Long before the aborted trial of T2020 in Queensland, one distribution newsagent group was ahead when it came to consolidation. Through T2020 they continued and right now they handle the daily delivery of more than 100,000 newspapers. You read it right – 100,000+ newspapers, every day.
There is a model here addressing management and operational challenges real time, embracing learnings that newsagents and publishers could benefit from.
While News works on the next incarnation of T2020, I hope they look at this model which has been working and growing for years. To me it seems to address their needs – if only they’d let it.
Wow, makes my business look like a hobby!
How many newsagents are involved in this group? Must be an extremely well organised business.
Love reading this, reminds me that newspapers are still going to be around for a good while longer.
I do believe News (and Fairfax more recently) are genuinely interested in newsagents running good distribution models without their interference, I think the problem is there are a lot of newsagents who don’t want home delivery or don’t rate it as an important part of their business, and if the publishers don’t do something about it they will lose circulation in some areas.
We need the newsagents who want and enjoy home delivery to control it and those who don’t to hand it over to another agent.
The only thing News and Fairfax are interested in is paying newsagents as little as possible for deliveries. They use and abuse us and have done so for years. We have to understand that they don’t care if newsagent are being shafted, they won’t fix things for you, you have to fix it yourself, like this group has done. 100,00+ a day would put you in a good position to negotiate on fees.
Jenny, many areas, especially semi-rural “suburbs” are not financially viable, even if someone wanted to do it. Newspaper publishers are not prepared to pay the amount it would take to make these areas profitable.
Mark, can you tell us who, and where this group is based?
Loved to find out more about this group and learn about their operation.
This could well be the guys in (Southwest Melbourne, Geelong and Ballarat?). There was at first one raggedy arsed group and then another 2 groups joined them. Altogether 30 odd territories. We heard they had a lot of problems in the first few weeks, but they’re steaming along now. It was a pretty ballsy move for all of them. The publishers weren’t officially helpful (except for some individual employees), and there wasn’t a ready made computer system that could handle the sudden upswing in volume. The key differentiator for them versus the Brisbane T2020 disaster, is that they all wanted to do it. Completely voluntary. And now they’re reaping the benfits. It’s been a massive learning curve for all involved and every week is better than the last.
This is how News Ltd should have handled T2020. The SEQ pilot project was a flawed concept. News should have allowed and supported volunteer groups to merge and then referred to them as benchmarks to encourage others. As a consequence of the false start the industry is once again in chaos and confusion about the future. It would not suprise us at all if there isn’t a class action brewing somewhere. Indeed if there isn’t there should be.
This actually started as Titan years ago. It’s 100% their model, their IP. Publishers could learn a lot.
I heard there were customer complaints as long as your arm from day one, and that they continue to this day. What can you tell us about their operation Mark that makes them the benchmark for the industry?
Ted a sickness in our channel is gossip / rumour.
Like any merging of businesses there were some challenges. But things are good today.
To me, what makes them the benchmark is the scale they have achieved and that this has been done bringing newsagents on the journey.
Interesting looking at what they charge for home delivery, they set their own fee, which is one of the factors that makes home delivery profitable. Obviously doesn’t bother the publishers that they do this.
Nope Jenny.
Jenny, the delivery fee’s are cumulative and are inline with the minimum as set by the publisher.
What I don’t understand is with the revenue model unchanged, how is it beneficial for a large group to consolidate voluntarily. I just don’t see the savings in efficiency can adequately cover the extra costs in new Warehouse, extra KM’s, etc.
Other than the intangible benefits of not having to think and worry about early distribution, How can Titan’s shareholders be reaping it in?
Gary, did I miss something with the fees.Is 50 c for Age and 30c for Herald Sun inline with publisher fees? I didn’t realise it was that high.
When consolidating runs the extra profit comes from supply to retail only newsagents and other sub agents in those areas, as well as saving on labour and motor vehicles when small runs are merged.
Like in retail, there are benefits from spreading management costs across more transactions.
We have just moved in with our neighbouring newsagent. We both run our runs as cmpletely separate businesses. The savings are about $40,000 across the 2 businesses.
We are considering merging our day-to-day operations but still keeping ownership of our businesses separate. This would increase the savings again by maybe another $50,000 across the 2 businesses – think of the administration, early morning operations, etc. In addition, the owners of both businesses would be able to dramatically cut back the number of hours they work.
If we then had another newsagent come in, then the savings across 3 businesses would be far greater again.
This is a variation to the model Titan has used, but achieves a similar outcome.
Jenny, The Sun, and Advertiser delivery fee’s are correct and at $1.26 and $1.03/week, still very LOW given the rising costs of everything. Age must be a mistake as at $4.07 per week it’s double the publisher’s guideline of $1.95 and given it’s the high cover price, should be the last paper to justify the hike.
Dean, can I ask where the $40,000 savings are coming from?
With current individual operations of 3-4k papers a day running very lean and requiring no managers or owner oversight each morning. I just don’t see any appeal or benefits in a large scale consolidation.
Gary,
We are delivery only as is our neighbour we moved in with.
The $40k is in rent, electricity, etc as we now have 1 warehouse between us instead of 2.
I think we can save conservatively $50k between us, and probably much more, by merging our businesses operationally in savings on staff wages and other expenses. That is $90k+ already. Imagine how much more we can save across 3 or more businesses if other neighbouring distribution only agents come in with us, we have a few near us.
However I do agree that the appeal is not there in all cases. If the next round is too far away, then the extra wages and petrol outway any cost savings. For example I would look at buying or doing a deal with my neighbour, but not someone 50km away.
If Titan Distribution are charging such fees to distribute Fairfax Media newspapers, surely any distributor could also charge the exact same fee for delivery of The Age or similar Fairfax products throughout Australia?
A precedent has been set.
Amanda I think you’re making it up. No one has said any such thing here.
Sorry Mark, you’ve confused me as to what Amanda is making up. The fees? Have a look on their website.
Okay I had not looked at the website. In terms of home deliveries. the fees they share and what publishers permit.
Mark, off topic but perhaps you are watching this site right now:
Check out the Fin review Monday 29 April if you can – article beginning on front page ‘Handbury takes on Australia Post”, seems he wants to use we newsagents for yet another parcel delivery point and kiosk operation ( does he know about parcel point and N-Parcel??)
Interesting read for us all.
Yes h, I’ll have a comment about it tomorrow. Interesting that they get front page coverage.
Anyone going into parcels now has missed the boat by 5 years imho
Yes. I’ve now read the fill article (on my iPad). Some very poor reporting there.
Folks, I am one of the founding members of this so called “raggerdy arsed group”. Over 3 years of bloody hard work.. all of our own making… no assistance from any association or Publisher ( apart from News Ltd that has given us one concession.. nothing to do with price). We merged because it makes sense for our future… do nothing…get nothing.
The future is not in our hands, it is in the hands of News Ltd to decide if they wish to move forward with world best practice. We get no special pricing, no advantages on our massive business than that of the corner Newsagent. History will judge us in 3 to 5 years time if we made the correct call.. do nothing.. gain nothing…
A Publisher called me a few months into our consolidation to state that although we only delivered 50% of an area we were responsible for 65% of the issues. I took that as a compliment… we had effected 100% of the CHANGE! My reply “When the other 50% merge lets compare notes to see who pulled it off the best”.
The easiest thing to do in business is do nothing…we’re not into easy!
Well done Ken Wilson and friends. The top end of town will reap the rewards of not looking after their foundations, more power to you guys for taking charge.
Mark, as Jenny said, read the Titan Website….I have not made anything up, I have merely gone off pricing from this company which appears to be operating out of Victoria.
The Titan Distribution website i looked at states fees for Home Delivery of the Age:
$0.51 mon-fri
$0.84 Saturday
$0.68 Sunday
I assume this is the model you are referring to as you called it Titan.
Those fees are well and trully above. Perhaps Ken Wilson can confirm if these fees being charged are correct?
Pretty sure Gary and Jenny read things the exact same way i did so i do not understand what I have made up?
Mark you cannot seem to leave any comment on the FInancial rieview story ?
It says COMMENTS OFF
Im confused about the delivery fee confusion. As I read it, if you get the paper delivered 7 days from Titan, it costs $1.93, .51 +.84 +.68.
Fixed Shaun – there was a WordPress (blogging platform) problem.
James I read it as 5 x 51c + 84c + 68c for a 7 day delivery.
Straight from Allied Distribution website which is found googling Titan Distribution. Covering East Geelong & Bellarine Peninsula aswell as Greater Ballarat regions. Delivery fees for the Age are:
Mon $0.51
Tue $0.51
Wed $0.51
Thur $0.51
Fri $0.51
Sat $0.84
Sun $0.68
That adds up to $4.07, not $1.93. Go to the website and do the math!
There is no mention of a discount on delivery fees for multiple day delivery on the Age, where as the website clearly has a discounted structure for the Herald Sun based on how many days the newspaper is delivered.
Could just be a typo??? That is why i suggested Ken Wilson either deny or confirm those prices. ….
Folks.. you caught us out! The table for The Age is a typo and unfortunately we are not charging these fees for home delivery. We are charging the fees as laid down by the Publisher.
What i find amusing is the fact that when they where playing with the T2020 thing they said put in a tender for what you think it will cost because they already know that the cents we charge at the moment is not viable but yet the Titan group are doing 100000 plus a day and yet have no barganing power with the big guys .
Ken has your group ever put it on the table with the paper companys about an increase in paper deliverys or are you happy with the way it is at the moment
Thanks Ken. Can you tell me what the delivery fees are for The Age, am curious how they compare to fees for SMH in NSW.
Jenny,
For The Age in Melbourne you are allowed to charge a non-subscriber the cost of the paper plus delivery fee $0.27 per day on a weekday and $0.30 per day on a weekend.
For a subscriber The Age credits commission of $0.51 per day on a weekday, $0.84 on a Saturday and $0.68 on a Sunday.
Thanks Dean. It’s quite disgusting that it costs more for a chocolate bar than a weeks home delivery fee. And the really stupid thing about this is that newsagents know that their customers are willing to pay more.
Jenny,
If you are thinking of revising your delivery fee, charge what you think is a resonable price for delivery afterall it is your business not Fairfax’s or News Ltd. We revised ours 12 months ago and only had one complaint, but when i explained why the price increase the customer agreed. If customers do not want to pay a resonable price for delivery ask them how much does it cost to drive to your business to pick up a paper each day.
Shaun S @ 30. I bet if they threatened to walk away and hand back the runs they would have !
Shauns… the current total renumeration for the Distribution business (if you have the correct mix of subs/ directs vs. home delivery) is not far off. It’s just skewed the wrong way where all the costs are on the home delivery side and the renumeration is incorrect. I am from a business background that it is typical for the customer and supplier to sit around a table and thrash out a plan and a cost structure that is fair and reasonable. I am not into threatening my suppliers or having a strained relationship… I like performing to the best of our ability and being paid accordingly for the results. To date.. all Publishers have been unable to change their method of doing business.. not sure wether it is ingrained, historic or in fact correct or not correct because every Publisher and Magazine Distributor acts in the same manner.
I look forward to a day around the table and have in fact offered many times to do so…while I wait I’ll keep striving to do our best as it is the business we run and believe in.. there is a future on both sides…the supplier and the customer. Gee, it would be great if we could do it together!
Ken,
Given that most if not all of the recently joined newsagents from Geelong and Ballarat already have a retail footprint and therefore the savings in distribution consolidation are somewhat limited to early morning labor only, big expenses like rent and retail staff will still remain the same for those newsagents.
And as you say the publishers aren’t coming to the party with increased remuneration despite their cost savings of having less drops.
Can you say those newsagents who have joined Titan are now better off financially compared to before operating on an individual basis?
Obviously not everyone is going to be the same, but what is the overall consensus?
Given what you know today (suspended T2020), would you still have expanded into Geelong and Ballarat? I imagine it would’ve required a substantial investment for setup costs alone. Quite a bold move in such uncertain times.
Gary, I don’t want to get into the roll out of what Titan achieved as it has taken us 4 years and hundreds of thousands of dollars to pull it together. I receive enquiries weekly “please send me an email of how to pull it off”.. I wish it had of been that easy.
What I will say is this: Breaking out distribution is not about breaking out distribution as a sole purpose.
When I bought my Newsagency 5 years ago it took me 5 minutes to work out that what occurred at 5:00am in the morning had NOTHING to do with the focus that should occur running a retail store. Distribution degrades Retail as only the bad issues come back to your day retail staff.
Are our stakeholders better off? Some yes, some the same and some no. The larger the retail business you have the better off you are, if you are a small retail business and the distribution was running from the front footpath under the awning.. your probably worse off.
So why have we done it?
Time will tell, if the industry stays as it is today then we have invested a lot of time and money for the purpose of splitting the business into two areas.. Distribution and Retail. We as a group are working as hard on restructuring the Retail side of the business as we are on Distribution.
If the industry consolidates and the Newsagent who was small and operating from under the awning had their distribution taken away from them and at the same time IF our group was awarded a contract then thats a really smart move from that owner. He may have gone backwards to go forwards but he still has something at the end of it.
The biggest issue today is that the Publishers actions do not match their words. In fact our group are late in the consolidation process, many have done it before us in Victoria. Every one who has done it prior to us started with great enthusiasm and got worn down by the waiting game.
Am I content today to be a part owner in a large business as opposed to a single territory operator… my word… all of my partners you’d need to ask them but I would suggest the reply to be positive.
We have completed what we set out to achieve, I have 9 Newsagents in the wings wanting to join the ADA Group and the answer is no. There is nothing more for us to prove other than we work extremely hard every day to improve our business and satisfaction to the Publishers and our/their customers.
I’m not into giving advice to strangers therefore this is only my current opinion: To anyone contemplating consolidation… I wouldn’t do a thing until the Publishers and Magazine Distributors are ready.
All of the solutions are available today…. get round the table and they would be sorted out very quickly.
We’re happy with our lot as it stands today, at times we have gone through hell to get to where we are today but it’s all behind us now.
Hi have a question regarding handing your run in ,do you have to hand in the list of customer names not the subscription ones but the ones you worked hard to get and want to try and convert to shop customers .who owns the rights to these customers .Any info would be greatly appreciated
Bob,
When I handed my run back, I kept the magazine subagents but yes, I handed over my run list
Bob I’d be transparent with these customers and switch them before making any move.
I handed my run back this yeah, should have done it years ago. News ltd didn’t want the home deliveries either, so they just stopped. I kept my subbies for mags, and news drops the papers off to the subbies, pretty much been a shambles ever since lol. News wanted me to do the subbies as a contractor, but we’re not prepared to pay a price that would generate a profit for me, so I declined. They’re such tight asses, I bet this is costing them more.
Bob,
As Rick says, you will find your customers come to you anyway as the replacement service on offer is awful.
To update my original (April 2013) post, the group to which I was referring would not today warrant the tag of success.
Bob when you hand your run back you need to give a copies of daily run and all customer details to newsagent who is taking it over so that there is a smooth transition for home delivery customers.
If a customer enjoys their paper home delivered they will still want it home delivered, I don’t think they really care who they get it from as long it’s there in the morning.
No one owns customers, customers choose how they get their paper (delivered or picked up) and where they shop.
Mark,
Are you able to, very broadly, elaborate or offer an opinion on the reasons you now say the group does not warrant the tag of success?
Dennis, departures from the grip and friction between some newsagents who joined and the self-appointed leader. My view is that many of the problems step from poor leadership and inadequate management controls.