I have been looking at agency line business for newsagents – lottery tickets, phone recharge, transport tickets, event tickets. Transport are the least efficient from what I can see. By least efficient, I mean in terms of other items purchased with them.
85% of transport ticket sales are the tickets and nothing else.
While it could be argued that this is the fault of newsagents, it could also be argued that the nature of the product is that it does ot lend itself to efficiency with other items being purchased at the same time.
It could also be argued that selling a ticket positions you to get the magazine, newspaper or card sale when that shopper wants any of those. I’d disagree with this based on my observations of transport ticket shoppers. They want the ticket and are unlikely to think of you for anything other than the ticket.
There is a time management conflict newsagents need to consider as they evolve their businesses. Card, gift, toy and plush shoppers need more shop floor help than a bus or train ticket customer. One is about retail while the other is about being a counter based shop keeper.
Attracting a shopper because of your gift range is more likely to result in them remembering you than attracting someone to buy a transport ticket. It all comes down to how much you focus on and control your own future.
The question is whether newsagents are prepared to ditch tickets. This is a question about margin focused retail versus slim margin public service operation. It’s about focusing on what you bring to the business versus slim margin volume.
Successive Liberal and Labor state governments have shafted small business newsagents by cutting margin while allowing other contractors to reap huge financial rewards with new ticketing systems. So much for small business policy. Delivering fair compensation for offering what is a public service could have reinforced their small business credentials. What they have done is the opposite.
But back to the data. Currently, transport tickets are the least efficient products / services sold by newsagents.
My personal view is that volume for between 2% and 4% margin is not acceptable. I do not sell tickets in two of my three newsagencies.
The agency business is an interesting one along with those persons/companies offering low margin product “but the extra traffic generated will enable you to increase sales of your other products.” The trouble is you ens up with lots of low margin products and you end up running but in the same spot. However the other side is no stock holding and instant cash and when somebody does decide3 they need a gift or a card they will drop in to purchase. So those extra sales are an unknown because it does not necessarily increase the basket at that sale but nay in the future. I have heard many people talk about the Post Office and how labour intensive for a small margin it can be. But if you are able to pay an employees wages and still have some leftover perhaps it is worthwhile particularly as that employee may also be used elsewhere in the business. I have lotteries and newspapers, magazines and cards and phone cards and think that is enough foot traffic but want the better margins of books and gifts. But I suspect that everyone has difeferent situations. 4% or less i would not have a bar of. Ultimately if enough said no they would have to increasse their margin to get the coverage. I also say no to tax tables all the other freebies we distribute for the govt that we used to do when we were exclusive newsagents.
Wally you’re in WA and a bit insulated from the level of decline in margin for some agency lines on the eastern seaboard.
Here, newsagent associations have made and make noise about transport tickets yet they have failed to deliver and in the case of VANA they still promote them.
I think we, each of us, have to make a fundamental decision – low margin high traffic or high margin lower traffic. We have to choose based on our own circumstances.
For me, it’s higher margin lower traffic. This is a model over which I have more control today and for the long term.
Mark,
A few years ago I made the same observation about agency products. I removed Western Union, Enterainment tickets and stamps from my stores. This was because it was a nightmare balancing resources i.e staffing or in the case of stamps 95% were sold solo.
I am in the same mind with telco products. At 4% margin its only worth while because of ezipass and if you don’t have a need to look for a void which is very costly in time.
On transport tickets I’d disagree. Ours are sold on consignment, so there is not cost of goods involved, they take up little sace and are the best profit / metre item I have with over 100 stock turns.
For me I cringe eveytime I get a customer asking my staff for phone credit. Usely their english is poor, they want to pay on a card and they don’t exactly know what they want or even how to load their credit, yet get it wrong and it’s costly in time for liitle reward.
That’s why I can’t see the point with N parcel or a new bill payment scheme.
At least transport tickets bring in the youth.
On Manager Today Magazine (Issue 91, June 2012 Taiwan), there are case studies on 6000 Taiwan 7-11 stores.
For the transport tickets, 7-11 stores invest in self served kiosk Ibon. Ibon can retail event tickets, high-speed train tickets, airline tickets, and local transport tickets, and many other services.
7-11 stores overcome many difficulties, in 2001 they still use fax and phone to exchange ticket information, in 2006, Ibon reduces the transaction cost, and pressure of front-line staff. That is win-win for customers and retailer, ticket venders.
7-11 stores in Australia use self-service kiosk for money transfer service.
7-11 stores also create better working procedures for front-line operators.
For example, in dry cleaning service, they let customer fill the form and receive the stock in bag. Front-line staff does not required to check the qty and conditional of the cloths, and the dry cleaning factory staff will do the checking.
That is the power of logistic and technology support to make stores do more service with less front-line works.