Advertiser Newspapers announced to South Australian newsagents Monday their plan to take over managing home delivery accounts for Advertiser products. They will gradually assume control for starting new home delivery accounts, collecting payment, managing stops and starts, handling holiday redirections and handling queries.

This significant and unexpected move by the publisher has been pitched to newsagents by them as a positive move with significant benefits. The key reason for the change appears to be improved subscriber retention.

The implications for South Australian newsagents, should the planned changes proceed, could be considerable. Indeed, the implications for newsagents across Australia could be considerable. This is why the proposed changes need to be discussed and debated nationally. If they are as valuable and equitable to all stakeholders as the letter from Advertiser Newspapers says then I’d expect them to proceed. If they are not then I’d expect the proposal to not proceed.

My concerns are:

• Transition challenges. The transition will require newsagents to hand over partial account details where they deliver and bill non-Advertiser products. Given the nature of home delivery accounts, balances handed over and or retained will be wrong.   This will make for a frustrating time for newsagents and customers. Newsagents will end up giving away credits to satisfy customers.
• No benefit for newsagents. Many newsagents will need to maintain accounts for customers – for Fairfax product, magazines and other non Advertiser product delivered. Indeed, with the accounts being smaller one could argue that, based on experience, these accounts will be harder to collect. Indeed, from a data management perspective
• Reduced revenue. Today, newsagents are able to sell home delivery to a customer at full price. Under the planned arrangement, the publisher controls all pricing. This denies the newsagent the opportunity of selling at a better margin.
• Retail traffic. While many suburban distribution newsagencies are distribution only, across the state many newsagents have retail businesses which rely on account payment traffic to drive retail sales. Customers receiving only Advertiser product will not need to visit to pay the bill and will therefore have greater opportunity to purchase traditional newsagency lines from other retailers.
• Processing delays. The current system allows customers to contact newsagents until late in the day before new run lists are printed or data transferred to electronic run devices. Centralising this in Adelaide will require an earlier cut off so that newsagents can have the data in enough time to get their local processes taken care of.
• Relevance. The move by Advertiser Newspapers goes to the relevance of the newsagency. Newsagents provide a one stop shop for home delivery customers. Slicing that relationship up by publisher will confuse customers and demonstrate that one supplier sees newsagents being less relevant. This may, in turn, impact back on the publisher down the track.
• Ripple effect. Newsagencies, retail and distribution, are finely balanced – take one slim plank away and there is a ripple effect. We saw this in 2004 with the ACP move to supply 800 or so petrol and convenience outlets directly. Reducing contact between home delivery customer and the newsagent, retail and or distribution, will lead to a loss of revenue in another part of the newsagency and this weakens the channel.

Some will disagree with my concerns. Others will want to add their own. Regardless of your position, please join the conversation here.

What is important is that newsagents, publishers, customers and other stakeholders engage in open discussion about this change. We owe it to each other to test the proposal and be prepared for what comes out the other side.

How the newsagents discuss and debate this plan will demonstrate our resolve in relation to the future of the newsagency channel as there will be more challenges like those outlines here.

UPDATE: I originally posted this at around 6:15am today.  I have updated the time stamp because newsagents new to reading the blog are having trouble finding this post.  I’ll leave it in this top place overnight.