Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Gordon and Gotch forecasts changes to newsagent magazine distribution model

Mark Fletcher
December 22nd, 2016 · 26 Comments

Gordon and Gotch sent this message to newsagents earlier this week:

Dear Newsagent

Since the industry consolidation in March this year we have been reviewing a number of processes that have been in place in our industry for many years. In our survey in July newsagents again said the work involved in processing and returning physical returns was cost prohibitive and time heavy.

We have now completed a six month review of EDI sales versus return data processed and the outcome of this has been encouraging. Approximately 350 newsagents have been identified as fully compliant as well as meeting the gold level standard through XchangeIT.

We will be advising these newsagents in January that as of February 2017 they will not have to make any physical returns excepting partworks and specific trading cards.

The full criteria on how you can meet the standards required will be posted on our website in January but an overview is:

  • GGA will use the services and technical support of XchangeIT for this program to generate the initial integrity, timing and continuity checks on the data files received.
  • XchangeIT will also run monthly variance checks across a sample of GGA titles for each newsagent and produce a regular customer classification.
  • GGA will use the top tier customers (Gold Members) from the XchangeIT classification process and run further validation checks for all returns processed.

We believe this to be a step in the right direction and hope that the number of newsagents participating will increase throughout 2017. We will be doing quarterly reviews and adding newsagents who meet the criteria.

We will contact you again once the details have been posted on our website in January.

May I also take this opportunity to wish everyone a Merry Christmas and Happy New Year!

Sincerely
David Hogan
General Manager
Gordon and Gotch Australia Pty Limited

While this move has taken a while to happen, that is has been made is welcomed by plenty of newsagents. Gotch needs to not stop here though. I have pitched that in my discussions with them this year and prior. They need to keep evolving.

On the decision 350 are fully compliant. I suspect the number is greater than this. The challenge is the reliance on XchangeIT to measure compliance. There are instances where this is less than ideal.

18 likes

Category: magazine distribution · magazines

26 responses so far ↓

  • 1 Colin, Malvern SA // Dec 22, 2016 at 8:32 AM

    GG need to keep evolving and with much greater urgency. Changes encouraging agents to have some faith in magazines need to be actioned and in place in the very short term. There is s critical mass for magazine distribution and if GG don’t grasp the challenge asap they will be over the cliff. Not a time for more 6 month studies. GG should listen to those that know what is needed.

    0 likes

  • 2 Brett // Dec 22, 2016 at 12:14 PM

    Its not only XChangeIT that needs to lift, its GG itself. To get a fault on a return because we were supposed to get 30 per bundle and only receive 29 per bundle, or get Zoom car mag when the sticker says Caravan.

    Hardly the agents fault.

    1 likes

  • 3 Peter B // Dec 22, 2016 at 12:47 PM

    Oversupply will still occur and every magazine will still be processed at our end.

    It’s the oversupply that makes the extra work in the first place!

    2 likes

  • 4 John Fitzpatrick // Dec 22, 2016 at 1:18 PM

    I think G&G are moving in the correct direction.

    My concern is for Distribution ONLY Newsagents.

    Our business rules for XIT “Gold” need to be different from Retailers.

    We may only send back sales data 2 or 3 times a week unlike Retail POS who send back daily(?).

    Whilst I understand G&G are concerned with making life easier for Retailers, I encourage them to NOT forget Distribution only in selecting the accounts who are eligible to ” not have to make any physical returns excepting partworks and specific trading cards”.

    Peter, agreed its the initial over allocation that causes returns/early returns problems.

    I suppose the question is – if the returns data is solid enough for this change, why can’t this translate through to allocations?

    John

    1 likes

  • 5 Henry Henderson // Dec 22, 2016 at 4:48 PM

    This is terrible news! I had hoped-foolishly, I admit- that GG and the large publishers would finally be pulling themselves out of denial and facing up to reality: THIS IS NOT A RETURNS PROBLEM, IT IS AN OVERSUPPLY PROBLEM.
    This notice is a clear signal that newsagents will be going on cross-subsidising stock that doesn’t sell from their profit from stock that does sell. What is more, the suppliers and big publishers DELIBERATELY oversupply. Newsagents’ REAL margin drops 1% (from the NOTIONAL 25%) for every 5% oversupply. For example, if our returns 25%, our REAL margin is 20%; if returns 35%, REAL margin 18.5%; if returns 45%, REAL margin 15.49%. According to MPA/GG figures, the average newsagent’s return is 46% (of those supplied).
    This means if an average newsagent whose monthly supply is $5000, are affectively lending $2300 at no interest. We get this back next month at which time we give another interest free loan of a similar amount.
    The market has intervened and has found magazines uncompetitive as newsagents scramble to reoccupying magazine space with more profitable stock with less processing costs. The proposal will make the road easier, but the road leads to the cliff’s edge. We need to get on another road.
    When the proposal is unveiled, I’ll be looking in the small print to see if it entails NOT ALLOWING EARLY RETURNS.
    It would great if the proposal was for newsagents to pay the supplier as the magazines are sold. This would remedy the above malady.

    4 likes

  • 6 Allan wickham // Dec 22, 2016 at 7:53 PM

    It’s a step in the right direction without a doubt. I have had the pleasure of having a chat with David and found him to be an open and honest bloke, he does care about magazines and about newsagents. He will of course get the naysayers and the whingers complaining but at the end of the day clean data will be the winner for some of us. After all, clean data on all categories is what will ultimately drive success.

    4 likes

  • 7 Amanda // Dec 23, 2016 at 9:43 AM

    Take 5, Thats Life and all other Thursday (22/12/2016) deliveries being put out onto shelves at Woolworths at 7:30pm Wednesday (21/12/2016) this week.

    Only stumbled across this after being open extended Xmas hours and remembering I needed to grab something from there whilst it was front of mind..yet no early delivery for us!

    Perfect example of one set of rules for National retailers, and a seperate set for Newsagents.

    For those that are naive enough to think people like David Hogan cares about newsagents, you really need to evaluate where these people place Newsagents to the importance of the Gordon & Gotch business…
    These people think “Industry Partners” and place importance along these lines: Woolworths, Coles, BigW, Kmart, Target, Coles Express, Woolworths Plus, 7eleven, Ritchies IGA, On the Run, …….then newsagents!!

    4 likes

  • 8 Mark Fletcher // Dec 23, 2016 at 9:47 AM

    Amanda it is not only some majors, some newsagents too. I know of newsagents who have been breached for this. In Rockhampton, for example, there is a newsagent who regularly had magazines out a day early. They got into trouble. I’d report the specific supermarket to Gotch and to the publishers. I am confident they would act.

    1 likes

  • 9 Henry Henderson // Dec 23, 2016 at 11:56 AM

    Alan, this has nothing to do with the integrity of anybody; it’s to do with the distribution model under which we operate. The individuals who operate the companies that control our industries are obliged to the shareholders to squeeze every advantage from a given situation that is possible. Indeed, they would soon find themselves replaced if they didn’t. If you believe the existing model is one that is consistent with the basic tenets of a market economy, or even if you think the present model is good for you, you should deal with the arguments of the ‘naysayers’ and the ‘whingers’ and show where they are in error.
    In relation to the present discussion there is no dispute that it is an improvement within the confines of the present model so there no ‘naysayers’. My ‘whinge’ is that this change seems to indicate that there is no plan to change the model.

    2 likes

  • 10 Peter B // Dec 23, 2016 at 5:58 PM

    I agree Henry, this will in no way change the model, which of course is a model the distributors and publishers don,t want changed. They know their days are numbered in the magazine chanel and this is only a softener to make a token effort.

    The data is there now and has been for a long time to supply what we sell, and to supply for the number of pockets that we have. There has been and will be no change to a less corrupt system because distributors and publishers will be out of a job much quicker that way.

    The only sure way to make magazines more profitable is to have less of them.
    You know the saying, less is more!

    1 likes

  • 11 Mark Fletcher // Dec 23, 2016 at 7:33 PM

    I have been aware of this change for some time and have some insight into more changes. While not happening as fast as I would like, the path ahead is a better path than what is behind us.

    1 likes

  • 12 Steve // Dec 23, 2016 at 7:58 PM

    When I first saw this from G&G I thought goodo. Then the ALNA sent an email claiming some credit through their ongoing discussions with G&G in relation to the MPA supply trial. That scared the sh*t out of me because I’d heard nothing about the MPA trial for months and assumed it had died a natural death. Obviously I’m wrong and it’s alive and well.

    0 likes

  • 13 Mark Fletcher // Dec 23, 2016 at 8:16 PM

    I don’t think this came out of the MPA trial. I think it is more out of the closure of NDC.

    0 likes

  • 14 allan wickham // Dec 24, 2016 at 7:02 AM

    Henry, I was commenting on the actual post about David`s letter about not having to send physical stock back, that is what Marks post was about after all. The distribution model has been posted about numerous times here before. I like the idea and maybe it`s just a small step but it is a step. A step that will save us some time and money. As for my comment about naysayers and whingers I was referring to those that will complain that they are not able to do so when it comes into play. There will be those having a whinge because they arent compliant and that will not be anybodys fault but their own but of course they will tell you its not their fault.
    But perhaps my comments might just be showing my naivety.

    3 likes

  • 15 Henry Henderson // Dec 24, 2016 at 10:10 AM

    Thanks Allan

    0 likes

  • 16 Steve // Dec 24, 2016 at 12:17 PM

    The interesting thing to see is which Newsagencies are deemed to be “Top Tier Gold Member” compliant. I’ve never seen any XChange IT classification’s beyond pass or fail so Gold Member compliant seems a newly minted term.
    I suspect in the first instance large suburban newsagents will get the tick if for no other reason than they are regularly visited be magazine merchandisers who can keep an eye on compliance.

    0 likes

  • 17 Mark Fletcher // Dec 24, 2016 at 1:38 PM

    Steve, merchandiser visits have played no role whatsoever in determining the initial list. It is 100% based on data, and not just from XchangeIT.

    This process has trust at its heard and, sadly, there are some newsagents with a track record of rotting returns. Not many. But enough for data matched to returns to be a factor.

    0 likes

  • 18 Steve // Dec 24, 2016 at 2:16 PM

    Mark unfortunately there are dodgy people in every industry. This is a brave move by G&G and not without some risk’s, their are undoubtedly some out there who while not rorting returns now will see this as an opportunity to start. That’s why it’s understandable that G&G are going to start with 350 agents they believe they can trust. Going forward there is going to have to be some form of verification through spot checks or something similar. Unfortunately if you give them half a chance there are some people who just cant help themselves and take advantage.

    0 likes

  • 19 Mark Fletcher // Dec 24, 2016 at 2:45 PM

    Steve, yes, dodgy people are everywhere. I have discussed the move several times with Gotch leadership. I am confident their intentions are honourable here. This move puts obligations back on publishers and that it a key here.

    There are spot checks today and that has been the cause of some problems for some newsagents.

    0 likes

  • 20 Eric // Dec 25, 2016 at 12:02 PM

    Merry christmas to everyone. But not to GG

    2 likes

  • 21 Rick Taylor // Dec 29, 2016 at 10:15 PM

    Can’t help some people, this is great news. It’s an admission that change is required, it’s the first admisssion in a very long time. It’s a beginning not an end. The issue is how to become compliant, I pass EchangeiIT every time, but really don’t understand the process.

    2 likes

  • 22 Mark C // Jan 17, 2017 at 12:25 PM

    I just got notified today that we are one of the newsagents included in the 350, good news for me. I expect to save $80-100 a month in freight costs alone, plus the associated labour with topping, boxing etc.

    2 likes

  • 23 Michael // Jan 17, 2017 at 3:05 PM

    I feel maybe a refresher course on the hows and whys of XchangeIT would be a good idea. We are rather compliant short of a couple of issues we had upon changing over to the NBN (And the weeks of no phone or internet that followed)

    No idea if we are a gold member or what not, no idea of what is required to be a gold member, no real information on how to improve our position. Not saying the job isnt being done already just perhaps a refresher is needed on the finer points of xchangeit

    0 likes

  • 24 Steve // Jan 17, 2017 at 3:14 PM

    Mark C, I got the same email and the freight savings will be substantial.
    I will keep topping magazines though, 2 of the new terms are to render magazines unsaleable and hold returns for 2 days. the best way to achieve that seems to be top the magazines and hold the tops. I never like dumping whole magazines, no telling where they end up once their in the rubbish.

    1 likes

  • 25 Henry Henderson // Jan 19, 2017 at 11:43 AM

    Michael, the word “gold” does not appear in the XIT manual. If you do a refresher course on the “hows and whys” of XIT, put the emphasis on “why”. I’m completely bewildered as to why any newsagent would use it.

    0 likes

  • 26 Steve // Jan 19, 2017 at 3:39 PM

    Henry, when it comes to XIT I’m bewildered why any newsagent wouldn’t use it Yes it cost about $450 a year and none of the limited number of POS systems it works with are particularly cheap but the time savings in being able to import invoices and process returns through you POS system aren’t apparent till you start doing it, and there considerable. Plus the convenience of loading DDO files from other suppliers like GNS and Card companies. Theres also the accurate sales data, pull from shelf reports and magazine sales history which are all invaluable.
    Now with G&G’s no physical returns initiative my savings on couriering returns will about cover the cost and your not going to get Gold Level XIT compliance without XIT.

    1 likes

Leave a Reply

Your email address will not be published. Required fields are marked *

Reload Image