I was fortunate to see a presentation from Simon Coulter, a newsagent in Queensland, on the trial he has been participating in with News Ltd in the delivery of flat wrapped newspapers. Simon was speaking last week at the Queensland Newsagents Federation state conference. Simon has declared flat wrap a success and he’s sticking with the $15,000 flat wrap machine to prepare newspapers for his home delivery customers.

Simon compared the flat wrap machine to a half fold machine and the more traditional tightly rolled machine. The flat product, while slower to deliver, resulted is considerably superior consumer experience. The newspaper is delivered to the home as good as it was coming off the press.

The key issue is one of cost. Flat wrap is more expensive in terms of equipment needed and the labour required at various points along the way. The current newspaper home delivery fee structure controlled by the publishers does not provide enough for most newsagents to make money with the lower cost rolled model let alone coping with the higher costs of the flat wrap model. If the fee structure can be addressed consumers cold be closer to flat wrap newspapers arriving on their front lawn.

I’m glad that News Ltd has facilitated this trial. It’s now time for action of the delivery fee structure so that newsagents with larger deliver areas can make the move to a flat wrap model if they choose. It is anachronistic that publishers control the delivery fee newsagents are able to charge and that this fee is set at the state level.

The big questions about flat wrap home delivery of newspapers are:

Who owns the delivery package? Will newspaper publishers allow newsagents to deliver other items in the bag?

Where will flat wrap paper have to be delivered? Will the driveway or just inside the property be acceptable? Or, will a doorstop delivery be required?

Will newsagents be allowed to have overprinting on the bag?

Will newsagents be allowed to deliver more than one newspaper per package?

Will newsagents be allowed by newspaper publishers to charge more for the service?

I like flat wrap delivery of newspapers. As long as the rolled product is delivered I will not get my papers home delivered. As soon as my local newsagent bring flat wrap in I’m happy to sign up. To me, it’s all about the consumer experience.

Publishers ought to allow newsagents to generate additional revenue and to charge a premium fee and reward newsagents based on sales growth. The right commercial levers will see flat wrap as a success story in suburban situations where it’s use is most appropriate.

Will flat wrap sell more newspapers? I doubt it. However, it improves enjoyment for consumers and this will stem sales losses and facilitate switching casual purchase to home delivery.

The rumor I first reported here several months ago speculating that Australia Post is investigating publishing a weekly magazine has made its way to me again. This time the suggestion is a monthly targeted at women – maybe leveraging an existing title? I think the rumor is part of the Australia Post strategy to gain magazine publisher interest in carrying magazines in Post Offices. Someone in Minister Coonan’s office needs to read the Act again, especially the section detailing what Australia Post can do.

While the Federal Communications Minister, Senator Coonan, is busy promoting the government’s proposed media ownership changes, Australia Post, another of her responsibilities, continues to stray further from the functions allowed for under the Act. Their April catalogue (click on the picture below) offers a teddy bear, laser printers, home office stationery, pens and plenty of other items small business newsagents and small business photo shops sell. There is little in the way of postal related product.

Government owned Australia Post retail outlets are hurting small business with catalogues like this and it is an indictment against the government that it allows its corporation to operate unchecked in this way.

Another newsagent told me today that they had walked away from the home delivery of newspapers saying that their 400 deliveries were not viable for the business because of the low delivery fees set by publishers.

Chinese, Malaysian, Singaporean, Vietnamese and Indians are buying more newsagencies yet suppliers, industry associations and newsagents fail to adequately embrace them. This failure leads to a disconnect with the channel, its best practices, traditions, and the community it serves. I estimate that more than 20% of newsagents are of a non-English speaking background yet my software company, Tower Systems, is the only industry supplier to actively embrace them and provide non-English services. (We provide Cantonese, Mandarin and Vietnamese speaking support and services.)

If industry associations, suppliers and newsagents believe that the channel is unique then they must actively embrace non-English speaking newsagents and bring them closer to the fold. This means offering access to services in languages other than English, employing staff to serve this need and spreading the passion of the traditional newsagency.

Failure to act fails not only the newsagents but also the communities they serve.

Easter is approaching fast and newsagents are embracing the season like any good retailer. It’s our connection with big seasons which bring people back in who may not have visited for a while and this is an opportunity to remind people about our magazine range and other points of difference. Take a look at one of our window displays:

I’ve been chronicling here the success we have been having in my newsagency with the magazine club card which I developed and implemented a year and a half ago. This was the newsagency channel’s first magazine based loyalty program. It’s been a huge success and I’m aware of close to 100 newsagencies running the promotion. The newsXpress group, of which I am a Director, adopted the program in October 2005 and launched it a month later. I just found out that the Newspower marketing group is about to launch it’s own magazine loyalty program. While I wish newsagents well with the Newspower program, I would have liked to see them offer a point of difference in the loyalty stakes. The more the newsagency marketing groups copy each other the more diluted the offering becomes. If the Newspower offering is similar to what I created I’ll start looking for new playing fields.

The doubts I expressed here about Alpha here months ago have proven to be unfounded. Sales are strong despite a requirement that it is only sold with the local News Ltd tabloid. Key to the success of Alpha is its placement next to newspapers and the $2.00 cover price. Even convenience stores are compliant with placement. Fairfax could learn from this strategy with Smart Investor. Placing Smart Investor next to the Australian Financial Review, The Age or the Sydney Morning Herald in addition to the newspaper display will boost sales. The challenge is to provide display units which create such space next to these newspapers. I’d also contemplate a lower cover price to make the purchase of two titles more enticing – even though this could be frustrating for newsagent employees at the counter.

The data I am seeing suggests that Smart Investor has a sell through rate of 20%. This is unsustainable for newsagents.

Vodafone cut the commission newsagents earn from selling their recharge product by 37% a few months ago to 5% yet left Coles at 16%. Now they have a promotion with the Herald Sun and expect newsagent support in handing out this lanyard and guide to Melbourne for the Grand Prix.

I heard of a newsagent who conveniently lost the box of Vodafone material. We’ll hand the stuff out in my shops, but begrudgingly. Vodafone has treated newsagents appallingly while sucking up to Coles. Vodafone customers need to understand how this phone company treats small business versus big business.

Newsagents in Western Australia are apparently about to face competition from their lotteries supplier, Lottery West, thanks to their planned launch of an online and mobile service.

I’ve proposed merging my newspaper home delivery business with those of newsagents near mine along the lines of the business plan I posted here some months back. I’ve failed. The only newsagents interested in amalgamating territories in a shared equity model in Victoria are too far away from my territory. Disinterest among newsagents to drive change in newspaper distribution seems to be a national challenge for the industry.

I’m concerned that if newsagents don’t act to create a new distribution model in the next few months they will lose the opportunity and have significant business consolidation changes imposed on them.