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

Is the gloss off the BNPL (buy now pay later) temple?

Buy Now Pay Later became a thing for retailers, online and in-store. It wads a way to reach shoppers who otherwise may not shop. We all raced to offer it, and promote it.

Humm, Afterpay, Zip and others made it easy, even though the cost to sales was significant, often as high as 6%.

We chased the cult-like BNPL shoppers without a care about what happened down the road.

The trailblazing BNPL companies have plenty of competitors now with PayPal, credit card companies and banks out with competitive offerings. The BNPL road is becoming rocky with consumer organisations and regulators in several countries calling for regulation of the fintech BNPL operators.

With BNPL maturing, there is data as to consumer behaviour, a better understanding as to how the BNPL businesses make money and the role fees, such as late fees, play for consumers who use BNPL.

These and related factors are likely to be behind share price falls for Afterpay:

And ZIP:

These charts are from www.fool.com.

Does any of this impact retailers offering BNPL? The increased competition does in that if you want to serve that shopper who relies on these delayed payment terms you are likely to need to expand your offering.

There is commentary that some BNPL businesses are looking at retailers playing a role in responsibility for payment. I am not sure how that could work.

That said, I can understand that their model needs to change, because the current share price trajectory is problematic for them.

Retailers liked BNPL because it did (does?) attract new shoppers and it offered a replacement to LayBy. But the explosion of BNPL is driving issues for the model.

My local coffee shop offers BNPL payment through Payo for a coffee and food. Petrol stations have partnered to offer BNPL for petrol and everyday necessities.

In my own shops I am not a fan of the more extensible BNPL offerings,l like Afterpay. Losing ten percent of margin dollars in a purchase make that purchase less valuable. It’s been a topic at a couple of retailer conferences this year.

While I am no expert, to me it looks like a dramatic increase in BNPL competition, the prospect of regulation and pushback from retailers as to the cost of a BNPL transaction are all impacting the share price, and tarnishing the gloss of the BNPL temple.

I expect there to be a shake out, which is likely to be disruptive for retailers. Eventually, I expect the larger and more traditional financial players to stabilise the BNPL model.

Our job as retailers is to offer what shoppers want, when they want it … and to take payment through any form that works for them and us. So, yeah, just as change is an everyday opportunity in retail, it is thus in terms of how we are paid.

I guess the key point I’d make to retailers about BNPL is be aware of the disruption and be curious and cautious about pitches to take on new payment methods.

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Newsagency management

So many discount news deals

Some overseas publishers appear to be targeting Australia with dumping type pricing of digital access. Like The New York Times:

And Bloomberg:

They make The Age seem expensive

This is what happens with digital products that have little or no distribution costs. Any incremental revenue is icing on the cake.

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Media disruption

Special interest magazines the growth opportunity for newsagents

Special interest magazine sales are strong in newsagency businesses for which I have seen sales data. And, by special interest magazines I mean fringe magazines, the titles we’d sell less than 10 copies each issue of. Magazines like Cigar Aficionado:

I mention Cigar Aficionado because this issue is easy for us to promote. Brian Cox features in Succession, a hit TV show that has connections to the media and Australia through cast and the broader subject matter.

In my shops we take care to notice covers, so we can leverage them if they present an opportunity. Sometimes, a full cover needs to be seen to gain traction. I think that;s the case with this issue of Cigar Aficionado.

And, yes, I hear some in the gallery complaining about magazine margin. I agree, it is appalling. but, these special interest customers are our most valuable magazine shoppers. They will buy more magazines and are more likely to add other items to their basket than the more regular shopper buying weekly magazines. We can make money by be8ing the specialist magazine retailer in the right retail setting with the right complimentary product from which to derive the value.

No, I am not all in on magazines, all gung-ho. Rather, I note that in some situations the category performs well, making a net positive contribution. Unfortunately, though, shifting the cream from weeklies and high volume monthlies to other retailers means there are now fewer magazine specialists. The ‘experts’ behind this shift, this deregulation, have gone on to other endeavours, leaving us to make what we can of their mess, which, in terms of special interest titles is plenty if done right and in a good situation.

Attitude is another special interest title that benefits from promotion., This latest issue with Josh Cavallo in the cover is timely.

It’s a magazine issue that could be bought for plenty of reasons and not by those who would usually buy this title. By shining a light on this Josh Cavallo issue of Attitude we can attract more shoppers to the shop, for the destination purchase. Social media posts about this could do more for us than pitching New Idea or Woman’s Day. Promoting Attitude would be a blue ocean activity while promoting those other titles is red ocean.

Again, the 25% is meagre, but when you’re doping close to $400K annual in magazine sales you want to take care of it. And, that’s what we are doing.

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magazines

Innovative retail in the US relevant to newsagents

A couple of weeks ago I visited several stores in the US in the card / gift / homewares space in Los Angeles. Myself and a colleague made a video about what we saw for newsXpress members. Here is that video.

Videos like this are part of the newsXpress resource kit for members to engage with as they continue to evolve their businesses. As you see in the video, it’s not about saying do this or that. rather, it’s about this what we saw that looked interesting.

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newsagency of the future

Some newsagents are finding linking to Shopify challenging

Not all newsagency software handles connecting to Shopify. And, time that do connect to Shopify do not do it in the same way.

This can leave newsagents frustrated, spending time double handling, missing sales, and giving up on online.

Good newsagency software provides a seamless two-way data flow between the newsagency software and Shopify. Stock details, pricing and images flow out, and sales flow back.

This makes the newsagency software the sole place for managing stock descriptions, pricing and images. It enables you to have an in-store and a different online price if you wish. It enables you to have an online description which is different to the main description.

Now, if this reads like a sales pitch for my Tower Systems newsagency software, it is. But, this post is more than that. I have heard recently of newsagents giving up chasing sales online because the newsagency software they were using did not offer a complete two-way relationship between the software and Shopify. they were wasting time, making mistakes because of double data handling and getting frustrated.

It’s 2022 for goodness sake. Tower Systems has been a partner of Shopify for more than 6 years. Back when we started with them there was commentary criticising us. Today, Shopify is the platform of choice for local retailers. Those who dawdled in this space have missed out and let others down.

I have a vested interest in Shopify beyond what my newsagency software company does. In each of my 4 newsagencies we win newsagency connected Shopify websites to connect with shoppers outside the shops, to win business we would otherwise not win. We run the shops lean in terms of labour. We need time efficient solutions. This is where the newsagency software Shopify link shines. It’s why I know the solution works, that it serves retailers well.

If your newsagency software does not fully integrate with Shopify and provide two-way connectivity, consider switching.

Oh, and my Tower Systems newsagency software also connects with Woo Commerce and Magento. Newsagents use them too, but they do require a level of tech experience in the shop to make them work for you. Shopify is simpler, it is also evolving faster, which helps you win more online sales.

Outside of those three, Shopify, Woo and magenta, there is nothing worth considering in my opinion.

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Newsagency challenges

If you are looking for Easter cards this year – shop your local newsagent

Newsagents have the best range of Easter cards. If you want an Easter card for friends or family, shopping your local newsagent t will present to you a broader range of cards than you’ll see elsewhere. Plus, you’re like to find a treat or two for an Easter gift … chocolate or something they can cuddle.

Shopping local is all about genuinely shopping local. Given that cards are the same price everywhere, your dollars spent on an easter card in a local newsagency are more likely to stay local than if you buy an easter card at a supermarket chain outlet.

So, if you’re shopping for an easter card this year, thanks for shopping at your local newsagent.

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Greeting Cards

WH Smith at Melbourne Airport is expensive

It is frustrating seeing a retailer take shoppers for fools. I think this is what WH Smith is doing at Melbourne Airport. They are promoting a multi buy of Allen’s Party Mix of 2 for $6.50.

Here’s the product.

Right now at Coles, the price is $2,50.

At Woolworths too.

At the IGA in Natalia, they have the product at the regular price of $3.00.

All of this begs the question, how is the WH Smith price special? Well, it’s not special. They want you to buy two, and pay more than if you planned ahead and bought at the supermarket. And, I guess, that’s what is happening here – their pricing is convenience premium.

Given that these products are readily available elsewhere, I wonder what the ACCC would make of the pricing approach that suggests a discount.

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Social responsibility

Sydney gift fair update

Day 2 of the Sydney Gift Fair has wrapped. It’s going well. I say that as a retailer attendee and as a supplier with a stand there (my POS software company).

While the Reed organisers are disorganised in my opinion, and this is a cause for frustration as an exhibitor, the fair itself if proving to be good.

The lower attendee numbers make it a better experience. People are spending more time on the stands that interest them.

There are some new suppliers, and enough suppliers with new products to make it worth attending. Sure, there is plenty of the same old same old, but, overall, there is good product to purchase.

I’m not going to list the new suppliers that I found interesting as that’s information I’ll share privately with others, sorry. But I will not there is a strong representation of baby and kids products, which is good as they are storing categories. Oh, and a good presentation of Australian made products. And, sustainability is a big pitch, which makes sense as it is of top of mind interest to the Gen Z shopper.

There are too many candle suppliers in my opinion and too much in the way of mediocre China made gifts. Plenty in the gift space have moved on from this.

The best part of the fair has been the opportunity to speak face to face with people, to hear their stories and talk retail. Covid was a topic, but not much. Oh, and in terms of discussion around wanting things to go back the way they were, no only said they wanted that, all were focussed on the future and what they can make of it.

What you get walking the aisles of a fair like this you cannot get from a rep or agent visit. It’s not the same.

My POS software company was the only retail POS software company there, which is odd to me. I am surprised others in this space did not embrace the opportunity to be face to face with customers and to use the opportunity to attract new customers. It’s an opportunity lost for them.

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Newsagency management

Welcome advice from News Corp. VIC on easter newspaper arrangements

The good and timely communications from the Victorian outpost of News Corp continues for us retail newsagents with advice this week on easter arrangements. After years of relying on patch communication from my distribution newsagent, this is welcome.

Good Friday – 15 April

  • Herald Sun – normal press start.
  • The Australian and Geelong Advertiser are not published – please DO NOT enter zero as this may impact supply for the following Friday.

Circulation Publishing Schedule

  • Thursday 14 April – Publish Friday 15 April
  • Thursday 14 April – Publish Saturday 16 April
  • Saturday 16 April – Publish Sunday 17 April
  • Sunday 17 April – Publish Monday 18 April
  • Monday 18 April – Publish Tuesday 19 April

News Retail Support Operating Hours

  • Over the Easter Weekend (Fri – Mon) – 7:00am to 11:30am

Returns

  • Returns may be entered up to 12:00 noon Wednesday 20 April into either iServices, iDeliver or the new Retailer Portal (whichever is applicable)

The Weekend Sportsman

  • The Weekend Sportsman will be delivered 24 hours early for on sale Thursday 14 April

To those at News driving  this, thank you!

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newspaper home delivery

Herald Sun shows itself as political lobby mouthpiece, again

This political claim in the headline published by the Herald Sun is misleading in may opinion.

The decision to change the game was driven by the lottery businesses from what I understand. That is where it initiated, which does not make it a tax drive.

The Herald Sun ‘report’ feels like it is designed to make the Victorian government look bad. It could also anger lottery customers, which could impact sales, and hurt newsagents.

It’s a non story other than that OzLotto is changing in the hope of, from what I understand, of driving more jackpots, which are expected to drive more sales.

News Corp does run a range of lines across its Australian platforms about tax. What they should disclose at the bottom of every article is the amount of company tax paid in Australia by the company and the percentage of gross revenue this is. Michael West covers this and recently shared:

Murdoch’s News Australia Holdings paid nothing for the seventh year on the trot, despite $1.7bn in income, and Foxtel – as reported here – has been conveniently and slyly “disappeared” offshore to the secrecy jurisdiction of Delaware amid rumours of a sharemarket float.

My point is this media company often shouts about tax, especially as it related to the Labor side of politics, while not reporting on its own decisions and actions relating to its tax contribution to Australian society.

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Ethics

Must read: Paper cuts: Why daily newspaper deliveries have become a lottery

The Citizen (A PUBLICATION OF THE CENTRE FOR ADVANCING JOURNALISM, UNIVERSITY OF MELBOURNE) has published a terrific report into the actions of News Corp. and Nine Media in removing newspaper home delivery from local small business newsagents and putting it under the control of a faceless, contactless mess of an organisation.

I am grateful to Petra Stock for the time she took to understand the issues and speak with some directly impacted. Her reporting on the impact on local family-owned Lygon Media speaks volumes to the disinterest in the offices of News Corp. and Nine Media in delivering a local service for local newspaper readers.

Lygon Media Distributors – a newspaper distribution business co-owned by Fabian Pizzica – made its final delivery run on Sunday, 27 March. Mr Pizzica has been selling or delivering newspapers since 1989, working from age 18 in his father’s Lygon Street newsagent.

In the mid ‘90s, brothers Fabian and Nick joined forces with cousins Robert and Pat (who has since passed away) to form the newspaper distribution arm of the business.

From a few suburban paper runs they grew Lygon Media into a service that stretched from the northern suburbs down to Docklands and Port Melbourne and delivered around 15,000 papers a day.

Lygon Media Distributors closed after newspaper distribution changes. Photo: Petra Stock

Until recently, the family-owned company was one of eight-to-10 remaining larger newspaper distributors, which alongside around 100 smaller newsagents, delivered daily papers around greater Melbourne.

As one of the larger operators, Mr Pizzica says Lygon Media had hoped to win a contract under the new model when News Corp invited tenders last year.

“We were out there buying up territories, increasing the volume. We were spending money and borrowing money to buy more territories, thinking that we’d be big enough for [News Corp] to look favourably on us,” Mr Pizzica says.

But their efforts didn’t deliver a contract. Now, he says, he’s out of a job and the business “isn’t worth anything and we have to pay off debt”.

We’ve all seen, and heard, how upset newspaper customers are with the poor service being provided by the News Corp and Nine Media controlled newspaper home delivery, which can only lead to reduced sales for print editions of their mastheads.

The report by The Citizen provides timely and appreciated coverage.

Personally, I am so lucky to have sold my home delivery runs in 2006, back when they had a good value. But through my newsagency software company, I speak daily with newsagents who did not or could not do this, newsagents who have had tens of thousands, and more, in goodwill ripped from them by the changes to newspaper distribution. This all started in the newsagency channel more than. 20 years ago. Those representing newsagents at the time have plenty to answer for enemy opinion.

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Ethics

Working from home

I am grateful to Dan Ziffer and the ABC for the opportunity to participate in this story about working from home. I am also thankful to colleague Jennifer for being willing to be interviewed and to Michael and Minh for their live shots and to some other crew members for joining on the Zoom. Here’s a link to the full story: https://iview.abc.net.au/video/NC2206H037S00

The story itself is an indicator of changes in reporting. Dan shot the interview with Jennifer at home and myself in our office over 2 days. The content made its way onto radio, TV and online.

On the topic itself, for us, engagement came about because some people were calling for a return to the city, a return to offices. That didn’t make sense to me so I wrote about it. Dan Ziffer from the ABC noticed that. My view is there is no going back to office blocks full of people. People who can work from home should be able to. People who want to work in an office should be able to.

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Social responsibility

The challenge of begging in the streets for retailers

Someone sitting on the ground out the front of a shop asking people for spare change is a challenge for the retailer. While some will drop some coins into the cup or cap, some will shop elsewhere to avoid the interaction.

There are other situations where relationships form. I saw this recently in Melbourne where a shopkeeper was closing up for the night and said goodnight by name to the person sitting out the front of their shop asking for spare change. That person said goodnight to the shopkeeper by name.

In Sydney, I have seen the same person on the busy CBD corner for more than 10 years, pitching the same story about needing money for medicine.

I get that many people are living in challenging and fragile situations and that there are significant cracks in the state and federal support platforms available for homeless, unemployed and other vulnerable people, and that this leads to some hitting the streets asking for money. I also understand that there are some who exploit locations, as a form of employment.

For the retailer with someone begging out front, it can be stressful, worrying. It can be hard to know what to do. While begging is illegal in Victoria, there is good commentary from experts that fines for beggars are not the answer.

Justice Connect published an interesting report about begging in Victoria, which I found useful.

In considering how to respond to a specific local situation we have to consider the situation of the person begging, people who want to shop with you, your own team members and others in the community. It is complex, and unlikely to have a simple or linear solution. Each retailer needs to discover the path that is best for them and those they share the situation with.

In my own case, since it is infrequent at the moment, I have found becoming more aware of the situation to be a useful first step. I have also spent some time looking for a respected homelessness related charity with which to connect, and support. I have settled on Launch Housing if you are interested. They do good, practical work, a secular organisation with a good track record. I like that they show the value of a donation in terms of rooms provided.

I understand that paying someone else money does not necessarily resolve your issue and that it can been see as payment to make a feeling of guilt go away. As I said, Launch Housing support is a first step.  The next step, next time someone is begging in front of the shop, it to try and understand. But I reckon that will be easier said than done.

Begging is a complex challenge, and it feels like it is on the increase. Plenty of local small business retailers and close to the front line of this challenge.

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Social responsibility

More cash free retail in the US thanks to Covid

Talking with retailers in the US this past week it is surprising how many in a broad range of retail sectors have gone cash free during Covid and have remained so.

Signs like this are common in stores I saw in Los Angeles and Las Vegas. The photo is from a gift shop in West Hollywood.

This is a trend that has been evolving for several years. But, pre Covid, it was primarily limited to food outlets. Now, I have seen it in bookshops, fashion, gift, homewares, as well as food. It is common.

Personally, I like the idea of being cashless as it offers less fraud, lower money handling costs, roster time saving, less data handling and fewer mistakes.

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Newsagency management

At Shoptalk 2022 in Las Vegas

I’m flying back to Australia today having been at the Shoptalk conference in Las Vegas this week, as well as in Los Angeles looking at some innovative retail.

Shoptalk was extraordinary. Thousands of attendees. Hundreds of sessions. Hundreds of tech suppliers. Thousands of retail businesses represented.

While I will have more to say on some of the insights next week, I’d note that the extent of change in retail is bigger, and faster, than I can remember. And, the nature of the change is such that no retailer can sit it out.

It’s been a scary, inspiring and affirming week. I am grateful for the opportunity to attend and immerse myself in all that was shared.

Now, here’s a snippet of one of the live entertainment pieces between keynote speakers.

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newsagency of the future

Shanghai Covid lockdown expected to extend supply chain disruption

The 2-part lockdown in Shanghai due to a surge in Covid cases is expected to further impact supply chain challenges given its place in logistics.

Relying on accurate information from suppliers on availability is more critical than ever. Their attention to building their stock situation is key here, as is our own stock piling in our shops to ensure we have stock to sell.

Talking to a range of suppliers across multiple categories, these supply chain challenges are expected to be with us through to the end of 2023 at least.

Related, the new chair of the US toy association wrote about this a couple of days ago:

Supply chain disruptions are an immediate issue of focus impacting our toy businesses, including:

  • ocean freight creating a choke point in transport costs;
  • the impact of shipping challenges on global markets over time;
  • ongoing disruptions caused by the pandemic, including the current lockdowns in Southeast Asia;
  • US-China tariffs on raw materials that are a component in rising costs of global raw materials; and
  • tensions caused by the Russia/China relationship; a destabilized Europe’s impact on selling markets and manufacturing options; and the high possibility of China’s issues impacting other Asian countries.

Add to these global challenges continuing logistics challenges impacting particularly road freight in Australia.

It all makes a stronger than ever case for locally made.

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Newsagency challenges

Good comms from News Corp. re production

Maybe I have not been paying attention but it feels like News Corp. has improved their comms to retail newsagents.

30 March 2022

Dear Distributor / Newsagent,

A reminder that Daylight saving is due to conclude this Sunday April 3, 2022.

We wish to confirm that production will run to current schedule on Saturday night.

Clocks are not adjusted until after the completion of the run on Sunday morning.

Please make your early morning staff aware of this to avoid any confusion.

Kind Regards,

News Victoria Logistics

Much appreciated.

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Newspapers

The Federal Budget benefits newsagents choosing software and getting websites

In the budget last night were measures that will benefit newsagents investing in a technology update. This is covered in detailed reporting from the ABC.

Instead, the government is offering a new, temporary tax break for businesses that invest in either new technology or employee training and skills development.

“Starting tonight, for every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction, helping them become more productive and competitive,” Treasurer Josh Frydenberg said in his speech.

This means employee training gets a bonus tax break. It respects the value of training. There are rules, of course, but they focus on training people. It will be interesting to see if any software companies now introduce a training cost.

“From tonight, every hundred dollars these small businesses spend on digital technologies — like cloud computing, e-invoicing, cyber security and web design — will see them get a $120 tax deduction.

This is a clear message about digital transformation, something newsagents need to embrace, urgently.

Of course I am biased in commenting that these moves are good, I own Tower Systems, the company serving around 60% of all newsagents in Australia with cloud based newsagency software and the company that has already developed websites for many newsagents.

But realistically, incentivising digital transformation in small business is a good move.

I don’t think a change of government would change this initiative.

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Newsagency management

Tighter controls for gambling customers in newsagents in Belgium

Click here to see this report published yesterday by The Brussels Times.

Tighter controls on gamblers in newsagents

Tighter controls on gamblers in newsagents

A newspaper shop in Brussels advertises Lotto products. Photo by Helen Lyons/The Brussels Times

Shops that offer sports betting and other means of gambling will be required to register all customers and check whether they are of legal age or on a blacklist from 1 October 2022.

The new legislation is part of a package of gambling reforms introduced by Federal Minister of Justice Vincent Van Quickenborne after bpost sold its chain of newspaper shops – many of which also offer gambling and sports betting – to a gambling company.

“After the clearer rules for gambling in newsagents, we are taking another important step in protecting people against the devastating consequences of gambling addiction,” Van Quickenborne said in a statement.

“The list of excluded persons is a powerful weapon that we want to use more often. Therefore, we also call on all general practitioners, care workers or social workers to use it, in consultation with the person concerned, at the first signs of problematic gambling behaviour.”

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Lotteries

Mistakes too many small business retailers make when setting up a website

Through my newsagency software company Tower Systems we have a web development team that creates websites for local small business retailers, including newsagents. We have been doing this for years, and have hundreds of websites under our belt.

It surprises me that here we are in 2022 and I am seeing newsagents make the same mistakes from years ago when setting up a website. Not everyone makes these mistakes, but enough do.

So, here is the top 7 mistakes I see newsagents make when setting top a website for their business.

  • Not knowing the target customer. The target customer for a website connected to any shop should not be considered to be the person walking through the r=front door. rather, it should be the person you want to reach, the person who would never walk past your shop. Knowing who they are, where they are and what they could be looking for is key.
  • Making the website a copy of the physical shop. If you copy what you sell in your shop online you are not likely to find new customers and the best website for a shop is one that finds new customers for the business. Nice is best. Niche is appealing and easily found through online searching. Stand for something – not not everything you currently sell.
  • Thinking it is easy and once the site is live you are done. Creating and maintaining a website is hard work, relentless work. Think of a website and a hungry beast, and you have to feed it.
  • Believing a web developer knows what is best for your business. Web developers are not retailers. They may have opinions about what looks good or works well, but do these opinions match the needs of your business. It is best to find a web development who genuine understand your type of business and what you want to achieve online.
  • Failing to understand the total cost off ownership. Paying for a website to be developed is on thing. What is the cost of maintaining it. be sure to have this documented before you begin because once you are into it you are on the hook for future costs. Knowing this upfront is key.
  • Different is good. Too many retailers are lazy, loading images and product descriptions from suppliers. Search engines see this duplication and mark sites down that copy others in terms of content. The more of your own content the absolute better for you and for your business. Sure, this is hard work, but it pays off.
  • Your website is not a destination. Okay, it is a destination for online shoppers, hopefully. But, it is not your online end point. The website will have to evolve and, eventually, be replaced. Go into it knowing it will not be your final online presence, that it is, rather, a stepping stone on a pathway.

I see so many mistakes made by small business retailers, including newsagents, expensive mistakes, mistakes that dishearten and, eventually, see businesses go offline. That’s not the future. Online is key to every retail business.

Invest time to get it right. Move only when you are sure, and ready. And, remember, buyer beware.

Footnote: I know about this not only because I own Tower Systems but because I have created plenty of websites for my businesses. The most useful ones have been those that failed. The successes are terrific. But it’s the failures that are educational.

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Management tip