The announcement yesterday that NDD is to close will see two main magazine distributors. While there are other players, it would take extraordinary expansion for them to compete with Gordon and Gotch and Network Services.
The magazine distribution model newsagents currently have often fails us. We are supplied at a level which makes the magazine department loss making or break even for more newsagents than those who make a profit. This is not healthy for us for publishers.
Despite what magazine distributors say, newsagents do not have fair control over the stock they receive. They are denied the opportunity of making business decisions on what titles they carry and the volume of each they receive. Yet we are held accountable for paying magazine supplier bills on time. This is grossly unfair since we are not given control over magazine cash flow.
In the next week or so I will publish a post here on magazine cash flow in newsagencies, based on fresh evidence. In one store, supply from Gotch and Network has been cash flow positive only three months out of the last twelve. Yet this newsagency has had to find the cash to pay the magazine bills or not receive stock.
Gotch and Network are doing what they need to do to serve their respective business models. Just as IPMG has made a decision about NDD which serves its business model.
It is a pity that newsagents have so little control over this vitally important part of their business.
The closure of NDD reduces choice and has the potential to see newsagents face tougher magazine supply terms.
I will NDD’s innovation, they we always at the forefront of range analysis and, in recent years, more flexibility for newsagents in controlling supply.
I have not been a huge fan of NDD but I am even a lesser fan of the two remaining giants. My magazine sales are down but their accounts are as big as ever.
We are in the same boat as the newsagent you mention, most months our mag account is more then the entire sales total for the previous month, including our so called profits, sometimes it runs to 50% more then sales if they push returns into the new month. We have been threatened with increase security deposits or cancellation of our mag supplies if we do not pay the oversupply. At a time when mag sales are declining and cashflow is tight we are seriously looking at quiting mags and adopting a supermarket style approach ie only stocking the major monthlies and weeklies @ 12.5%. At least I will not be losing money.
Seems the time is fast approaching where more primaries will opt out in favour of going subby in this climate. Who wants to chuck that kind of dosh around for negative income, month after month, year after year?
Unfortunately it would see the far fewer primaries, having to carry far more subbies, resulting in even bigger burdens of supply/cash.
The whole model would have to be revisited on that basis alone. The present one is simply unviable, and I for one would not be prepared to go to the wall because distributors will not change their brief. The issue will be forced.
Niche titles will have to be more creative in their quests for stockists. This is already happening, but I do see the direct subscription model becoming more widespread, negating newsagencies – beyond main titles anyway.
Newsagents, Distributors and publishers are all doing it tuff. NDD are out and Publishers are closeing Magazines. It’s not the distribution model it’s the abuse of the model by a few.
Us newsagents are being screwed by the distributors. I’ve always found NDD to be ok, Network not bad while Gotch are rancid. My cash supply is non existent. The strength of NDD was their allocations, far better than the other two. I’m thinking of selling up anyway and retiring to Goolwa and hitting the pokies and playing lawn bowls.
Harry Henderson , any fishing that can be done in Goolwa ? i might come with you
There is nothing stopping newsagents creating an alternative magazine supply model. Maybe the closure of NDD is the catalyst for change.
I must disclose that between 1999 and 2004 I worked for NDD. I can assure you the NDD team were the best in the market as we had to rely on smarts and treating people correctly to be in business. In the end publishers are to cause of now handing all the power to a duopoly who your own experience will demonstrate have a care factor of zero.
The only power newsagents have is as a single united front. I remember working with the ANF and other key newsagents to solve the magazine industry GST dilemma (remember NDD solved that big headache for the entire industry). Our united solution meant Peter Costello changed the GST legislation.
I agree with Mark, there is no reason an alternative cannot be created. But success will depend upon being united. No doubt other retail channels would join the party if they got the right invitation (like NDD did with the GST).
Mattp, you seem to have a short memory if you state that NDD was the best in the market, we cancelled our NDD account in 2006 because of the continued gross oversupply and withholding of credits. It might have taken a while but it makes me smile that I am still here and they are not.
i found in the later days that ndd was the easiest to deal with . easy to change allocations , no dirty letters and over all better to deal with
Hi Luke, you will note I worked at NDD from 1999 to 2004 during which time the NDD team were best in the market. I cannot comment on your experience with them since that time. I can assure you if NDD had not resolved the way your business has to handle the GST and you were left with the solutions proposed by the duopoly then you would have significantly more administrative burden. That is just one example of the leadership and contribution NDD made during my time there. I do acknowledge things may have changed and also that it is impossible to satisfy some newsagents 🙂 This is why I maintain a unified approach is the only way any improvements will occur.
On previous occasions, GNS has not been keen on the idea of magazine distribution. However with the massive downturn in business activity- published economic figures seem very rubbery- maybe GNS could have another look at the possible distribution of NDD magazines. NDD has many fantastic non-local titles.
JOHN PIGOTT
Hopefully more publishers will see the light and sign up with Fairfax’s magazine distribution division Fairfax Media Publication Solutions – FMPS who use a pull based model and already have titles such as Best Bets, Guardian Weekly, Insight etc…
Mattp, my issues with NDD were inclusive with your time at the company, but like I stated I am still in business and they are not and you have moved on so we all win.
I am now thinking that a duopoly may work out better for us. With less competition the ACCC will look harder at any and all abuses. This may work out for us and force the big two to play nicely in the sandpit with all of us.
Brett,
I don’t believe the ACCC will make one ounce of difference, I mean they do such a FINE job of handling oligopolies such as the “Big 4” banks, Federal Water Allocations and Mining Industries……….mmm me thinks holding my breath won’t work here!!
Bob I hope they don’t unless Fairfax agrees to supply retail only newsagents direct and not as a sub agent.
And give us the ability to adjust supplies or decline anything we don’t want on the shelves. WE can’t early return the World Cup Mag distributed by Fairfax. A prime example! We are stuck with these until they deem it fit for return & credit. gggrrrr! 22 copies of something that had no hope of selling in our area.
NDD still owes me $$$ , will they refund of my $$$?
I would also like to know the answer to Eric’s question.
NDD actually owes us money since 2 months ago after returning all the excess titles/supply they sent us. At the rate most of their titles sell for us, it will be a while before we use up the “credit”
Should we/ can we ask for our money back first?
Max
You can early return mags to fairfax through connect and change supply etc.
I check my supply at least twice a week
Garry
Ed I am confident that NDD will ensure that all credits are paid. We will be getting supply for another month or two.
Garry.
Don’t know what deal you are on but the World Cup Mags cannot be returned early by us. We approached Fairfax and were told that no early returns possible on this one.
And yes I check our supplies & adjust at least once a week.
Seems to be a lot of inconsistencies in this area.
Myself and a few other publishers are getting together to put into place an alternative to the G & Gs of this world. Wont be up and running in a day but we have started moving on it and expect it to be up and running in the not too distant future.
If anyone is interested in working with us on this, both publishers and newsagents please drop me an email.
The time is right for a third player in the market and from all the research I have done its not that hard to start distributing magazines 🙂
Cheers
Ned
The biggest hurdle may be implementing the supply management system. Having xchangeit integration, a retailer web portal and powerful distribution management software will not only take time to set up but but will be incredibly costly when starting from scratch.
Woops, that last message should read …
Ned,
Were just loosing our third player in mag distribution. I would be wary of creating another distributor unless it operated in a very different structure (like a zero profit organisation). I would be confident that newsagents wouln’t dismiss the opportunity to embrace a distributor that runs with a new commercial structure and a new retailer-cooperative attiture to distribution.
The biggest hurdle may be implementing the supply management system. Having xchangeit integration, a retailer web portal and powerful distribution management software will not only take time to set up but but will be incredibly costly when starting from scratch.
As a niche monthly magazine publisher, I am sick of the control distributors have over our future and our business. We have no control over supply numbers for newsagents, find many stores with huge over supply resulting in early returns and loss of sales and lots of stores undersupplied and selling out of the mag. We get paid months and months after sales and yet stores have to pay for stock. It’s a monopoly. There is also no proof available of true sales figures in this country it is only an honesty system. There needs to be an alternative. And much more fair and careful allocation of stock. Wastage is enormous – up to 40% of print run.