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

Bricks and mortar aggregators

Australian newsagencies are bricks and mortar aggregators. Consumers visiting a newsagency have access to between 1,500 and 2,000 magazine titles and between 20 and 50 newspapers in English and an array of foreign languages.

Historically we have been a one stop shop for news and information. The perfect model for the day – a model which has resulted in significantly better than average per capita consumption of news and information product. The model was created by the publishers and until 1999 protected by government.

The model in its present form is out of date.

Now that we have been cut loose we’re facing tougher competition. Those who created and fostered the development of the newsagent channel are busy placing their product in other channels where they feel consumers are more likel to make an impulse purchase. This is happening at the same time as new online models are emerging to challenge print.

Newsagencies are typical middle-men in the supply chain and are the most at risk of not adapting to change. Many are too busy in their businesses to consider the strategic issues.

Given the involvement of the Australian Government in, first protecting the newsagent channel decades ago and, now, cutting them loose, it would be appropriate for them to provide assistance so that the 50,000+ employees in newsagencies and the mum and dad investors who own the businesses have a future.


Content is king

Content is king. Long live content. Consumers and content providers are the new best friends and finding ways to each other which eliminate many traditional businesses. In fact, they are racing toward each other faster than we can measure. Whole channels are at risk in the music, video and news/information distribution and retail categories.

Eliminating bricks and mortar channels replaces our out of date product search, service and payment mechanisms with a model which today’s 18-34 year old consumers want.

While my last posting here talked about a way newsagents could participate, it’s stop gap because of the desire for content to be as close as possible to the consumer where and when the consumer wants. In such a world newsagencies, CD stores, video libraries and the like are of little relevance.

Newsagents can be relevenant in the future if they start changing today.


On becoming a gateway

Welcome to a new retail model for newsagents for the new age. At this store you can:

  • Recharge your mobile (cell) phone, electronic purse and any other portable device you have.
  • Download content at ultra high speed (music, video, books, podcasts, and casts we’re yet to see emerge) to the devices of your choice.
  • Upload content from a range of devices.
  • Shop online.
  • Pay accounts online.
  • Advertise online.
  • Upload ads of interest to any device.
  • Upload pre set lottery and other service purchases.
  • You can do this 24/7 (even when we are closed) if you have an account with us and are wireless enabled.

    This new retail model is all about providing the gateway regardless of the medium. It’s not long term though as a bricks and mortar presence will not be part of the model for the content providors.

    Until now newsagents have been medium specific – print. This new model says the future is about access, the gateway, and that the medium is less relevant. With music tracks available for 99 cents the next step will be lifetime limited downloads which will make items available with a limited life. This will push transactional volume up.

    Through the Bill Express network 2,600 newsagents already have the beginnings of such a network. The challenge is for newsagents, Bill Express and content providers to appropriately, viably and quickly leverage the opportunity for us in the space.

    While much of what is proposed could be done from home, a national network of stores providing such access can help fuel the mobile paradigm shift.

    Bill Express

    Sony and Intel join forces

    Intel Backs Bertelsmann (Sony) File-Sharing Venture
    The world’s largest chipmaker, Intel, and German media conglomerate Bertelsmann plan to cooperate in developing technology for downloading and sharing films, music clips and games from the Internet.

    This announcement from two giants in content and processor technology has gone largely unnoticed in Australia.

    This is a convergence play of enormous proportions. It will bring bigger files to all manner of devices faster and in a higher quality form. It changes the playing field and could impact newsagents.

    The impact for Australian newsagents is in this question – what happens when consumers can download the stories they’d read in Time or Womans Day or New Idea or Who onto their iPod for listening later or a portable video device for viewing later for just a few cents? What purpose magazines in that world? I appreciate it’s a way off but it’s something to consider.


    A kick in the guts by Australia Post

    Camera loving Dick Smith launched Australian Geographic magazine in 1985. After a struggling subscription launch, Australia’s 4,600 newsagents promoted the heck out of the product and grew over the counter sales considerably. Then, surfing the waves of success, Dick Smith and his crew turned their back on small business newsagents and jumped into bed with Australia Post.

    “By the time we pulled out of the newsagents we had about 135,000 subscribers,”

    “It’s a very expensive journal to produce and we tried to negotiate to get the copies sent back to us, but it didn’t work that way,” Whelan says. “At the time they were just simply cutting the masthead off for the credit and they’d pulp the rest”

    Two quotes from Howard Whelan, Editor of Australian Geographic as reported on the Australia Post website talking about the history of their move from a retail distribution model to a mail only distribution model.

    In the same article on the website Australia Post says: Australian Geographic was also troubled by the amount of magazines wasted in the newsagents’ system. While the journal achieved better than average sales figures, selling 70 to 80 per cent of copies sent to the newsagents, those copies not sold – which at times numbered as many as 30,000 – were pulped.

    A 70% – 80% sell through rate is fantastic. Especially in that product category.

    I do not believe the claim on full copy return. Full copy was available at the time this happened. I suspect that someone other than newsagents was being too greedy and priced full copy returns out of contention. So, the all green Dick Smith at the time decided it was better to save the 30,000 paper copies which would have been pulped and instead use 200,000 plastic bags every month to get the product to consumers. Paper or plastic Dick? I guess you chose plastic. And you chose big business over small business.

    Here is the link to the article on the Australia Post website.

    Australia Post holds Australian Geographic up as a successful subscription only story in their pitch to publishers. They kick newsagents for wastage and for not being prepared to negotiate on this matter and provide full copy returns. In a very clever spin they promote their service and educate people about what they consider to be flaws in our business model.

    Folks, this is our own Federal Government doing this to us. Our Government is happy to sit by while their wholly owned corporation takes an unreasonable swipe at our independent small business channel.

    All of this took place in the late 1980s. It is relevant today because Australia Post use this story today in their pitch for more subscription business.

    Shame on Australia Post and shame on their owners, the Federal Government of Australia.

    Thanks for your support of small business.

    For the record I note that Dick Smith is no longer involved in the magazine.


    Blogs, newspapers and news distribution

    This article on blogs and blogging from the Wharton School of the University of Pennsylvania is an exceptional introduction to the blogging phenomenon and the reach it is likely to have.

    It is a must read for any involved in news and information publishing and distribution.

    Dan Hunter Assistant Profession of Legal Studies explains that blogging is here to stay in this quote from the article: “This is not a fad,” says Hunter. “It’s the rise of amateur content, which is replacing the centralized, controlled content done by professionals.”

    In Australia around 90% of newspapers are sold through newsagencies – a channel of 4,600 retail and distribution businesses established for this purpose. Almost all are privately and individually owned. The future of newsagencies as we know them is inextricably linked to the future of newspaper and magazine publishing and distribution – yet we are not part of the conversation about future models for mainstream media.

    With the blogging phenomenon newsagents have an opportunity independently to claim territory in what is called the blogosphere. Newsagencies could create BLOG POSTS – an in store kiosk like PC where people can read or post – giving a bricks and mortar presence and therefore greater person in the street relevance for blogging. This fits with the movement citizen journalism where everyone is a journalist. There are several models emerging including this model from Bluffton South Carolina.

    I see BLOG POSTS in newsagency stores as the beginning. They identify this old world bricks and mortar channel with the new movement. They provide a relevance for the 18-34 year olds who are shunning newspapers. They provide a starting point from which new traffic generators and business opportunities for newsagents can evolve.

    Bricks and mortar businesses like newsagencies with rely on newspapers and magazines for more than 50% of their foot traffic can either look outside news and information for their future or embrace the opportunities of blogging and practically demonstrate their relevance in the emerging new world. Through BLOG POSTS in their shops newsagents would identify themselves as part of the future.

    The big question is how newspaper publishers would react to this. A secondary question is how would those in the blogosphere react to such a relationship with a traditional media distribution channel.


    Australia Post (part 3)


    Australia Post, because of its government ownership and exclusivity is HUGE and its size and exclusive mail distribution, has several significant reciprocal corporate arrangements with which newsagents cannot compete. They provide economies of scale and provide an advantage with which newsagents cannot compete.

    a. Coles Myer. Australia Post handles the logistics for Coles Online. Coles offers an in store bill payment service which competes with that offered in Australia Post. Newsagents offer a similar service using the same technology as used in Coles. Australia Post has complained about newsagents establishing bill payment but not Coles. Odd that.

    b. Telstra. Up to September 2003 Australia Post had an exclusive contract for the provision of in person bill payment services to Telstra. Telstra seemed keen on appointing a second, non exclusive, in person bill payment network. The second largest in person bill payment network had been established by Bill Express Limited and was located in newsagencies. In August 2004 year on the same day that Telstra announced that it had given Australia Post a five year exclusive contract for in person bill payment services, Australia Post announced that it had given Telstra an exclusive $200 million IP telephone contract.

    The Australian Government needs to deliver a level playing field to newsagencies like mine. It needs to divest itself of retail post offices and provide a similar free market system under which enwsagents are other retailers operate.

    Bill Express

    Newspapers of Tomorrow

    Where will newspapers be in 5, 10 or 20 years time. The world is becoming more environmentally savy and more time savy. Everyday billions of newspapers are printed all over the world and i would say that most consumers would not be aware that any unsolds are returned to the publsher (this is the case in Aust, anyway). These returns come come at a huge cost in both transport and labour for both the retailer and the publisher. Imagine a world where only the number of newspapers that are actually purchased and paid for by the end consumer are printed. Will newsagents become mini print centres? With high speed colour printers/copiers readily available in most newsagents will this become a reality?
    Imagine reading a newspaper printed on quality white paper in full colour with much better quality graphics. No more ugly newsprint, no more broadsheet and when your finished bring it back to your newsagent the next day, we will recycle it and give you a discount on the next days all because you recycled.
    With copier technology available today we can fold, staple and hole punch your newspaper all for your reading pleasure.

    And when you buy your newspaper we are not going to put it in a plastic bag for you to take home either.

    More on this later

    Ben Kay


    Australia Post (part 2)

    Further to my earlier post here about Australia Post

    Foot traffic is crucial to every retail business. It’s a numbers game. The more people walking through your front doors the more likelihood that someone will find something they like and make a purchase. For many years Australia Post retail outlets existed to provide a retail face to postage products. In the 1980s they started to offer non postage product and this trend picked up apace in the 1990s to the situation we see today where, on average, more than 50% of a government owned Australia Post retail outlet is given over to non postage product of greeting cards, stationery, telephone hardware and in person bill payment services.

    That Australia Post has exclusive representation of the retail of postage product through its outlets provides it with an unfair competitive advantage over the retail outlets selling the other products and services which Australia Post carries. Australia Post competitors do not have an equivalent government protected product offering to guarantee equivalent customer traffic.

    The Western Union money transfer service offering is a good example of Australia Post benefiting from its government ownership. Newsagents introduced Western Union in 2000 and by January of 2004 year had achieved 800 independent small business owned outlets. During 2003 year Australia Post introduced Western Union.

    Solely because of its foot traffic, Australia Post has been able to snare a majority portion of the Western Union business. Australia Post outlets do not provide signage or significant promotional displays whereas newsagents invest significantly in signage, literature and advertising.

    A study of the Western Union example will prove the considerable commercial value of the Australia Post foot traffic and show the advantage Australia Post gains from having access to the exclusive foot traffic.

    What is happening with Australia is privatisation by stealth. Our own government is beefing up the Australia Post retail network to the detriment of small businesses like newsagencies. What for? Dividende? A sell off?

    Newsagents should revolt and demand an enquiry!


    A new newspaper

    Welcome to blufftontoday.com. You are witnessing the launch of a new kind of newspaper.

    And which those words the world was introduced Sunday night to a new newspaper model – an online newspaper with a free daily give away for the citizens of Bluffton South Carolina.

    Blufftontoday is part online newspaper, part citizen journalism. There are professionally written pieces and blog entries. Professional photos and submitted photos. But all wrapped with an air of professionalism whcih makes it interesting.

    We have to find a way for traditional news and information retailers (like newsagencies in Australia) to be part of the new media. Maybe reading stations in our shops? Maybe a promotion point for the such new local ventures. We must respond in some way otherwise our relvance will be challenged.


    Newspapers and the 18-34 year olds

    Newspaper sales are falling. Or that’s what we’re told. In our newsagency we are experiencing double digit growth thanks to relentless hard work by our front line team.

    Having said that, we are watching with interest the move toward citizen journalism. Today I stumbled across this report, published April 3, from the Carnegie Corporation in New York.

    Here’s the riveting opening paragraph:

    There’s a dramatic revolution taking place in the news business today and it isn’t about TV anchor changes, scandals at storied newspapers or embedded reporters. The future course of the news, including the basic assumptions about how we consume news and information and make decisions in a democratic society are being altered by technology-savvy young people no longer wedded to traditional news outlets or even accessing news in traditional ways.

    I’m interested in the report since it goes to the heart of products which are critical to the future of by retail business and 4,600 like mine in Australia. 50% of our traffic is generated by newspaper product sales.

    The world is changing around us at a rapid pace and we need to not only embrace change but create a model which will serve us and our employees for the future.

    We will not allow this business to become a white elephant.

    We accept that News Corporation and other newspaper publishers and mainstream media generally need to put the needs of their shareholders ahead of businesses in their current supply chain. However, we’d like to be part of the conversation about the future.


    David vs Goliath Newsagents vs Australia Post

    No government has a right to own and operate a retail channel which competes with independently owned small retailers. Especially when the government owned retail channel, in this case Australia Post, has a monopoly on the retail of postal products and have leveraged that monopoly driven traffic by moving into other products areas.

    For more than 100 years stationery was dominated by newsagents (4,600 independently owned retail stores unique to Australia) and other retailers as was the greeting cards category. About 15 years ago Australia Post entered these marketplaces and have turned their government owned retail post offices into businesses which look, for the most part, like newsagencies.

    This is the Government of Australia demonstrating their care for independently owned small retailers. It is obnoxious, offensive and killing small businesses. And the government does not care. They will say they do but lay out the facts and you will see they do not. They are happy for Australia Post to spread its competitive tentacles even further into space ably served by independent retailers.

    Newsagents don’t have the luxury of monopoly traffic. They do not enjoy that protection bestowed by the Government on Australia Post. Australia Post claims 1.1 million daily visitors to its 4,477 stores. Newsagents, while having good foot traffic, cannot match the Post because we do not have the products which only they allow themselves to carry. Newsagents cannot claim to be an essential service and therefore get preferential rental agreements with landlords. We do not have the postal service logistics operation of backload stationery and other products around our network for a fraction of the commercial fees we pay.

    The Government supports the continuation of the Australia Post monopoly because, as the sole shareholder, they are the beneficiary of the arrangement. They are conflicted in any decision they make about any small business channel competing with Australia Post. I appreciate it’s an emotive and simplistic view. However, walk in my shoes and then tell me I am wrong.

    This same government facilitated the deregulation of newsagencies in Australia in 1999 and created a situation which today sees thousands more businesses selling newspapers and magazines (core products for newsagents) than in 1999.

    My software company bought a retail business 9 years ago so that we could walk in the footsteps of our customers. We still own the business today. Right across from our shop is a Post Office – government owned. We do a promotion on printer ink cartridges. Australia Post does one. We fine tune our prices. They fine tune their prices.

    This is our government competing with my tiny shop.

    What right to they have in using their might to compete with my business?

    We sought approval for a sign on the wall outside our shop the same size as that for Australia Post. Centre management refused.

    If all they sold was postal products then I’d be happier. If they provided me with postal related products for reasonable margin so I could compete with their core products then I’d be happier.

    The current situation stinks and politicians on both sides seem to lack any care. Australia Post is untouchable.

    I’ll have more to say on this in future posts.


    Easter Alive

    Well its taken a while but this is the first blog entry for Forest Hill. We are alive with Easter at the moment, we have decided to go nuts with our Easter Darrell Lea range and we have taken on four times as much stock as last year. There a number of reasons would decided to do this, firstly Darrell Lea has made a company decision not to supply any of their easter product to any of the major supermarket chains. If they support us with such a move then i am only happy to support them.

    Secondly I recently attended a visual marketing seminar hosted by the Australian Retailers Association Young Executive Group (which i have also joined so you probably hear more about these guys in further entries). The takeaway from the session was that if you are going to give you customers a visual display, then make a statement, dont half do it and have the stock to back it up. If you take a look in the photos section you will see we have made a statement about Easter we have done the front window, easter dump bins, posters and props etc etc. We probably spent about $300 on items for the display including some moving lights that we hired. Whislt this may seem like a lot i see it as an investment in the future and better visuals means better sales.

    Ben Kay


    Entry #1

    This is the first entry in a what we hope will be a warts and all blog about life in a busy Australian Newsagency.

    We’ve owned Forest Hill Newsagency since February 1996. It’s a very busy retail shop plus there is a home delivery round, loarge magazine distribution round and sub agents to manage.

    We bought the business to gain first hand experience in running a newsagency – the software we write is for newsagencies.

    Anyway, 9 years on and we’re still here and still learning.

    You can see photos of our shop here.