At the Reader’s Digest website you can sign up for a year long subscription to their magazine for $39.99 for the year. Seems like a good deal at 30% off the cover price.
Some newsagents have been supplied subscription packs to sell. They have been sent stock for their shelves and an invoice which will have to be paid by the end of December. The stock is to remain on the shelf until the end of March when unsold stock is returned for a credit in April or May. This means newsagents will carry the price of the unordered stock for four or five months.
Given the size of the packaging, newsagents will need to allocate at least two and probably four pockets to display the product. This amount of space and the attendant labour will cost a shopping centre newsagent around $15.00 per month.
Some newsagents I have spoken with are angry as the subscription packs represent the sale of an item which guarantees the loss of repeat business. The publisher and distributor would comment that they see it as an opportunity for newsagents to get some revenue as opposed to none had they not used the newsagent channel to sell the subscription product. It’s a challenging issue but if I were to adjudicate I’d say don’t sell subscription product in newsagencies as they are retail specialists and they (we) need repeat business to ensure our survival/growth so why push an alternative channel?
The photo at the top of this entry is of a Reader’s Digest subscription pack which I bought while in the UK a few weeks ago. It seems that the UK has a retail subscription model which is fairer for the newsagent. There, stock is provided free of charge as it’s an empty packed effectively. At the sales counter an activation label is attacked and it is this which is sent off with the form in the pack to start the subscription. So, UK newsagents are ahead as they pay the distributor/publisher when they sell the product. Australian newsagents pre pay. This means they carry the cost of shrinkage, the cost of the cash for five months and the cost of returns.
It seems to me that aside from whether newsagents should sell subscriptions there is a more fundamental operational issue here which Reader’s Digest and their distributor, NDD, have not thought through from a newsagent perspective.
Newsagencies are small businesses. It is unfair to experiment with something like Reader’s Digest. I’ve seen one newsagency with an invoice for $550.00 in subscription pack stock. They’d be lucky to sell 20% of that and such a sales volume would not even cover their costs of having the product in store.
I’d like to see Reader’s Digest and NDD recast their subscription package strategy immediately and in a way which is respectful of the cash flow challenges in newsagencies.
This is a good example of the cost of deregulation on newsagencies. No other retail outlet now selling magazines in competition with newsagencies – supermarkets; convenience stores; petrol outlets – will take Reader’s Digest. Newsagents take it because it is sent to them. The trading terms for relatively low volume magazines like Reader’s Digest need to be reconsidered to take into account real-estate, labour, cash flow and opportunity cost.
Footnote: I’m curious about this text at the Reader’s Digest website, especially the sentence I have italicised: Send for a 12-month trial subscription for only $39.99, plus 83c copy postage & handling – saving you 30% off the regular cover price of $71.88. You’ll be under no obligation to continue your subscription. But just like a newsagent who receives an order, we guarantee to continue sending it until you tell us to stop which you can do any time. The comment about newsagents seems to be out of context.