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

Author: Mark Fletcher

Australia Day newspaper bumper edition frustrates newsagents and customers

I’ve heard that Fairfax in NSW will publish a ‘bumper edition’ Sydney Morning Herald on Friday January 26 and to be on sale for the entire Australia Day long weekend for the usual Saturday price of $2.20. I would have thought that in the current newspaper market – challenged at best and decaying at worst – Fairfax would do everything possible to not upset customers. Their customers will be upset by yet another lazy Bumper Edition. Newsagents will bear the brunt of customer anger. Talk to any newsagent and they will tell you of the frustration expressed across the counter and on the phone explaining the pricing and the convoluted rules associated with the Bumper Editions this past Christmas. Bumper Editions are not good customer service.

Everywhere you turn there are reports of sales declines being experienced by newspapers. Newspapers themselves are regularly running naval gazing pieces about their own future. Publishers like Fairfax have invested hundreds of millions of dollars in online businesses which are speeding the decline. It is odd to me therefore that Fairfax would ‘play’ with their customers in this way. If they want to delay the decline they would publish each day of the Australia Day weekend. But then, maybe the financial return is better if they run a Bumper Edition and that’s more important than what the customers want.

Memo to Fairfax: You might want to let the computer companies know about your Bumper Edition plans so that they can provide advice in advance to their newsagent clients and thereby save the hundreds of phone calls which would be made otherwise.

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Customer Service

Hooked can fish elsewhere

hooked.JPGWe have returned Hooked to NDD without putting it on the shelf. At $29.95, with a shelf life of four months, requiring two display pockets and with our fishing category already well stocked there is no room at the inn for this baby.

We need a magazine czar who decides which titles have access to the newsagent network. Currently, publishers shop the three distributors until someone is prepared to take the title on for the right fee. We are foolish enough to give them our real-estate and labour for free.

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magazines

Delicious magnets make us happy

delicious-mag.jpgI bang on here a bit about the items publishers use to promote their titles and which are often not retail friendly. This month Delicious has a great offer with the magnets shown in the picture packaged with the magazine.

Retailers are happy because the magnets present no display challenges. Customers are happy because the magnets are good value.

So, well done to whoever at Delicious is responsible for this idea.

We’re especially happy in my newsagency because we received an extra 10 copies by mistake and we usually sell out. (Yes, we let the distributor know.)

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magazines

Alpha joins the breast pack?

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Maybe it’s just this issue but Alpha seems to be positioning itself more in line with FHM, Ralph and ZOO. The blokes on the cover for the past year have worked well with the magazine usually selling out. If we see more covers like this I think sales will fall.

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magazines

Magazine oversupply complaint lodged with ACCC

Here is the letter I sent yesterday to the ACCC detailing my unconscionable conduct complaint against NDD. I have documented what I consider to be irrefutable evidence of supply and return data for Bargain Shopper magazine from the last fourteen months, data which has been ignored by NDD in the making of their latest scale out decisions for this title:

On December 21, 2005, NDD supplied my business with 64 copies of the 2006 edition of Bargain Shopper. We returned 34 copies: 28 copies on January 12, 2006 and 6 copies on June 7, 2006. On February 8, 2006, NDD supplied us with 40 copies of the same 2006 edition we had earlier returned. We subsequently returned 30 of these: 14 copies on April 12, 2006 and 13 copies on June 7, 2006. On August 25, 2006, NDD supplied a further 29 copies and we subsequently returned 18. In broad terms this represents a sell-through (success) rate of 38% for 2006. Once we allow for theft, the success rate falls to close to 34%.

On January 10, 2007, NDD supplied my newsagency with 75 copies of the 2007 edition of Bargain Shopper. Given the access it has to sales data, NDD would know that it would be unlikely that we sell any more than 30 copies of the title through the entire forecast on-sale period, even allowing for some growth.

The supply of 75 copies on Bargain Shopper accompanied by a requirement that they are held for eight months is, in my view, unconscionable conduct under section 51AC of the Trade Practices Act 1974. I say this because NDD consistently oversupplied long shelf titles like Bargain Shopper with the full knowledge that my business will sell less than half of what they supply.

Section 51AC of the Trade Practices Act 1974 sets out several factors a court can consider in deciding whether conduct was unconscionable. The ACCC website advises:

Being taken advantage of in a transaction in a way that offends the conscience is known as unconscionable conduct.

Does it offend the conscience that NDD supplied me with such quantity of Bargain Shopper that I will lose money? Yes! Does NDD do this for other titles? Yes! Will NDD offer to fix this? Yes! Some time after fixing this will NDD revert to their old practices and oversupply? Yes!

I could have supported my complaint against NDD with evidence relating to many more titles. I felt it appropriate to start with one. Depending on the response from the ACCC, I may add more titles.

It would be easy to turn a blind eye to the oversupply by NDD as many newsagents do. Sometimes it is too stressful thinking about the tens of thousands of dollars in magazine stock sitting on the shelves waiting to be returned some time in the future. My view is that unless newsagents take a strong stand we will continue to be treated as we are. We ought to be proud of our businesses and the benefits they provide publishers and magazine distributors and we ought to price ourselves accordingly.

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magazines

Magazine browsing made easy

madison-counter.JPGWe’ve taken the stand supplied to us by ACP to promote their 600 page COOK cookbook last year and turned it into a magazine browsing stand. It was a logical move – we noticed that COOK was browsed regularly so rather than trash the well designed and made cardboard stand we thought it could work with the right magazine titles.

We have started with Madison as shown in the photo and will move on to other titles which work with the red colour and lend themselves to the browsing experience. Also, with women more likely to browse at our counter than men, we will focus more on fashion and food titles. Oh, and we will only use the stand for monthlies – we don’t think it’s right for the weeklies and they are well promoted elsewhere. Also, promoting monthlies better reinforces out point of difference.

If this works for magazines and leads it a measurable increase in sales the next step will be to see if we can make a more permanent unit with a slightly smaller footprint.

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magazines

ACP and APN in online joint venture

Another day another old media company investing more in online business. Scoop NZ has the ACP Media release. Here are the highlights :

ACP Media Limited (‘ACP’) and APN News & Media Limited (‘APN’) have entered into a joint-venture to develop the free online general classified site http://www.sellmefree.co.nz.

ACP and APN believe that free, live and multi media rich trading environments will be an important part of the future of buying and selling general merchandise for the private individual.

The joint-venture brings immediate benefits to sellmefree.co.nz including: • accelerated development of the product offering including a free auction service and enhanced multi-media and live functionality; • a significant investment in marketing; and • a major increase in private listing content from print assets in key population centres.

“The proposition for private sellers expecting to sell general goods for free with photos and videos, and for buyers to be able to buy right now is clearly gaining ground. This trend is backed up by over 300,000 registered sellmefree.co.nz member accounts currently”, says Heith Mackay-Cruise, Chief Executive Officer of ACP Media.

Newsagents need to ask themselves what connection they have with online business models. Last year my company offered newsagents access to revenue from our Find It free online classifieds business. 800 ended up registering with us. 400 have signed contracts. Less than 100 have actually engaged with us in our beta release marketing activity. Unless newsagents act soon, online revenue will be lost to them and they will have to rely on print only.

What ACP and APN want to bring to sellmefree already exists in Find It. If you have something to sell or give away advertise it free at Find It. Help us provide competition for these big media companies.

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Online classifieds

Explode magazine still popular

Searching for Explode magazine on Google lands more people at this link on my blog than searches for any other magazine title. Huh! Explode magazine is the short lived magazine aimed at teen boys from Pacific Magazines. Every week or two I receive an email asking where old copies of explode can be obtained or whether there is a website. I’m surprised the website did not continue – now, www.explode.com.au takes you to the Total Girl website – further frustrating those interested.

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magazines

Loving customer service

dreamin.JPG

When Ben Kay, manager of my newsagency, sold “Zelda” a syndicate entry in the $33 million superdraw they got to talking about what they would buy if either won a major prize. Ben’s dream purchase is a fast boat. “Zelda” promised to buy it for him if she won. Similar conversations are shared across newsagency counters every day. It’s a level of personal and friendly contact which is rare in retail. It’s non existent at mass merchants.

“Zelda” didn’t anything in the superdraw but she wanted to encourage Ben to keep dreaming. She brought in this envelope to the shop with a couple of photos of boats and the message KEEP ON DREAMING “MAN”.

I’m glad we have people like “Zelda” as a customer. We enjoy her company.

I hope the Victorian State Government considers the personal service newsagents offer when they contemplate changes to lottery licencees this year. I can’t imagine “Zelda” being happy about having to buy her lottery and scratch tickets from the supermarket.

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Customer Service

Lottery counter integration

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I’ve had some great feedback here and offline about my post yesterday about integrating the sales counter. This photo shows part of the story at our counter – the placement of a point of sale register between two Tattersalls terminals. It means we can sell anything from the Tatts points. This helps us include products at the Tatts counters and be able to sell them from there. We’ve had success with magazines, pens and some gift items at seasons.

The register, along with the other two point of sale registers at the counter, allow us to track all Tattersalls sales and thereby measure the efficiency of Tattersalls product to the business overall. We can tell how many times people buy Tattersalls product and nothing else as well as what they do buy when they buy other items.

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Lotteries

Small business policy failure

ap_jan07.JPGThe Government owned 863 Post Offices have launched a stationery sale using this flyer. Nowhere is it promoting postal products. This flyer directly targets small business newsagents who rely on back to school / back to work promotions to kick start stationery sales for the year.

It is offensive that this Government owned business so aggressively and relentlessly targets small businesses in this way. It is even more offensive that the Minister responsible, Senator Helen Coonan, refuses to even talk about the millions of dollars in sales Australia Post is ripping out of the newsagency channel. Instead, she responds to queries with letters way off topic. My last letter still awaits a response.

My newsagency is directly opposite a Government owned Australia Post shop. They are taking stationery sales from us. They do this by abusing their monopoly privilege around postal products and promoting traditional newsagent stationery lines. I do not have exclusive traffic to leverage off. I do not have their marketing budget. I do not have a government protecting me.

For all its bluster about deregulation and competition, when it comes to Australia Post the Government is looking after its mates.

Newsagents, their families and their employees are the losers as a result of Government failure on small business policy.

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Australia Post

Fairfax and News acquire online businesses

Courtesy of Andrew Pascoe’s under the rotunda Blog I found out that News and Fairfax have been buying another online business each:

News Digital Media has purchased Moshtix, the online ticketing business where patrons use their mobile phone as the ticket to enter events.

Fairfax Digital has bought Essential Baby, a parenting website.

While publishers have spent hundreds of millions acquiring online revenue streams, newsagents are yet to spend a cent. Am I alone in seeing a problem here for newsagents?

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Media disruption

Seller beware, maybe the buyer is not that interested

Several newsagents report being approached by business brokers looking to buy their newsagency. Upon suggesting they would be interested to talk further they are presented with a confidentiality agreement which is very skewed to the buyer.

If you are approached to discuss possibly selling your newsagency DO NOT sign any confidentiality agreement without getting independent legal advice first.

I have seen a situation where someone purporting to be interested in purchasing a business used this as a cover to find out more about the business so they could acquire the lease and pay nothing for the business.

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Newsagency challenges

Size does matter to the big American book store

A big book store put up a sign crowing about having 3,000 magazine titles in stock. The newsagent put up a sign saying they had more than 3,000 magazine titles in stock. The manager of the big book store complained to the newsagent saying the sign should come down. Hmmm, yes, it should come down. How dare a newsagent tell the truth that they have a better range of magazines than a US bookstore chasing after Australian small businesses?

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Newsagency challenges

Imported magazines out of date

import.JPGWe received stock of this issue of Crafts Beautiful on January 3, a week after Christmas.

Like many imported titles with a seasonal theme it can be out of date by the time it arrives in the shops.

While I like the point of difference stocking such titles offers newsagencies, it makes the shop look lazy to have such Christmas stock on the shelves.

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magazines

Integrating the newsagency sales counter

Newsagents need to take back control of their counter. The counter is the busiest part of any newsagency, the key profit generator, yet in many newsagencies it is suppliers who are in control. Lottery companies, magazine publishers, just about everyone, wants in on the action. They want their stands, display units and products at the counter. So much so that in an average newsagents the counter is mess of mixed messages.

Reclaiming the counter should start with the lotteries area. Lottery companies like a defined part of the counter where nothing but lottery product is sold. They tend to prefer the best counter location. It means customers wanting lottery product can make their purchase and leave – without being tempted to purchase other items. It also means that customers purchasing a newspaper, magazine or some other product are less likely to be tempted with a lottery product purchase.

I am all for integrating the counter, mixing lottery sales points and regular register points and merchandising the counter appropriately. A properly integrated counter, against the rules of some of the lottery organisations, should increase sales of lottery and non-lottery product.

In integrating the counter newsagents ought to focus on higher margin repeat business, thereby building the business so it can weather a downturn in newspaper and lottery sales – both categories of products are being impacted by online developments and are the top two traffic generators for newsagents. In other words, newsagents will be hit hard if/when traffic and sales from these two fall.

By leveraging existing lottery and counter traffic with an integrated counter, newsagents can start to reposition their business and re-educate customers about their offering. This is exactly what publishers are doing with their online and free models.

While some lottery companies will resist the integration I propose, newsagents need to put their business needs first.

Today we have great traffic, among the best in the country. By acting now and leveraging that more efficiently and across a broader range of better GP product at the counter we can weather generational change.

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Lotteries

Newsagents worried about free daily newspapers

The Sunday Herald in Scotland has a story about the possible impact of a recently announced free afternoon newspaper on newsagents. The UK newsagent association (NFRN) is holding meetings of members and with the publishers to discuss the lost of sales and customer traffic caused by free newspapers.

As data from Dr. Piet Bakker – published here just a few weeks ago – shows, free daily newspapers are growing. Even though Australia is behind Europe and the US, they are gaining traction. These free dailies provide publishers with an easy sell to advertisers and are being used in many situations to boost advertising sales for the paid for product. It makes sense. In Europe especially publishers have been very successful maintaining revenue through by launching free daily newspapers.

While it’s natural that newsagents will complain to publishers about the impact of these free newspapers, my view is that our energy is better spent expecting the move and adjusting our businesses today accordingly. Free newspapers are not new, we have seen them growing for the last five years. This is change we can prepare for today. Indeed, it is change we ought to have been preparing for long before now.

We need to rely less on newspapers for traffic and revenue. This means we need to build traffic from other categories. It also means we need to adjust the layout of our businesses and focus on higher margin traffic generating product toward the front of our shops. While publishers will resist such a fundamental change – given that newspapers have always had the best location in our shops – they need to allow us to respond to market trends just as they are through acquisition of online businesses, moving their product further outside the newsagent channel and by launching free newspapers.

The newsagent channel in Australia was created by publishers to serve their needs. In 2007, newsagents must put their needs ahead of publishers. Tough decisions face us and we must be businesslike and swift in making them.

For the record I am not advocating that newsagents get out of newspapers, rather that they invest real estate and labour in newspapers according to their anticipated return to the business.

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Media disruption

3loves free online dating passes 3,000

Our 3LOVES free online dating social media site has passed 3,000 profiles. We’re seeing over 500 messages shared between members each day and we’re receiving feedback from people who have been on dates as a result of the site.

The connection with newsagents is that media companies (News, PBL and Fairfax) are attracting eyeballs to their online offerings through dating sites. 3LOVES is a traffic generator for Find It – low cost classifieds we’re launching in partnership with newsagents.

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Online classifieds

Bill Express and bopo executives work with newsagents to mend bridges

I met with senior representatives of Bill Express and bopo (the Australian pre paid Visa card) for two hours on Thursday to discuss the charging of newsagents for training in selling bopo account top up. The meeting came about in part due to blogging here. It was a frank and fruitful discussion and, I’m pleased to report, not the only such consultation with newsagents on this matter. I am confident they will respond to newsagent concerns about the training and, at the same time, further guide newsagents as to the business opportunities of bopo.

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Bill Express

OK! weekly gaining traction

ok!-magazine.JPG

In the two and a half months since OK! moved from monthly to weekly sales have been growing from what I can see. This is due to its striking visual point of difference, consistent quality and, in my experience, consistent supply to newsagents – thus enabling us to better display the title. As the photo shows we have positioned OK! with New Idea, Woman’s Day, WHO and Famous. Being in such high traffic real estate, ensures browsing and, with OK!, browsing is key as it builds consumer recognition. We’re also achieving sales having OK! displayed toward the front of the shop near the lottery counter.

I’m not seeing any decline in sales of other weeklies in my newsagency and it is this growth of the category which is most welcome.

The challenge will come if the price moves, as it must. $2.95 for a weekly of this quality is not good for me. I also think it sends the worng message to the consumer once they see the production quality. Based on current sales I need to be making almost double what I am making at the moment to break even on my labour and real estate investment. That’s not a complaint as I’m happy, for the moment, to invest in extending the category.

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magazines

$2,000,000 in newsagent cash missing

Further my post earlier today – I’ve been contacted by enough newsagents to know that the slow down by Network (PBL) in handling magazine returns will cost the small business channel around $2 million in cash-flow. That is, a $2,000,000 cash liability to Network seems to have been shifted out by 30 days.

Nice work if you can get it.

The magazine returns process and cycle is well established. The change by Network, while permitted under their trading terms, is unexpected and unfair. It is hitting this small business channel at a time when many will not be in a position to carry the cost to their bank balance.

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Newsagency challenges

How NDD steals cashflow from newsagents

bargain.JPGLast year NDD sent us 64 copies of bargain shopper. We returned 34. Some weeks later they sent us another 40 of the same issue and we returned 30. Some weeks later they sent us 29 and we returned 18. In all, 133 supplied and 82 returned – a 38.3% sell through rate. Fast forward to this week, NDD, a company claiming to be magazine distribution experts, sent us 75 copies of the 2007 edition of Bargain Shopper.

This is unconscionable conduct by NDD. There is no support in our sales data, data they also have, to support such a scale out. In my store alone this title is costing me $559.68. Based on my sales history I can expect to return more than 60% of stock supplied. This means I will have $447.75 of my cash being held by NDD purely for their benefit. The cost of this cash, the real-estate taken and the cost of labour wipes out any profit from the title.

It is appalling that my newsagency and thousands of other newsagencies are being abused by NDD in this way. It is this behaviour which is killing our channel. I will lodge a complaint with the ACCC about this conduct. Hopefully other newsagents will as well.

While I will also early return the half of what I have been supplied and make a case to NOT pay for this excess stock, it is appalling that my time is wasted with this activity.

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magazines

PBL shifts magazine cash from newsagents

It’s January and time to process the return of unsold magazines from last month. I am hearing from newsagents that Network, the PBL magazine distribution business, is not wanting all last month’s unsold titles back yet. For example, in several cases, stores have been asked to return one week’s returns for Woman’s Day from December 2006 but no the others. This means the stores carry the cost of unsold product an extra month.

If the reports I have received are accurate and if it applies nationally, the bottom line benefit to Network could be over $2 million. That’s money sucked out of newsagencies, small businesses which cannot afford such a cost.

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magazines
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