In the 2015 financial year, online revenue accounted for 12.5% of Tabcorp (Tatts – The Lott) lottery revenue. In 2016 the percentage was 13.5%. In 2017 it was 14.5%.
In the financial year to June 30, 2018, according to the annual report just released by Tabcorp. This, on page 12:
Lotteries has over 2.9 million registered digital customers and digital accounted for 17.7% of all lottery sales.
That is a whopping 22% increase on the previous year. What for three years was a steady increase in the percentage of lottery revenue coming from online, the 2017/18 year saw a spike, a significant spike.
While I have no evidence, I do wonder if this is the Lottoland effect. Lottoland has spent a fortune on advertising promoting online purchase of lottery products. The bulk of that spend has been in the 2017/18 financial year. I suspect The Lott has benefited from that Lottoland advertising.
Newsagents need to factor in continues migration of over the counter lottery purchases to online. If I was a Tabcorp shareholder I would want to see this. If I was a regular lottery punter, online is what I would use as it is time efficient, accurate and easier. It fits with the migration of other in-person transactions to my phone and / or computer.
The evidence is the evidence. There is no refuting it. The challenges are: to be informed and to factor this evidence into your business planning.
For what its worth, I think the most critical point here is to be actively working on new traffic generation. This is done through offering products that will appeal outside your usual pool of customers, products people will travel to purchase, products people will purchase again and again and products that you actively and primarily promote outside your business.
Are reality is newsagents should have been working on new traffic opportunities for years as these things the time to develop and mature. There are missteps to learn from and small successes to nurture.
While I understand some will be angry at the growth on online reported for The Lott, that achieves nothing. It is a business putting its shareholders first. tats is wha you have to doo. that is why you have to be working on opportunities outside what has been usual for you – to chase a better than usual result.
Mark, Has the overall size of the “pie” increased or is it the increase wihin the current sales “pie” ?
If te pie oveall has increased then are the sales comensurate with that growth?
Graeme I believe retail sales (in NSW anyway) were down about 0.4% for FY18 compared to FY17
Interesting that Mark seems to only report the negative trends affecting our lotto business. Surprisingly there are positives.Tatts/TABCORP is constantly restructuring the lotto game mix to increase jackpots, evidence : the recent $100 mil jackpot in Powerball which followed a $50 mil jackpot. Not to mention the $70 mil jackpot in OZ. While online lotto sales are increasing IMO Tatts are not “hanging us out to dry” as suggested in Marks commentary.
Further to this ALNA/tatts are in putting the final touches to a commission increase (which will include a slice of the online sales). My info says that this is to be announced in Sept/Oct to be implemented in Q1 of next year. It should be fairly substantial.
While I appreciate Marks reporting, the sceptic in me thinks he needs the negative lotto sentiment in the channel to promote his business model.
FYI my lotto commission is up 45% YOY. While I appreciate this is due to a one off lotto event IMO we can expect this to be more frequent due to the game restructuring.
Looking forward to good time ahead for lotto.
Basically the call for trading today is that you have to do both. That is compete with online for your on line customer and compete with the retail consumer for the same reasons.
After a while it will sort you out. Either the on line will out grow your retail space and if this happens you stock more retail shopper goods or cut down on the space when the lease is due. This means you need to know your performers per sq. metre.
If online grows then you have to decide the balance of profit per the overheads etc. Most of the “big” retailers are doing just that JB Hi Fi -Harvey Norman etc. and managing the transition. Whatever that means to them.
We have to do the same or go under as a lot of newsagents are doing.
Mark I believe is looking at conversion to total retail and not services such as lotto. LPO. Home delivery newspapers. These are all things that he has removed form his own business model with great success and although it is not for every one there are a lot more out there who could join him in his success.
Gary I have reported plenty of positives about lotteries here.
I think it is premature and inappropriate to comment here about what ALNA is working on. I will leave the timing of any announcement to them as it is n to the announcement of anyone else to make. FYI I met with their CEO most recently Thursday last week.
Not premature or inappropriate Mark. FYI been talking with Qld ALNA reps for some time on the probable outcome of these negotiations. Question for you Mark, are you a member of ALNA. If yes, then good. If no, then why are you meeting with our CEO?
Hey Gary take of your rose coloured glasses.
No, Gary I am not.
Well Mark I take exception that you, as a non member, telling me, as a member, what is appropriate.
Remind me Mark about the positives that you have reported on our lotteries. My memory is fuzzied by my rose coloured glasses.
Gary, what ALNA hope to achieve and what is actually achieved by ALNA are two completely seperate things and could be world’s apart.
Tell me more Amanda. What do you think ALNA is trying to achieve? Why are they “two completely separate things”? What are these “things” that you are talking about?
Final question is the one I posed to Fletch, are you a member of ALNA Amanda?
I truly hope you are right Gary. Any increase in commission would be an awesome result. I cant see how sharing commission on on line sales would be possible though – if someone buys a ticket online does the commission go to the nearest agent at the time? The agent closest to their home address? distributed evenly to every agent from a pool? Would be awesome though if it happened.
Gary,
you are 100% correct
your memory is fuzzied by your rose coloured glasses.
perhaps you should remove them and ‘see the light’
Spot on gary. Tatts comms in my zone are up 40%. The swing would be national. Whilst its early in the year i believe new powerball has structurally changed the game for agents. It has also boosted my general sales. Good times thru my rose coloired glasses. If you don’t have tatts you are handicapped.
Gary, in relation to: Well Mark I take exception that you, as a non member, telling me, as a member, what is appropriate. I have not done this.
In relation to: Remind me Mark about the positives that you have reported on our lotteries. My memory is fuzzied by my rose coloured glasses. go look for yourself. The evidence is here on this blog if you care to search.
Everyone is entitled to their opinion here on any topic. Like Jim who says: If you don’t have tatts you are handicapped. I think that is a ridiculous statement.
Folks, if your lottery commission is up, that is great. The annual report demonstrates in revenue and percentage of online results that a migration is occurring from over the counter to online. That is the evidence. Whether you choose to see that way is up to you. Let’s check in next year, the year after…
In the meantime, there is no downside to my regular exhortation here that it is mission critical for newsagents to work on attracting new traffic, no downside whatsoever. However, it does require you to concentrate on being a retailer over being an agent.
Mark if you would prefer to pass up $100-$350k commission and associated traffic per year i think you are the ridiculous person here. Your call to agents to ditch tatts is misleading and reckless for someone who holds themselves to be a captain of our industry.
Jim I have never called on newsagents to ditch Tatts. Stop making stuff up. I have never said I am a captain of the industry and don’t see myself that way You should not see me that way either.
I am happy in my businesses not having lottery products.