicates to me that poor management is a key contributor since I can see newsagents with, say, net sales of 50 for a title, receive 65 copies and then early return 30.
How do you fix this, how do you get newsagents to check their data before they early return. Some I have spoken with get angry saying they should not have to check their data. The magazine model angers them so much that they don’t care if they make wrong decisions.
I sincerely feel that we are at a cross roads point here. We have been so poorly treated for so many years that too many of us have lost the will to look at the issue objectively. I hope this is not the case but early return behaviour I have seen suggests we are. Some publishers feel this too.
The publisher who asked me this question yesterday said newsagents would still be bale to early return if they implemented pay on return. Newsagents doing this would not have access to the modified terms.
While I would take up the option to pay on actual sales I can’t see how it will stop early returns. Early returns in my case aren’t cash flow driven there driven by a physical inability to place any more titles on the racks, in the last year I’ve increased my magazine space by 20% and having never seen a rep from any distributor they don’t know this, still every Mon,Wed & Fri morning I find myself making decisions about which Mags (still before there return date but something has to go) I’ll remove to make room for the new ones.Publishers and Newsagents can complain all they want and try what ever they like but only Distributors can fix it because they created the system and now their abusing it for their own short term aims, ie create as much turnover (the only thing they control) as they can get away with as it contributes directly to their bottom line no matter how much actually get sold.
Obviously Publisher’s are sick of the model just as much as Newsagents….this is what seems to be the theme.
The common denominator at the centre of over/under supply issues appears to be the Distributor. They treat Newsagents like s#*t and they probably do the same to Publishers.
It is frustrating Newsagents, and this is resulting in newsagents perhaps making what Mark describes “poor management decisions” out of spite. Most times it is not the Publisher’s fault, it is the fault of the distributor.
Why not implement the publisher’s suggestion across ALL titles, not simply selected lesser-known titles which are attempting to get a spot on the shelf.
Let’s go one stop further and claw back some of the possible commission we should be earning which is going to the distributor.
The days of 25% are not sustainable. 30-35% is much more realistic. This is what Newsagents NEED to continue to have magazines occupying valuable real-estate. The commissions are possible. Any deadbeat can get a better deal by going to isubscribe or magshop online. Throw in websites such as Cudo and Living Social etc and its clear much higher commissions are possible.
But Publishers can’t afford this I hear someone cry……well they are going to have to adjust to meet the market. Newsagents have continuously absorbed costs passed on, it is time our industry partners took a hit themselves and made their own in-house more efficient.
Alternatively they will head the direction newspapers are heading.
Magazines would then return to being a VIABLE product for the real estate they occupy. Newsagents would WANT to make the most of selling opportunities. Newsagents would stop shrinking their space previously allocated to Magazines for more profitable lines of product.
And if the current distributors cannot do it, then perhaps here lies an opportunity for GNS to enter the market as a distributor.
Well said Steve and Amanda !
It think the points you’ve both mentioned are the real issues that need to be rectified and while pay on sale would be useful it doesn’t really go any way to fixing the real issues and rewards (or lack there of) of the magazine system. If something isn’t doen about it soon then magazines as a hardcopy as opposed to E copy item will go the way of the Dodo sooner than expected.
Steve, have you told network and Gotch how many titles from them you can carry? If not then do it. Without this data they can only go off your sales history.
Amanda, publishers are responsible in that they can control as much of the process as they choose. It all depends on what they contract to the distributor. While I like your point about higher margin, publishers who have tried this will tell you that newsagents care less about it – they do not respect the higher margin with a change in attention.
We are our own worst enemy.
Mark all publishers need to lift to a higher margin having a publisher that you sell only a couple of mags of does not make a great deal at the end of the day , it needs to be across the board .
Don’t wish too hard for what you want. The present system is quite workable with a few tweaks. We have sale or return. We can early return. Suppliers can make mistakes. We can make mistakes. But we have the tools to manage the business if we diligently apply them. It’d be good to have a bonus or rebate on net sales that encourage you to try harder. But’d it have to be substantial. Not the pissant points system they have now, which is hardly worth any extra effort.
On top of that I’d prefer changes to include easier to understand billing and statements which enable quicker and easier reconcilliation for more accurate payment. I reckon the biggest leakage in my business is not having the time to pursue and fight for every shortage and/ or overcharge.
Just on returns, i would like to hear from those remote Agents who are on “tops only”. Just wondering if they have any over supply issues ?
While we have newsagents early returning without thought and extraordinary disunity around commitment to magazines I’d be surprised if there is consideration of margin change.
May be if you do not do early returns you get a 30% margin i could go with that .
You would have to change your supplies as you can now We ajust each over seas invoice from G G
Allan,
We were allowed to go to tops only returns last year, but its done nothing to alter supply. Still get oversupplied regularly, especially by Gotch. The bonus is on the obvious saving on postal charges to return the mags.
Thanks Vicki, good to know.
Al
Mark , you make it sound like it’s all the newsagents fault with the comment at 42 !
If the magazine publishers and the distributors don’t give us enough reason to support their product then why would we ? You yourself have made similar statements about other products or lines so why should magazines be any different ?
The publishers know that probably nothing beyond the top 30 or so publications will get any support in any of the alternative outlets like supermarkets, service stations or 7-11s so if they drop us what are they going to do with the hundreds of other titles they hoist onto us now ? There certainly wouldnt be enough volume to support the continued operation of either G&G or Network for a start. They are already giving away magazines to hairdressers (two near me now get supplied not just some of the womens mags but other titles like a caravaning one !) and other non specialist retailers so seriously why should we give two hoots about them ?
If they want us to treat them as a premium line then they need to reward us and treat us as such. When I can sell more and more products at greater than 25% margin & with a greater margin dollar value I know for certain where more and more of my shelf space and retail commitment is going to go each month. If they want us to commit to them they need to show commitment to us and that is something we don’t seem to see too often.
Mark in #38 you say publishers are reponsible depending on their contract with the distributor.
Well why is the blame always put on the newsagent, are the distributors and publishers a protected species.
Paul, newsagents who early return leaving the day of on-sale less stock on the shelves than they would usually sell are to blame.
Ted, newsagents are to blame for decisions not based on evidence. Newsagents are never blamed for over or under supply. Blame needs to fall where it is due.
This is a good discussion by the way. It’s important we challenge each other. Magazines are our network-wide point of difference yet they, currently, are our weakest point.
OK, we’ve entered an personal bugbear area for me. Warning: long post.
I basically agree with most reasons for early returns, ie oversupply, remove poor sellers, need more shelf/stockroom space freed up, etc.
I like to think I get it pretty right, ie I don’t often run out of shelf stock of a title I early return. I’ll continue to give a title a go even if we only sell one every say 3 issues. I might early return on day of release, put half the stock on the shelves and monitor sales to see if back room stock can be early returned or used as shelf top up. But there are 2 glaring issues for me. I was going to put this on the newsagency forum but (a) I lost my user/pass and (b) I’m not sure of the readership, but there don’t seem to be any posts there. Anyway:
Space. I have a limited area for each category. My puzzle category has been overrun in the last year from Beachcomber entering the field. There must be 30 new titles in their stable? That’s 30 I didn’t have last year to fit into the same area. I know that people have their favourtie titles (although I have no putaways for any puzzle mags), but I can’t see the difference between Sudoku Time, Sudoku Challenge, Sudoku Challenge Collection, etc etc etc. Yes, there are difficulty levels, but that actually makes it worse because there is a easy, medium, difficult title for each!
Beachcomber started to push the old standards like Find and Circle Jumbo, Circle a Word Jumbo, Find-a-word off the shelves. But wait! They are all basically the same thing as well.
Add to that the plethora of Penny Press Variety, er, varieties and I’m afraid I just don’t have the room to display all supplied copies of all titles for all the nominal shelf life. Something has to give.
Lovatts A4 titles are the exception here because they actually sell better than the others. Presumably because of the format sticking out more, and perhaps their “specialisation”, ie Lovatts (apart from Mega/Big/Prize crosswords) seem to only have one Arrowword, one findaword etc)
2nd peeve. EMG magazines. I’ll give you my general peeve first and then a real world example from today.
Craft magazines, for example, have a “flagship” title, but there are “satellite” titles that deal with the same subject matter. The satellites rarely get an issue number/identifier. The flagships are monthly and follow the Vol/Num identifier scheme. The return date may be weeks after the date that the next issue is received. They come bagged with copies of older titles. Or, indeed, bagged with other titles still on sale. The satellite titles may be “on sale” for 3 months. However, the “editorial” content of all the titles is identical. So I have 5 titles on sale at the same time that are basically the same content from the same publisher. Not 5 titles from 5 separate publishers that may have some points of difference.
The case in point today:
Already on my shelf this week is “Patchwork and Quilting”. The Flagship. The “satellites”, also on sale, for return in November are “Stylish Patchwork” and “Delightful Scrap Quilts”. For return in December is “Favourite Patchwork Quilts”. This week, I got “Best Showcase Quilts” and “Spectacular Quilts” to place on the shelf as well. I don’t have the room, so 2 old satellites had to make way for the 2 new satellites.
Once the covers are off, they appear identical in layout. Of course the pattern of each quilt changes, but you have 5 magazines that have 10 quilt patterns/material lists in each. I can’t feel that I’m depriving anyone of content if I return them early.
I suppose this one also boils down to “space” but since the pattern is repeated with their Garden mags, 4WD magazines (and their constant re-re-redistribution. How many time can one go to the Simpson Desert?) and to a lesser extent Car mags, I thought it warranted mention.
(Also, when topping the magazines, I saw that “Delightful Scrap Quilts”, which I had just removed (as a “feature” satellite) was included as a bagged extra when early returning one of the new satellites.
If I was buying craft magazines every month, I don’t know how I’d feel about my “free mag” being one I bought last month already. I would suggest your favourite “hot car mag” customer has 5 copies of each issue of “Performance Garage” as well.
Anyway, it’s Sunday and I want to go home.
/rant off.
Everyone knows the real reason for early
returning mags – CASH FLOW NEGATIVE.
You can couch it in other terms e.g. shelf
space or backroom storage etc but it boils down to one thing – we cannot pay the bills of the two main distributors because they are offloading extra stock to us.
I don’t know the reasons for the extra stock apart from (IMHO) shops closing down and print runs staying the same which means the distributor has to ensure
that all the print run of each title is delivered and with fewer outlets that means more for each of us.
I have been watching my supplies very closely. Grazia is a case in point. It has gone from 10 to 12- 15 to 25 to 30 and the sales are still the same (under 10).
To add to the problem I received 2 x copies under SBR last week when we still
had 20 odd in the store.
It is hard to maintain a positive attitude towards the distributors when this sort of
blatant oversupply is evident.
Undersupply is also a problem.
My bulks of delicious were lost last week and I still don’t have them. This is costing me in sales for an item that is usually amongst my top sellers.
We are treated shabbily by the distributors
but there is no-one listening.
We need the ANF to have the power to lobby GG and Network and IPS and to have outcomes on these issues, for all newsagents.
It would only take one big win like this to
ensure the membership of the ANF flourished.
The state associations are toothless tigers
and need to be replaced by an association
with the clout to make a difference.
Trading terms are the top priority for us
going into 2013.
It’s good to hear a software solution is coming to identify delayed billing. Delayed billing however does not address the key reason for early returns, which is incorrect allocations in the first place. When you have a company like Network who send you 5-10 new lines every week and continually re-introduce previously deleted lines, the only course of action left is an early return. (Mark you seem to be the only one I have heard of who has the ability to limit the number of titles you receive.) I have 750 pockets and continually review my range only to have Network resend me non performers over and over. At least with Gotch we can manage the non performers.
Net paymet may sound a good starting point, however all delayed billing has done for me is clog up my small storage space.
We have the system but fail to use it properly. We should be able to determine the base quantities we wish to be allocated for each title, and sales based replenishment should be the standard on all titles, starting with the longest shelf life titles. My small storeroom has stacks of wedding mags just waiting for the delayed billing month to arrived so I can return them.
We need a return on our investment in not only retail space but also the labour intensive aspect of the poor supply model.
How about paying us a base fee for each copy sent, which covers the free rent and labour non performers currently enjoy, and an over and above commision for each copy sold.
Whilst the distributors are paid to move product and we are paid on performance nothing will change. Let’s start by having all parties in the process rewarded in the same manner.
June – As evidence by numerous posts here, there are many newsagents who early return as a function of managing space, not cash flow.
There are a number of different reasons for early returns. The first step to fixing the problem is
a) identifying the major reasons
b) establishing what functions of the existing system allows these problems to eventuate
There is absolutely no point devising solutions when there isn’t a very clear and detailed picture of the problem. Such initiatives are only band-aids.
June, oversupply is a function of the copies printed and the contracts between publishers and distributors. That said, my view is that fewer newsagents early return today because of this than managing cash flow or out of pressure elsewhere in their business.
Bill, on the delayed billing front it’s got to be a total solution – not just an indicator on a label as there is evidence that what’s on a label or in a computer system is ignored by those early returning for other reasons. Also, I know of plenty of newsagents limiting what they receive. It starts with you understanding your own data and acting on this. I am happy to help.
This post was never intended to propose the solution. It was a question that came out of a meeting with a concerned magazine publisher. I think the idea has merit. I let them know I’d pose the question here. I think the responses provide the publisher with an answer.
If oversupply is a function of the copies printed and the contracts between publishers and distributors(#54), shouldn’t that be the starting point to fix the problem.
Mark, I manage my stock from the time it arrives. Delayed billing is helpful in the case of Lovatts for example but in the main it is a pain because it just means an oversupplied title remains in my store longer, or cost me time in trying to reconcile my credits at the end of the month if I make a mistake and early return.
The only solution is that the entire system should use the data for fact based allocations, meaning a more balanced display for the consumer and less double handling for the newsagent who gets no reward for no sale.
Correct supply to me is all I require from the distributors and it shouldn`t be that hard
Delayed billing is not that important to me.
Today I received 56 recipes+
Normally receive around 33 and sell 25
So can Network explain why I got 56 and tell me why I shouldn`t early return 30.
of them.
This is the reason why I early return and some mornings I probably early return to much.
What a waste of time and money for me, the pulisher and the distributor.
There are some great points of discussion on this topic. Everybody has an opinion, everybody has a reason. The overall consensis is that everybody early returns.
In post #53 Jarryd raised the importance of tackling the issues. Understanding the problems both newsagents and Publishers face, and to be fair we should look at Distributors also.
There have been some great points raised:
“Reg’s rant” (post #50) alerted to everyone how particular publishers are abusing and manipulating the system. Much to the detriment of their own products.
In post #35 Steve touches on the fact it is in the distrubotrs interest to dump stock on newsagents. It is then the Newsagents responsibility then to return the stock correctly to get the credit. So it is the newsagents responsibilty to ensure they get credit for something they have not even requested or in a lot of cases even want.
In post #37 what is raised is the importance of what is realistically a NECESSITY for an increase in commission to newsagents being required immediately, whilst publishers still have space on newsagency shelves. I think this post most importantly highlights that Distributors are milking the industry of income. And perhaps an alternative distribution alley via GNS could be a possible solution?
Personally, I feel some parts of the system are working, but other parts which were supposed to be improved by computer software improvements in our own systems and that of XchangIT have done very little to imporve anything at all.
Commissions must change to meet the market. Current commissions do not warrant space in the current retail climate. And as previously mentioned in another post above, consumers can get margin’s double that of us retailers via online shopping….we must ask ourselves as an industry how can that even be possible.
Perhaps if GNS were to become a realistic alternative distribution model, it would actually work for publisher’s and newsagents, not just the distributor as it is currently skewed. Perhaps then magazines would return to an income stream for Newsagents, and not join the loss leader category of newspapers.
the publishers are complicit in the oversupply problem, and should not complain when we early return. They have the contract with the distibutor re allocation. Even if early returns are costing sales ( i dont believe they are in my store, im not an idiot and i can still add and subtract even tho i left school years ago to work out how much i should return and how much i should keep, and Mark i do use my computer system to guide me in this decision) publishers should look at the root cause for early returns in the first place, and that is clearly oversupply. Have the balls to deal with the issue of supply and you will also fix the early returns issue.
ACT. Don’t return that many. Allow fir growth. research if there is a reason for the supply first though.
ACT
in that case with that mag, i would not early returns any, but have a crack at a few co locations around the shop for a couple of weeks, its a pretty popular mag and i find its not a bad impulse purchase. my beef is with the really crap mags and the sheer volume of like material, like puzzle mags.
Its an interesting discussion, managable supply of magazines is obviously a major problem for many newsagents.
The one option i see as being potentially viable is to have trading terms that have a firm sale component.
If we were to recieve margins of around 40% for any title we commit to not returning at all i think we would all take a serious look at our inventory and sales data and “buy” accordingly.
Yes we need sale or return to encourage new titles and range, however a split system makes sense to me.
Clearly the system as it stands creates management problems and ridiculous amounts of waste on many fronts.
Post #62 by Hamish is worth discussing and exploring further.
By committing to quantity X at 40% firm sale, an agent WANTS to sell those products and will give that product extra space.
With a 40% commission, it is much closer to the margins earned on competing products such as cards, gifts and stationery. When i say competing, i mean competing for space within a news agency.
And 40% is a realistic level of commission, considering online retailer Cudo was offering Better Homes and Gardens to consumers at 51%off RRP with FREE delivery.
It is a pity though, more newsagents have not joined this discussion.
Nice point Hamish, but what about the Agent that would look at his sales and be “too safe”? Sales of a particular title could suffer if some Agents took a soft option. Matbe the amounts would have to be mutually acceptable. Then there is the “promo mag”…..how would we nominate an amount for a “one off” ? I like Amanda`s comment…..we need more Agents too discuss this.
Al
Still OK with 25% sale or return if we only pay for what has sold. Sales based replenishment and no returns would make this a reasonable deal and if we all supported it then maybe a rise in margin could be won. Alan makes a good point that firm sale will make many too cautious about new titles and this harms the category more than it helps. A broad range is our point of difference and this is what needs to be developed under terms that reward us for the effort. Oversupply is the big issue and while for my first couple of years on direct supply it did not effect us this is now changing and that along with wrapped bulk issue reduces our ability to go for breadth of range and breadth of range is in my opinion what we need to develop.
Will not happen any of the above we bend over and take ,need some real action ,like dropping titles
Bill that’s just dumb. We need to make our retail network the most compelling place for publishers. We do this by being professional retailers. Every day we treat magazines as a chore and or a rod for our back is another day lost.
I understand what you are saying Alan but i think if AWW for example offered me a firm sale allocation at 40% i would jump all over it and push the title harder than we already do. Personally i would order more than we are allocated currently. The incentive to near on double my return per issue sold would drive my decisions on how to maximise sales and negate the concern of having a few copies left over.
This is how we buy books and it works.
We buy firm on titles we back ourselves to sell and take the extra margin for making that comitment. On new or niche authors we buy SOR so we share the risk with the publisher.
Regardless of the mechanism used we controll supply 100%, if we buy short we miss sales, try to reorder and learn. Likewise go too hard and we pay the price with dead stock and the cost of return (or in the case of a firm by we have to discount it out) and once again learn.
Yes we minimise risk wherever we can. That said we also have the incentive and oppotunity to maximise our return. Regardless the terms of trade give us the mechanism (SOR) to support new and small focus titles.
I agree Brendan that oversupply is a big issue. I just cant see how it can be resolved while distributors allocate stock at will knowing full well the more they send out the more they get paid.
The current system is completely outdated with both the publishers and the newsagent on the wrong end of the stick.
Hamish that’s you. I know of newsagents who said they’d like this and then tried to early return titles provided on a firm sale basis for a higher margin.
We are our own worst enemy.
You cannot have a one size fits all approach as everyone would like something to suit themselves depending on how many mags they sell and range. Surely we can have choices instead of the take it or leave it option now.
In todays world it cannot be too hard to have software that sees agent A is on firm sale 40%, agent B is on sor 25% and agent C is on a 70-30 mix of both.
I’m no expert but I think publishers and dist are taking the easy way out by staying with an outdated model.
Last week I wrote of my frustration with New Idea and their giveaway product and how difficult it was to place on the shelf. I was labelled a “Wally” and immediately rushed out with my tail between my legs relayed my mags to give New Idea extra space and even placed them next to the newspapers to attempt extra sales of this wonderful FREE giveaway. I had to remove faces of other magazines because of a lack of space and the EXTRA space required by New Idea. The net result was that I sold exactly the same number of New Idea as I had sold the previous week and less than what I sold 2 weeks ago. I would suggest that these FREEBIES don’t sell magazines perhaps it is the content that does.
Did I lose sales of other mags because of the loss of their facings. I don’t know but possibly. Did the distributor make extra money from distributing a FREEBIE.- probabaly. Did the publisher make extra money – Probabaly. Did I. NO I may have even have LOST money.
Regarding delayed billing it is also about space and cash flow and oversupply. I like the Lovatts post from Terry Thelwell and would suggest their model is about right. Our sales of Lovatts have gone up, we early return less and by the sound of things they have increased their sales to. So everyone is happy. But their product also sells. Some titles don’t or only have a limited market and may not be entitled to that space. Some of those FEEBIES don’t deserve the space either. Reg’s post #50 spotlights much of the problem.
I understand that Mark but why should I be penalized because others can’t abide by their commitment?
Maybe I should be organising my own terms of trade so the product has a chance of remaining relevant in a bottom line sense to my business. Well that’s not really an option because of the one sided restrictive contracts that are in place.
The lack of flexibility we have now is just delivering one outcome – less magazine pockets across our channel. I can’t see how that obvious result benefits publishers . Surely it’s in their best interest to address this as a whole rather than the fragmented individual tokens being offered now.
The same agents who don’t play by the firm sale rules will just manipulate the scanned sales proposal by scanning out more copies than they actually sell an then reversing the transactions under a generic magazine code, especially if they don’t have to return unsolds.
Wally
With you 100% on the New Idea giveaway as soon as in turned up I predicted womans day would out sell it and it did .
W.D. supply 32 returns 2 . N.I. supply 32 returns 9. I’d estimate in my small store the pantene add on cost new idea 5 sales and added a couple to womans day. I’ve also noticed adding a pair of crappy sunglasses to Cleo does bugger all to boost sales.
As for firm sales @ a 40% margin I like the idea but it would only work for publication that have a predictable turnover like AWW and BHG and these seem to be the ones distibutors already get supply amazingly right (in my case anyway).
I was thinking about my comment that I was satisfied with 25% and feel that there are exceptions to this….bagged issues….I strongly feel that for each extra magazine, whether old or current included in a bagged product, there should be an increased commission. Perhaps 12.5% for each extra magazine would be appropriate thus compensating us for the extra space we lose to these issues. After all I’m sure that extra advertising revenue is being earned with these issues and I’d bet that the distributor don’t charge the fees they would for a single title yet we commit more space without an increase in revenue.
As for extra commission on magazines in general, perhaps a rebate based on sales as with the card companies is the way to go. This would reward agents that commit extra space and effort to their magazine range and encourage a better effort from us all. Performance based rewards are generally the fairest option for all parties.
These measures in hand with Sales Based Replenishment across all titles and payment for only those titles sold should alleviate oversupply and reward newsagents that take the department seriously.
I don’t believe that a number of different structures is the way to go, rather one structure that has in built mechanisms to reward results, then it is up to each of us as to whether we operate as magazine specialists or are more of a sub agent.
We need to look at how all parties can benefit from any new model or it won’t get up and while my suggestions will no doubt have flaws I think there is merit in the a model that reward sales attained by agents and makes oversupply less attractive at the same time.
Mark, I am a little confused by the comment “we need to make our retail network the most compelling place for publishers”. What retail network is more compelling for publishers then the newsagency network? Service stations? Convenience stores? Supermarkets? Discount department stores?
I find it hard to believe publishers find these retail outlets more compelling than newsagents.
And i fail to understand why you do not consider the comments made by Hamish as informed comments by what to me sounds like a newsagent who understands the industry and the issues we are facing.
Contracts are a MAJOR issue. The fact NO individual agent has the ability to negotiate its own contract is unlawful. The fact is magazine Distributors and Newspaper publishers abuse the Newsagency channel.
For someone to say they are fine with 25% commission like Brendan has suggested is fine. That is his opinion.
But Brendan obviously has not experienced the issues SBR had posed in my news agency and many other agency. It simply does not work. We cannot get stock when we need it, and get sent stock when we don’t need it.
And Brendan obviously is not aware of the clause in ACP Connections commission incentive where if you order extra stock and do not sell it, you are penalised. Unfortunately most newsagents are unaware of any clauses of the contracts they have signed.
There is room to get a greater commission. Why not chase it? Why not force it upon publishers, like they force conditions upon us?
The problem i find is if a group does get together and achieve a better deal, it is people like Brendan who will be the first to jump up in the air and want it too! Even though they were the one’s to oppose the idea to begin with.
Amanda if we look at the growth of space allocated to magazines in some other channels over the last ten years there is your answer.
The question is, are we appealing to publishers? On price and ease of access due to the current model, yes, no doubt.
Are we appealing as engaged retailers who support magazines and run our businesses as magazine specialists. I think the answer to that is drifting to a no. Too many newsagents treat magazines as a chore rather than as an opportunity.
Real and professional SBR does work. This, coupled with some small changes to the model would serve newsagents and publishers well. Achieve this and 25% works just fine.
You only have to look at the financials for Gotch to see that distribution is not highly profitable. I talk to enough small publishers (1 through 10 titles) to know that their businesses, also, are not highly profitable.
I am concerned that the action of some newsagents will reach a point where publishers actively look elsewhere. If that does happen, a whole new level of complaint will begin.
This is a complex issue. Newsagents on their own do not have the answer. However, our bargaining position would be better if our businesses were more compelling and if the state associations gave the magazine distribution issue to the ANF for a single national representation.
Amanda, What have I opposed????? I have mentioned an increase in commissions but like in any negotiation there must be benefits to all parties. I thought this was how my post read???
Amanda please read my posts #17, #65 and #74 again and you will find that the canning you give me is undeserved.
“For someone to say they are fine with 25% commission like Brendan has suggested is fine. That is his opinion.”
I mention a couple of times that it would be possible to gain a higher commission if we prove it is warranted.
“But Brendan obviously has not experienced the issues SBR had posed in my news agency and many other agency. It simply does not work. We cannot get stock when we need it, and get sent stock when we don’t need it.”
“I also note how oversupply of one agent hurts agents who cannot get stock when required hence the need for SBR on all titles.
And Brendan obviously is not aware of the clause in ACP Connections commission incentive where if you order extra stock and do not sell it, you are penalised. Unfortunately most newsagents are unaware of any clauses of the contracts they have signed.”
Got me there, I’m not familiar with that clause but do not order extra stock for the sake of it anyway.
“There is room to get a greater commission. Why not chase it? Why not force it upon publishers, like they force conditions upon us?
The problem i find is if a group does get together and achieve a better deal, it is people like Brendan who will be the first to jump up in the air and want it too! Even though they were the one’s to oppose the idea to begin with.”
Where is this agreement that you think I oppose. I can’t oppose what does not exist or what I am unaware of.
Again Amanda please read my post again.
Publishers chose to put their magazines in supermarkets, petrol stations, convenience stores etc many years ago – because they could – NOT because our retail network wasn’t doing the best job for them.
Exactly Jenny. Post 79. This affects magazine specialists and the publisher. The customer base is split and was enticed away from the Newsagent which includes subscription. However that is the past, I wish I had an answer where customers realise their is more than 50 magazines in existance. A whole generation has been exposed to the diversity, which in hindsight has in my view come back to bite them.
Space is my reasoning mostly on only keeping my magazine range @25% commission in majority of cases does not do it in my business, it did once, what has changed that is one of the questions we should be asking. Some of the problems are outside forces such as overheads, in my case this is the cause for my pain, therefore I must sell items @45%+ commission.
Brendan what more do we have to prove for a greater commission to be warranted?
Is it simply another way publishers are trying to minimise the amount of newsagents there is like newspaper companies are currently doing?
We have all implemented computers and software and paid for expensive shop fixtures in which to display magazines.
Card suppliers offer to pay for such fixtures or alternatively negotiate with you individually a rebate based on your sales.
Gift suppliers provide free stock to subsidise the cost of fixtures or spinners.
As Derek has eluded (post 80), overheads have blown out in the past ten years since deregulation, yet commission structures for magazines (and newspapers) remain the same. We do not have the ability to change the RRP on these products, so we should have the ability to negotiate commission.
As Jenny mentioned (post 79), publishers chose to put their magazines in alternative channels. And by newagents remaining on 25% commission we have effectively subsidised this. Derek (post 80) correctly states “this affects magazine specialists..as the customer bas is split”.
Amanda, for the channel to be taken seriously it needs to act professionally toward magazines. Publishers have put margin opportunities to newsagents in recent years and these have been ignored and or abused.
Card suppliers don’t pay for fixtures. You pay for them. It’s in your contract.
Gift suppliers pay for fixtures in the pricing of their product.
To get more commission we need to be professional with the category, to make publishers fight for our space. Some of us are doing this. It takes hard work every day.
To be proffessional with the Magazine category it does not come down to just one part of the chain.
The Newsagent, the Publisher and the Distributor need to work as one.
Some ideas although repeated are.
Newsagent: Must specialise, promote and not early return. All must have POS, Real time data sharing. Full control over magazine range. At least one employee / owner needs accreditation in Marketing and Merchandising.
Publisher: Must withdraw from Supermarkets, Bookstalls, 7 Elevens, Petrol Stations etc to be able allow rebuilding of the Newsagent specialists, higher commission should result if done.
Distributors: Newsagents only pay for what they sell, this will allow Newsagency specialists to be sustainable. No full copy returns. Stop abusing publishers from ridiculous allocations. Allow Newsagency control on magazine range. XchangeIt should be free as Data Sharing is ignored. Fix Partworks category. Fix Software to include real time data sharing. Train Newsagents in marketing, merchandising. Implement quality control of magazine product, I dont want a delivery driver, I want a customer service trained delivery driver with a respect for Newsagents and their customers to sell a magazine in pristine condition. Implement a transparent grievance procedure.
Excellent post Derek, I could not agree more.
Earlier in this discussion Rick asked some questions that I think all newsagents would like to know:
*is the newsagency channel the only one that early returns?
* if that is the case then why?
* do other channels have oversupply issues,
* are there different trading terms.
* Did they say what their preferred channel was if its not newsagents and
* what do they do differently and why?
These are all relevant questions, that I would be happy for any publisher to disclose.
* Did they say what their preferred channel was if its not newsagents and
* what do they do differently and why.
Would love to know the answer to this aswell
There seems to be a lot of threats from publishers about this . I know woolies are more than happy to leave mags in a trolley for half a day before SHOVING them in there shelf , no displays no posters no nothing . Petrol stations the same deal .
Having spoken to a 7-11 franchisee that I know fairly well, I’m of the understanding that 7-11 controls the volume of product that they receive and that they get better margins for it than we do as newsagents (though I didn’t ask if it was due simply to their wholesale price or any rebates that they get). They do keep a much smaller range and he himself said that he wouldn’t be interested in carrying a range any larger than he does now as his floorplan doesn’t allow for it and its still not a high grossing line compared to many of the other products he sells.
I’m another +1 for Dereks post. The whole system as it currently stands needs an overhall and isn’t doing anyone bar the distributors any good.
When I can receive an offer for Money magazine mailed to me as a retail customer offering it to me for $2.47 per issue and yet as a “valued” retail partner it costs me a dollar more than that at wholesale we know there’s something very wrong with the way the system works now.
Shaun, what threats from publishers?
Alicia, the newsagency channel has a bigger range of titles than others, also, ours in the only what I’d call open push model.
Supermarkets are paid for space, convenience and petrol control what they get with very limited space allocation.
While newsagents complain a lot about magazine supply, I am not aware of any taking legal action to remedy the situation.
What they do is create retail businesses that pull high traffic volume for other purchases – they make themselves appealing to publishers.
Very few newsagents have taken steps to drive new traffic to their businesses. Most initiatives rely on existing traffic.
Mark, you have said such negotiations should be left to the ANF, but what has the ANF done for newsagents? How many agents are even members of the ANF?
A better scenario would be if the heads of each marketing group got together on a committee and negotiated on behalf of newsagents. They have real members. They have real data. They have quality agents under their banners. They have power in numbers. I am sure there are some ego’s that would collide. But perhaps this is the only option, as the ANF and state associations are laughable.
Amanda, you’d need to ask the state associations why they do not give the ANF support and strength to own this national issue.
The challenge with your marketing group suggestion is the considerable difference between them on the issue of magazines. One group has been openly hostile and ignorant of magazines.
Mark post # 76
I am concerned that the action of some newsagents will reach a point where publishers actively look elsewhere. If that does happen, a whole new level of complaint will begin.
I am sure i have read something like this several times on previous posts ,maybe this is just your thought or is it coming from meeeting withg publishers .
Just a suggestion. I am not aware of the politics or hostilities between groups, or which group you are referring to.
The associations and ANF thus far have achieved nothing. They have added nothing to my business. I dont want to bring up Bill Express.
I thought perhaps it could have been an opportunity to get real strength in numbers.
Shaun, no publisher has said this. The comment is all my own work based on my observations and assessments.
Amanda, for years there has been what I would label a battle between the state and national associations. Newsagents are the losers. On Bill Express, that was 100% the doing of the ANF at two points – the 2003 Board and the 2007/08 Board. Pathetic in both cases.
At the risk of inflaming old wounds, one of the best opportunities for driving change in magazine distribution was when IPS launched.