I have received a copy of an invoice showing that a major supermarket chain receives 16% commission on Vodafone recharge business. Newsagents have just been cut to 5% from 8%. Australia Post licenced outlets have just been cut from 8% to 7%.

While supermarkets offer starter kits to attract new customers I doubt this warrants a 16% commission. If I offer these kits in my newsagency I can get 8% commission. Supermarkets (based on the invoice I have) get double that and I doubt they do great starter kit business.

This invoice tells me how much Vodafone values the 3,000 newsagents who offer convenient recharge for their customers; how much they respect the capital investment newsagents have made so they can offer efficient recharge service. Vodafone prefers supermarkets and Post Offices over newsagents. Vodafone prefers big business over small business. Or, maybe Vodafone was just out negotiated by the supermarket chain.

Vodafone has judged the newsagency channel, those who work in it and those who shop there by their actions. 5% commission is less than minimum wage. It is offensive compared the 16% paid to this supermarket.

On this invoice I can see that the supermarket did around 60 Vodafone recharges. There are newsagents who would do this volume of business.

The other difference seems to be payment terms. Newsagents pay their recharge aggregator daily. This supermarket seems to pay weekly if not monthly. This provides them with cash on which they can earn interest.

None of this is good corporate citizenship by Vodafone. It increases the divide between big business and small business. It demonstrates lack of respect for the small business channel. It puts at risk jobs in the small business channel.

Vodafone is a guest in our country. They have an obligation to be socially responsible. The only way they can redeem the situation is to urgently review their newsagent commission position.

PMP Limited announced to the ASX yesterday that Brian is to join the company as CEO. Evans’ appointment to PMP will be welcomed by some newsagents who are keen for stronger competition in the magazine distribution sector.

News Corp and Fairfax both want newsagents in replace current newspaper display units with a new $3,500 unit. While the new unit will lift the standard in some stores, in others it will change something which is not broken. Instead of asking newsagents to spend $3,500 I’d recommend they ask newsagents to spend $200 on a small TV/DVD to be placed directly above the newspaper stand. We’ve done this with the Symply Too Good cookbooks and the sales results are wonderful.

The TV/DVD cost us $198 and Annette Sym has kindly provided a looping DVD promoting her books. From day one sales are up.

I appreciate that newspapers getting news related content to thousands of newsagencies could be problematic. Instead, I’d suggest a series of DVDs featuring columnists, the writers unique to the newspaper. Each ‘film’ could run for, say, 3 minutes. Give browsers a flavor of the columnist, their interests and have them talk about a relevant topic they write about. This builds a connect between columnist, newspaper and consumer. I am certain it would drive sales. It supports content only available in that newspaper and hopefully not available online. A new DVD every month with four or five items on it is all we would need. The investment would be small and the incremental sales worth it.

Publishers need to invest in a quality retail distribution channel if they want to drive sales. This pursuit of convenience purchases may generate a small kick in sales but the gain is not worth the cost of disrespect it shows to the existing specialists.

Our small experiment with the $168 TV/DVD player and the Annette Sym cookbooks shows that at least a trial is warranted.

Kudos to the Herald Sun for their Phar Lap poster promotion today. Giving away a poster of this champion racehorse reinforces the newspaper’s connect at the start of the Spring Racing Carnival in Melbourne. Well Done. Customers loved it.

Brickbats to the people selling space at the Herald Sun website. They are promoting (above) Tattersalls online – a direct competitor to the in store Tattersalls business operated by newsagents. Newspaper publishers need newsagents to maintain and or grow sales. The fewer who visit newsagencies the fewer newspapers they will sell. So why promote an online business pulling people away from newsagencies? Nuts.

This is a peak inside the Australia Post shop opposite my newsagency. This shop is owned by the Federal Government. They compete more aggressively than others with us for stationery, greeting card, phone recharge, money transfer and calendar business. These government owned shops are taking business from independent small business newsagents through the monopoly they have on postal products and the fact that you have to walk through the store to get to the counter. The Federal Government is happy to sell off Telstra and remove their conflict but they refuse to even consider selling the Australia Post retail network. I wonder how much economic damage will have to be experiences by small businesses before the Government realises the damage their policy is doing.

I received a call from a colleague yesterday saying that Vodafone was offering recharge at 10% off through the Woolworths stores if you purchase a one of their SIMs. While Vodafone are welcome to do whatever deal they want to attract new business, that they can offer 10% off recharge through a big business channel and nothing through a small business channel bothers me. Vodafone will say that the Woolworths stores are building the Vodafone customer base. Newsagents do as well through signage and adding to the Vodafone convenience factor – given our locations and the hours we are open. Vodafone recently announced a 37.5% cut in newsagent commissions for Vodafone recharge to 5% making it of doubtful economic value.

Australia’s 4,600 newsagents are often told by publishers that they are important to them. Why then is News Corp. testing its capital city dailies in the Civic Video chain. Civic has over 300 stores and most would be close to a newsagent. While Civic stores might be open longer in the evenings, newsagents open earlier and this is when the majority of newspapers are sold.

The move by News Corp. is disrespectful of newsagents; it tells newsagents they are not a sales growth channel for publishers; it encourages newsagents to look for alternative traffic generators; it makes the newspaper less of a specialist product; it dilutes the connect consumers make between newspapers and newsagents.

My newsagency is proof that same store newsagent sales growth is achievable. News Corp. would be better served working with newsagents to achieve this than pushing product elsewhere.

This graph shows average daily over the seven days for Take 5 magazine for 3 months (red) in 2005 compared to the same period (black) in 2004. The graph shows the critical importance of day of issue (far greater than many in the industry think). The graph also compares average daily sales from 2005 with 2004. You can see the sales growth we have achieved: most of this is on the first day. Our growth is due to our magazine club card promotion and we expected to see growth spread across the seven day shelf life.

While Limelight magazine from the ABC is sold through newsagents, the ABC does not note them as an outlet in TV commercials. Their commercials promote Limelight Newsagents carry by my very rough) guess 50,000 copies and generate sales of 35,000 copies. Imagine the result if the ABC promoted newsagents as carrying Limelight. If they want newsagents to carry the title they need to promote the newsagent channel.

Someone asked my why I complain here so much about Australia Post. It’s simple, they are 100% government owned and operate government owned retail stores which compete with small business stores like mine for stationery, Western Union, greeting card and bill payment business.

Here’s a photo peeking in at the government owned Australia Post store opposite my shop. For the most part it looks and feels like a newsagency in the first half. I wouldn’t mind this competition if they were not government owned and if they did not have their monopoly over postal services. This monopoly gives them cheaper rent, lower customer acquisition cost and greater control over their future.