There are several battles being waged at present around which businesses can get direct supply of magazines. I know of newsagencies selling more than $8,000 in magazines a week which are being denied direct supply access while a small supermarket nearby selling considerably less is given a direct account without challenge.
There are some who would say that the distribution newsagent must be protected. These same people do not fight when a new supermarket or convenience outlet opens and gets a direct account – because newsagents lost that fight years ago. They only fight when a newsagent (subagent to them) wants to go direct. They do this because the magazine distributors will probably agree with them – the individual newsagent wanting a direect account is not as powerful as, say, IGA, Coles or Woolworths.
In situations of which I am aware right now, goot retail newsagents are being blocked from accessing direct supply of magazines. This will encourage them to reduce focus on magazines. Publishers will be the losers. I wonder if they know how magazine distributors are managing the representation of their product in the changing newsagency channel.
I agree it would be difficult to let go of revenue, especially from a business you have helped grow. However, competition policy is on the side of the consumer.
Behaviour I have seen recently shows that some playing in this area do not understand competition law.
Mark dont you think some kind of goodwill should be paid or do you think every one who wants to should sell lotteries mags and papers?which industry has been helped by deregulation? not one that i can think of. cheers Andy
If you open a newsagent in some elses territory then you SHOULD be and ARE a sub agent.
If this was your territory that was happening in you would not like it, but you do it and are keen to help others do it.
You know small bussiness needs some protection.I find your stance very odd since you go on about helping newsagents now you want to take a major subbie away from one??
The territory owner paid for it so why should a new person come in and take away his lively hood??
That’s what’s happening to me at the moment. There’s one distributor that I’m not direct with, that hasn’t even heard of me.
My “agent” limits my supply to less than $500 per week in sales so that then I’m not “eligible” due to poor figures to get a direct account. He also supplies my nearest magazine competitor – with all the magazines they want!
It’s not fair on me and it’s not fair for the magazine companies that could sell a trailer load more of their product each week in my store.
It’s the distributor’s criteria which is hurting the two hands that feed them – the stores and the publishers.
Mary,
While you could argue this, it goes against competition policy.
You are wrong to tell me what I think and do.
My post is about opening a topic for discussion.
One case I am talking about, the one of most concern, is very different to what you have put.
Mark
Andy,
7-eleven did not pay goodwill to sell tattersalls products in my ‘territory’.
Holding on to the notion of a territory is part of what is holding our channel back.
Territories do not exist in retail.
Mark
Mary, I’m a small business too. I can make a lot more money per week for my “agent” yet he doesn’t want to increase my supply.
I’m also not in his territory, so I see it as being plainly unfair.
Mark,
maybe in this case they should have bought a newsagency and there would be no problem with supply.the idea of a sub agent is that they complament sale out of hours not take sales off the agent.
andy
Andy,
Someone buying a newsagency doing $6,000 a week is magazines has to expect that they will ultimately get a direct account. While on paper we can call them a sub agent, to the consumer they are not.
We do ourselves a disservice hanging on to a multi tiered supply model which is past its use by date.
mark
If the “territory” does not exist why when an Agent is sold the new owners buy the “territory”??
Mary, it’s a hell of a situation I’m in!!! The agent that has the territory does not want to supply me with newspapers so I’ve been past to someone else who want’s to supply papers but is not interested in magazines. Sounds confusing, I know!!!
At the end of the day the agent is not capitalising on having me as a sub, I’m losing out, and as Mark said the consumer does know the difference and gets annoyed when I’m out of a title the day after it came out.
The fact I’m in a “territory” doesn’t help anyone.
“Territories” only exist at the discretion of the distributors, we had a large shopping center open in the middle of our territory and the distributors simply rewrote the definition of our territories not to include the new shopping center, end of story no way I could challenge it. When we tried to fight it we were told that if we did not sign the new territory agreement then our entire contract would not be renewed. As soon as one territory was altered all were altered.
Like mark states if someone big like Woolies or IGA wants mags direct it can and will get them so the whole argument about territories will soon be irrelevent, as for goodwill for distribution runs these are also owned by the publishers not the newsagent so if someone went to say fairfax, nationwide etc and worked out a deal then they don’t have to pay the newsagent a cent in goodwill.
Mark
why has the territory system reached its used by date? compleate deregulation has not helped any industry .with the 7/11 shops it has happened how do you think we can rectify it?
andy
Andy,
To be clear, my post is about retail. The territory system is not relevant in retail because consumers do not think, shop or act, for the most part, in territories.
I can’t control what happens. However, if some smart operators I knoww are not given direct aaccounts they will reduce focus on magazines meaning the newsagent who ‘owns’ the territory will need to seek out other outlets. These will either be new newsagecies or other stores selling magazines.
Mark
on The 7/11 Tatts issue Mark ,tattersalls could have enforced them(7/11) to pay a trail to the whole existing network as compensation/subagent fee call it what you like,to be divided amongst the network just like the retailer incentive scheme but chose not to…just treating us like idiots again…
The territory system is relevant in retail. Just because consumers do not know what goes on behind the scenes doesn’t invalidate the distribution system in place, that is a false argument and insulting.
Also, it is wrong to say distribution newsagents don’t fight when a new supermarket goes direct, we just don’t often win.
Distribution newsagencies serve a purpose and are helpful to the publishers/distributers that don’t want to directly manage every sub-agent and we have better local knowledge and invested interest in good service.
Don’t make the agents scared to make you too successful, embrace the effort they put in for their 12.5% and embrace the partnership. We get kicked in the guts everytime some high up in a larger chain is all but bribed to go direct, how would like it if the distributors came into your store and tore out a few bays and said they will use them elsewhere that space is now void, without recompense? Its a bit more than just a ‘its hard to let go of revenue’ situation
These agents that think they ‘need’ to go direct are still losing out if they move away from magazines. 12.5% of a well supplied magazine section is better than 25% of nothing.
Bringing up ‘competition policy is on the side of the consumer’ is also a false, the consumer will see the magazines at the same fixed price that all newagents and other outlets, direct or sub, sell them for.
Also there are better topics that help everyone worth chasing up, We should all be chasing higher margins and better practices from the distributers/publishers. Not fighting amongst ourselves yet again.
It’s what newsagents do best sa paperboy…
SA,
It is only insulting if that was the intention. It was not.
Maybe not today for you but at some point this issue will be addressed. Driving that gives the channel a better chance of navingating a better outcome.
Whether you like it or not there are retail only newsagents doing $8,000 a week and mroe in magazines. That space can cost $1,000 a week in rent. Magazines can cost $500 a week just to manage. The figures tell the story.
While I understand the supplying newsagents wants to be protected, the reality is that unless there is an economic adjustment the newsagent will reduce magazine space. Consumers suffer, magazine pubishers suffer.
Let’s lose the emotion and have a business discussion.
Mark
No the economic reality is not that the consumers suffer, if that particular store reduces its magazine space then some other store close by will fill the demand. The publishers thusly do not suffer as well. A good distribution agent is an asset.
I don’t understand what you mean by ‘retail agencies sell $8000 a week whether you like it or not’ Why would I not like a sub-agent that sells that much stock? I have no desire to limit my sub-agent at all.
Its a fair slap in the face though when through your efforts to help build a subbie up they turn the good work against you and go direct. If some other distribution agents are intentionally limiting sub-agents because they know that will be the end result that is losing them altogether then its not too hard to understand is it?
The problem there is not the distrubition agent, its the one-sided contracts which really don’t guarantee the territory at all. Stregnthening those contracts for distribution agents would reduce that fear and allow the dstribution agents to do what they should be doing best. Network et al are to blame for the poor situation and fear with their actions. ACP in particular are aggressive in wanting to take over the planograms for chain outlets and relying on bad returns practices and ineffiencies to artificially boost sales.
The only benifit to going direct is to the retail newsagency, and only in the increased margin. It is not better to the consumer or publisher.
We do plenty to protect the retail outlets we supply for all the over-supply problems that destroy cash flow and which you talk about frequently in this blog and are far more responsive in changing supply figures than than the distributers. We are the ones that do all the waiting on hold and quiblling over crap and supply problems and everything.
In short we earn our 12.5%, we do not limit our sub-agents. This is a call for extra margin and that is all, do not try to make it a call for a better system, and make the case for the consumer and publisher which doesnt exist.
SA,
They will go direct or want to at least. Such are the economics of retail and the magazine distribution model. No surprise there I would have thought.
You are in a unique situation in SA. The Eastern Seaboard is very different.
Mark
Its short-sighted to throw away the distribution agent for the margin and think you are making a straight 12.5% gain.
The magazine distribution model suits a good distribution agent making supply decisions based on good data, as opposed to arcane algorithms and blatent over-supply programs that you blog about constantly.
It supports a local agent that knows the market, the seasonal changes and the quirks.
A savvy retail store will get the most of their agent, they will merchandise and offer free promotion as well.
It can be a good partnerships that nets more than 12.5%
So don’t be surprised that we will be defensive when people just want to treat us like an additional cost that offers nothing, that simply isn’t the case.
SA,
I am not suggesting you throw away the distribution agent.
This is where we kill ourselves. We are unable to engage in a debate without getting emotive or misrepresenting another’s point of view.
I wrote about specific situation. I have not published the details so it is hard for you to apply your view to those situations.
Mark
SA, I wish you were my agent!
Mine has no interest in getting the most out of me, he doesn’t wait on the phone getting extras for me. I could sell four times more I estimate each week, but he’s not interested.
I think he just restricts my supply so I can’t get direct supply, so when he sells his shop, he can say he has x amount of subs – hoping to get a better price.
Do you think I require a direct supply?
I can only assume when you post a story like this that part of the point is to address the distribution system. I can only make responses based on that assumption, and based on my own circumstances. It is an individual case on which you are making inferences that the whole system needs review. Plus you say yourself this post is about opening the topic up for discussion.
In the case of one particular agent selling $8000 plus a week in magazines I would say they enjoy the support of a good distribution agent. That that agent wasn’t able to stop a close by supermarket from getting a direct account is the fault of the Distributers willing to devalue the agents contract for the sake of some golden handshakes with some very select people, It is not an indication of poor performance on behalf of the distribtion agent.
You claim it is going to hurt the consumers, I say it doesn’t. That retail store will get smarter and better supply/service than the supermarket. I know of some chain stores with direct supply that are losing money on magazines.
You say the only option is for this agent to go direct or cut back. I say they have the option of investigating increased service from their agent to warrant the 12.5%.
Stronger contracts as well as many other things that would benifit both distribution agents and retail ones are the way to improve service. The current state is bad yes on that I agree, we shouldn’t have to be scared of success and losing good sub-agents. That is certainly contrary to what the publishers want and the consumers.
I am with SA on this one… We supply one of our sub-agents with around $4,000 per week in magazines and they are 5 meters from our front door.
We ran trials with the sub-agent to understand the impact on our P&L and determined we are far better getting the 12.5% on the $4,000, than the 25% of the $1,000 per week in additional magazine sales we generated when supply stopped over a one month period.
We have a strong relationship with the sub-agent who has over 50 points of representation and knows he can go direct, however chooses not to.
The reailty is we could supply him with more, and he would sell more of the weeklys than we do. This would probabaly not effect our counter sales greatly, but would provide further increased revenue all be it at a lower margin – we are strongly considering this.
In addition, this guy also buys his non-general stationary through us at retail prices which can be between $2,000 – $3,000 per order, and
We are also about to get fresh bread supplies off him to support the early trade and return unsold items when they open on a 100% margin.
This is a guy we need, and one who supports us. We know if we loose him it will hurt, and thats why we dont push to try and get more of his business, as we know he also does similar things for his local newsagents at his other locations.
I know not every sub-agent is like this (our others are not), so we need to work with what we have.
Cheers
Peter
Michael – the industry doesn’t need to support poor agents, in either distribution or retail. There are proper channels to follow, if you really can’t get good service from your agent then you really don’t have an option but to pursue an alternative.
If he really is scared though that you will go direct once he builds you up why not reassure him otherwise? If you can sell 4x the amount with his support it is better than the current situation. Get all you can out of him.
SA,
Please don’t make assumptions about my blog posts. Their is no hidden or unwritten position you need to add.
In one of the cases of which I write the service is not good. The newsagent is not reaching his potential. But that is not your concern.
On the contract front, I don’t expect stronger contracts.
mark
I don’t expect stronger contracts either , that doesn’t stop me from seeing the benifits, to everyone, from them.
And you have successfully claimed in this thread that the post was to start discussion but then when I do offer discussion then told me its about an individual case of which I don’t know the full details. I am forced to make some assumptions.
You don’t say in the original post that the service is poor, just that the retail agent is not getting a direct supply.
And telling me that it is not my concern isunfair, This other business ultimatelly isn’t your concern either. The sentiments expressed in the post are of concern to me, which I have already addresed in my replies.
It is of concern to me that some retail agents are so dismissive of the service a distribution agent provides, and it is of concern to me when somone states quite boldly they should just ‘give up’ their sections of their contractually designated supply territory, especially when they paid for that business and they are offered no recompense.
You have not stated in the article if they have offered to purchase form the distribution agency for what their account is worth as well? Much better to steal it direct from the publishers.
SA, I’m working on a direct supply at the moment, time is the factor.
He’s not building me up as I’ve said, he’s holding us back. It’s embarassing telling customers on the day the magazine comes out that we are sold out – sometimes even by 6:30am. That hurts my customers and turns them away from my store straight into the supermarket.
The only alternative I can pursue is going direct supply. All I want is to have the quantities I require.
You’ve explained how you go above and beyond for your subs, my agent does not, and I know of other subs that are like myself that should not be blocked from going full.
SA,
I cannot go into more detail on either of the cases which led me to write the blog post.
Their business is of concern to me because I have been asked to help.
The dismissiveness of some retail newsagents of distribution newsagents is another topic altogether. Some distribution newsagents deserve it. others do not.
Mark
Well there really isn’t excuse for continaul poor service.
It’s slightly off topic but related none the less.What if the newsagent simply can’t get the required supplies from the distributor/publisher, regardless of how many adjustments you make online or how phone calls you make and how high up the corporate ladder you go? Or, you succed in talking someone around to increasing supply, only to have it cut further again in the next round of efficency cuts!
We have even tried using the line that appears on one company’s subscriptions notices..”it is your responsibility to ensure you order sufficient supplies blah blah”, but effectively got laughed at.
It seems to me that the distributors/publishers are full of uni grads who only paid attention to the lectures about limiting waste (no problems with that) but totally ignored the lectures on actually having sufficient quantities of stock to meet demand.And the publishers wonder why circulation figures are falling, it’s not rocket science…..anyway……I can feel my blood pressure rising already so I’m going to stop!
If I can put in my two cents worth…SA Paperboy has mounted a strong rational argument.
Up until the final posts, Mark’s responses have been somewhat condescending and I might say, a little superior. To infer SA is being “emotive” like so many others is a good example of that.
To claim your comments related only to some specific examples is only half truthful. Your comment that “Holding on to the notion of a territory is part of what is holding our channel back” is representative of the way SA’s view has been treated in this thread.
You will no doubt deny it Mark, but an interesting thread, rationally debated, is hurt by your attitude to those that have a slightly different view to yours.
Perhaps the underlying story here is not that territories are such a bad thing, but that the poor performance of some distribution agents, as usual has dire consequences for the majority.
Ted,
You are entitled to your view. Hey, let’s cheer that you and others are able to publish this here unedited.
SA was emotive in my view.
I was making one point about a couple of situtaions I am currently assisting with and he was talking about a different set of circumstances.
I don’t think I was condascending but I’ll leave others to judge me on that.
There are poor distribution agents just as there are poor retailers. Outside of that, the distribution model is in for a shake up. Now we can be in denial about that or sieze it and create a new model – that is not a new proposal. Unfortunately, we will think it once others with a vested interested have their new model ready.
It would be good to see debate about substance and not the people debating.
Mark
I think it would be interesting to see how effective distribution models were without territories. I believe there needs to be some level of territory… I know that it works well in our town. Fellow newsagents should respect territory lines, but not to the detriment of their own business. I like the sounds of how SA paperboy runs his business. I would like to hear more, because this could be a part of where negotiations are headed. While I understand that new directions should be considered and undertaken, we should look to the past as well as the future to create a better model.
Sarah
Ted, I like Mark could see SA being emotive and if I was in SA’s position, I’d be the same. It seems he does a really good honest job for his subs – which is excellent, from my position it’s great to hear about someone like him.
Territories may work well looking at SA’s example but what happens if you get someone like my agent, that is content with earning $65 per week of me?
All that could be positive becomes negative. I believe that you shouldn’t be able to buy the 12.5% but you should earn it like SA does – keeping both parties happy.
When there are problems that can’t be resolved, like maybe the agent that does not want to supply partworks because of the headache, the sub that wants them, Shouldn’t the sub have the right to go full? Even if they’re selling $8000 per week?
Mark
why should a subagent selling $8000.00 per week in mags get a direct account?if they should why have subagent at all?
andy
Andy,
In one case the ‘sub agent’ was a newsagent but converted by the previous owner. The agreement was for a fixed term which has now expired. It is commercially appropriate that this store have a direct account.
Also, as a direct account you get collateral to promote magazines – more so than you would as a sub agent.
Mark
Another “argument” I can put forward is how I have a Bunnings within 500m of my store and they sell a small amount of gardening and building magazines, as do I.
I bet they aren’t a sub to anyone yet they can sell less magazines than me but I have to be a sub.
Mark
i would have thought that an agrement that is not enforcable is more to do with due dillgence.is it not commercially apropriate for goodwill to be paid to the agent?if not why not.
cheers andy
Ted – as you would be aware, this site is heavily edited by team fletcher and if any post is critical of him then a condascending reply will be forthcoming followed by moral support from Michael who appears to slavishly follow anything team fletcher says
Michael, that point is incorrect as Bunnings traffic flow would be much greater than yours. It is no different to small Woolies, Coles, servo’s. It is all about profile and mass distribution. Your issue should be with the guys that allowed distributors the chance to sell to nationals to begin with. Subbies and distribution agents won’t be much different down the track. I have paid good will for an area but I am sure as eggs that if Woolies petrol plus or the like come in I will not have a share of that supply.
I would love Woolies to pay me a tribute for the fact that I miss out but then again why should they. They supply the distributor with much greater exposure across 500 outlets than I do in 1. It again is an issue where the various groups will provide comfort in direct supply.
Also keep in mind every subby that I have heard go in, the orginal newsagents has been offered the opportunity first.
no name (also known as anon and Jack),
Comments here are not edited. Ehy not out yourself so we can have a reasonable discussion about your views.
Mark
Brad, yes they do have higher traffic than me but what about magazine sales? I just don’t think it’s right that I want to specialise in magazines but Bunnings don’t but get direct supply.
I don’t have a problem with them selling them, I just want a level playing field.
As far as I was aware territories for magagizenes do not exist. Mag companies have their protocols for upgrading sub agents and seem to be fairly strict. For one company we basically ‘hold up” our suppling agent as we outsell them. But we have applied for a direct account twice and have been declined. This is unfair for our business model as whilst some agents provide good service (as appears does SA paperboy) our agent does Not. The reason why we first applied was because we were selling a reasonable amount of mags, plus our relationship and service from our suppling agent was poor. We had no alternative. So I suggest if you are a suppling agent look after your sub agents, because if they are selling the required amount of papers they will and SHOULD apply for a direct account.