I newsagent colleague shared product efficiency data with me earlier this week which showed that shoppers purchasing transport tickets purchased nothing else 84% of the time. This is in a business with excellent up-sell opportunities in place at the counter and excellent, engaging, customer service.
5% of transactions included a newspaper. Only .3% of the time did customers purchase anything with a margin close to 50%.
As the margin on transport tickets has been driven down by state governments (of all political sides), newsagents have stayed in the game in the hope that the traffic generated by offering transport tickets translates into add-on business.
The newsagent reporting that 84% of transport ticket sales are for tickets alone is not unique. Indeed, this figure for alone sales is low compared to others I have seen – some are as high as 94%!
On first glance it is easy to argue that transport tickets are not efficient and that we do need to assess their value on the margin made from the tickets and not from the hop of selling something else to the customer. However, we also need to consider whether the transport ticket customer will remember us when they do want something else and come back in and purchase other items.
My view is that transport ticket shoppers are blinkered when they need a ticket or a transport card top-up and that it is unlikely they will think of us when they want a card, a gift or something else. They usually get transport related products from us because it’s convenient when using public transport. That’s the mindset they have when coming to us. They’d be in a different mindset when shopping at a more leisurely pace.
I do not believe suppliers of low margin products and services when they say that we will benefit from the traffic they generate for us. This is an argument we need to challenge as there is no data I can see to support such a case.
Okay, I am no psychologist with insights into the minds of shoppers, not even close. But I do watch shoppers and I listen to them. I suspect that many buying a transport ticket don’t even know what else we sell. I suspect most would not think of us when they do want to buy the other items we’d like to sell them.
So we come to the question: are these slim margin products (anything with a margin of 6% or less) worth it to us? This is a complex question we can only answer for our own businesses considering our own circumstances. It’s a question newsagents need to ask themselves. They need to make a thorough assessment based on their own business data and considering future plans for their business.
For me, my newsagency businesses are less interested in these slim margin traffic generators than we are in lower volume, high margin, more sustained products and services that we have more personal control over – products and services so valued by customers that they will seek us out.
