A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Author: Mark Fletcher

Bill Express in The Age again today

Mark Hawthorne nearly brings together the current situation regarding Bill Express in a good report The Age today. His report includes a reference to the meeting we held in Melbourne Thursday last week where attendees representing 70 newsagencies voted to add their support to the class action already on foot. At least 100 more newsagents who could not make the meeting have agreed to support this class action. There is a meeting of newsagents in Queensland to discuss the where they lodge their support.

Outside of the newsagent class action, anyone looking at the Bill Express business needs to carefully research the current revenues from all parts of the business.

  • My information is that at least 30% of mobile recharge business is now being conducted by providers other than the Bill Express Dialtime operation.  While margin on mobile recharge is slim for the company, every retail location lost is a significant bottom line hit when annualised.
  • Liabilities are growing at a concerning rate.  Take Bill payment revenues – newsagents had their commission of $1.00 unilaterally cut in February by 30%.  They were promised that this 30% would be spent on advertising.  So far, we have not seen any spend on advertising.  Five months on and the liability is significant.

Given the reports of Bill Express Director Ian Christiansen flying our to the United Arab Emirates I wonder is this is to meet with parties associated with an existing shareholder in the business and licencee of the Bill Express “technology” for that region. I’d be surprised as being caught once ought to be enough.

The coverage by The Age these past two days is excellent.  They are drawing public attention to a problem which has been concerning newsagents for years.

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Bill Express

Kleins and the brand makeover

Newsagents ought to read page 58 of the Australian Financial Review today.  The article by James Stewart is relevant to the retail newsagency offer.  This topic is close to my heart as it relates to the content of my Newsagency of the Future workshop I presented at the recent ANF Convention.  The need for reinvention of our retail offer is urgent and ought to be pursued by us individually and collectively.  Look at what happened to Kleins.

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Newsagency challenges

Educating customers

ilot_scren.JPGIntralot has started its TV campaign based around the theme of the luck factory. In-store, they are using the LCD screens to educate customers about their new games they launch July 1. I am pleased to see such good use of the LCD screen – they add to the theatre of retail. All of this activity is exciting and will refresh interest in lotteries as a result

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Lotteries

Healthy Food promotion

healthy_food.JPGHealthy Food magazine is our counter offer this week – despite receiving no marketing collateral.

With sample bag packed with more than $10 worth of products, promoting Healthy Food at the counter makes sense. I’d expect us to sell out by the end of the week.

I can’t stress enough the economic value to our business of this small counter space allocation for promoting magazines with good giveaways.

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magazines

Filling the AWW space

aww_sell_out.JPGWhile selling out of the Australian Women’s Weekly is welcome, we have scrambled to find appropriate titles to fill the space.  AWW is usually in the column next to Woman’s Day.  We have called on Oprah, Woman & Home, SHE, Good Housekeeping and Women’s Health to do the honours – we feel they best suit the demographic.

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magazines

Cut and run by Brumby Government

fh_counter_june08.JPGThe Victorian State Government continues its cut and run strategy on its changes to over the counter lottery products. Their lack of genuine engagement in navigating the resulting changes is disappointing. I have written to the Minister for Gaming twice about unreasonable demands by Tattersalls regarding space allocation. The Minister has ignored my letters yet he has sent another form letter to all lottery outlets pointing us to the office of the Small Business Commissioner.  I have written again this morning.

A better approach would be to demand Tattersalls stop sending threatening letters to its retail network, require a moratorium of, say, six months and establish a commercial approach to resolving counter and other in-store space allocation issues.

If my moratorium approach is adopted, I could promote and sell Intralot and Tattersalls products as I choose – see the photo – and then be judged by resulting sales. If my Tattersalls sales are down compared to other outlets then I’d need to to what Tattersalls says. If, on the other hand, they are on par or up, I am left alone to run my business.

I have written to the Minister again this morning as well as Tattersalls and then SBC. With seven days to go and a legal threat from Tattersalls someone needs to step in and help my and others in my situation.

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Lotteries

Bill Express further exposed

The Sydney Morning Herald has a good report on the Bill Express situation this morning. The Age has a smaller report. The reports miss these details:

  • Bill Express unilaterally changed contract terms for its 3,500 small business newsagents, resulting in most facing an additional $495 (+GST) a month in costs to offer the service.
  • At least one company housing staff which provide IT services to Bill Express has gone into liquidation and another started in its place with less then half the staff. It has been reported that the staff not taken up by the phoenix business were not paid redundancy payments.
  • Newsagents have commenced class action against the company having notified them ten days ago that they are to be a respondent in a planned Federal Court action.
  • The Bill Express liability to newsagents is growing at the rate of more than $1 million a month.
  • The mobile phone recharge component of the Bill Express network is a day to day proposition with out of socks occurring every couple of days either network-wide or significant pockets.
  • The data room referred to in both reports was established by the business seven weeks ago.
  • The ANZ, somewhat cynically I suggest, doubled its eftpos break fees shortly after Bill Express got into trouble -my speculation is that they wanted to stop newsagents migrating to other eftpos providers.
  • I estimate that one third of Bill Express phone recharge revenue has moved elsewhere – ePay, Comm Bank Xpos, Suncorp, St George and our own eziPass.
  • The national newsagent association, the ANF, stood by and let Bill Express get to this point because it contracted away its rights to act as an association for its members in return for around $200,000 a year in fees from Bill Express.
  • Bill Express did a deal with Swish group over the advertising screens in newsagencies – after it took away from newsagents the”guaranteed” funding which underscored the economic value of the screens to newsagents.

Now that the Bill Express story has hit mainstream media I expect to see quick action around the future of the business.

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Bill Express

Marketing 101

I am often asked by newsagents where they can access good training in marketing without signing up for a long course. While there is no fast way to develop good marketing skills, I have found an online marketing course, Marketing 101, at Smallbizu which looks good. It’s free and from what I can see provides a good grounding in marketing principles. I especially like the structured approach it takes to preparing a marketing plan.

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marketing

Free digital magazines

Texterity has announced the launch of a new magazine service making free digital editions of magazines available for subscribers of the companion print product.  This is an interesting move on several fronts: it sets FREE as the price point for digital editions of magazines, it subtly invites print consumers to migrate online and helps find new online only subscribers.  The cloverleaf site (that’s the name of the service) lists a bunch of magazines already participating.

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magazines

Traffic from a story in The Age

age_june21.JPGOur Sophie Randall shops were featured yesterday in the Domain section of The Age, in a report about the popular Cow Parade range.  The first we knew about the coverage was when customers visited our Melbourne Central location asking about our cows.  Their seeking us out as a result of the story is  reminder of the value of editorial coverage in newspapers.  We are thankful to Jasnor, our supplier of the Cow Parade range for pitching the story to The Age.

At the local newspaper level, newsagents have many opportunities to provide story ideas to editors: events in store, unique products, community support.   All it takes is a phone call or a good press release.

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marketing

Tattersalls claims Quick Pick

Tattersalls has claimed that it owns the term Quick Pick meaning that Intralot has had to ditch tonnes of printed material and come up with a new name.  While we will work hard to pitch their Lucky Pick to customers, customers will call it what they will.  If it catches on, customers wanting a Tattersalls product could ask for a lucky pick, now that would make me smile.

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Lotteries

Swish group and newsagents

be_screen2.JPGI bet newsagents have not heard of the Swish group.  This public company, SWG on the ASX, claims newsagencies as part of their retail signage network – see their May 2008 shareholder update.  Bill Express announced an agreement with Swish on April 28, giving Swish control of the advertising screens in newsagencies.  In February, Bill Express removed the $210 a month rebate which it had reviously guaranteed to pay newsagents in return for having the screen in their stores.

I wonder if Swish needs to make an announcement to the ASX about the Bill Express situation. I hear that many screens in newsagencies do not work and that where they do, many newsagents have them turned off because of their issues with Bill Express.   I do not plan to turn my screens on until Bill Express addresses my concerns over their breach of agreement relating to the “guaranteed” $210 a month they would pay per store.  Not that it matters in one of my newsagencies as the screen has not worked for months.

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Bill Express

The Bill Express liability

I estimate that newsagents currently ‘owe’ somewhere between $15 million and $20 million to Technology Business International for the equipment used in-store for the Bill Express Dialtime bill payment / phone recharge service.

Most newsagents entered into their lease agreements for this equipment expecting that they would never have to pay the lease costs thanks to rebates offered by the company.

The removal of the rebates by the company in February left newsagents out of pocket for the fees for the first time. hence the interest in the network wide ‘liability’.

I wonder how this all plays out when the future of the company is being considered. While Bill Express probably unlocked the total value of the lease early on, I would not be surprised if there was some liability from the company to the financier in the event of a mass newsagent revolt or some other issue around the monies being paid.

$15 million to $20 million is an amount newsagents cannot afford to lose. This is why I support Federal Court action to challenge the actions of the company and others which has left newsagents in this precarious position.

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Bill Express

Promoting the Who Pantene offer

who_pantene.JPGWe are promoting the Pantene giveaway with Who this week. The offer is excellent but the point of sale material light on so we created our own to make for (we hope) a better display. We would have displayed this at the counter but that space is supporting the In Style giveaway.Magazine giveaways are important in driving sales. The key is to not become too dependent as has happened in the UK with Sunday newspapers. This Who offer fits their demographic and will be a great success.

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magazines

The dying CD

Death knell sounds for CDs published by The Globe and Mail in Canada is a story worth reading.  The opening two paragraphs offer chilling reading for any music retailer.

The compact disc has less than three years left in its reign atop the music industry in Canada, with new data on music sales indicating the download will officially be king by 2011.

Physical music distribution, defined largely by the sale of compact discs, is eroding faster than expected, while online music is growing quickly, says a report published Wednesday by PriceWaterhouseCoopers LLP.

This is a story not just about music.  It is about smart always-on devices, the desire for specific content rather than aggregated content and the elimination of old world supply chains.

While it sounds like doom and gloom, it is as much about opportunity.  It relates to newsagents as much as music retailers.

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Media disruption

Good and bad bagged magazines

bagged_mags.JPGSome publishers handle bagged magazines better than others as the photo shows.

The folks at Fast Car have included their masthead on the bag whereas the folks at APC have hidden the masthead and made picking the title more challenging.

Fast Car in this packaging has a quality feel. Also, the information on the bag makes it less likely to be ripped open. APC feels cheap. The lack of detail on the bag makes it more likely to be ripped open.

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magazines

Last Wednesday Tattslotto

last_wednesday.JPGAt Forest Hill we are getting behind the last Wednesday Tattslotto draw this coming Wednesday, June 25. We are promoting that there can be no jackpot, the prize pool must go. The focus of our locally produced marketing is our house syndicates which we have created just for the occasion. This, coupled with Tattersalls provided material will drive good sales.

Embracing the final draw as we have allows us to talk about the changes coming July 1 when Intralot games start.

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Lotteries

Investing in the Aussie Phonecard

For transparency, I post below a copy of an announcement today about our new shareholding in Access International, the company behind the Aussie Phonecard.  I have been impressed with Aussie for some time – the 30% commission it pays newsagents, the quality of call on the cards and the real value to consumers.  It’s not often newsagents can make 30% GP from a product which does not require any stock investment.

Access International Group, the company behind the popular Aussie Phonecard, has completed a share placement to parties associated with retail software company Tower Systems.

As a result of the share placement, reflecting 25% of paid up capital, Tower Systems owner Mark Fletcher has joined the Board of Access International Group Pty Ltd.

The funds and other resources brought in through the share placement will be used by Access to bring additional phonecard products to market and to expand the retail network selling the company’s products.

“The technical and organisational synergy between Access and Tower is excellent on many fronts” commented Access Managing Director Steve Mclean.  “We will quickly leverage this to bring new offers to our retail partners and to expand our retail network.”

“I was drawn to Access by the honesty of their consumer offer and the genuine value they deliver their retail partners” said Mark Fletcher, Managing Director of Tower Systems.  “I am looking forward to working with the company to help more Australians benefit from their products.”

Access plans for first additional phonecard product launch for July this year.

The company is currently recruiting business development staff in Melbourne and Sydney to drive increased penetration of its products.

The Australian phonecard market is estimated to be worth in excess of $220 million a year with annual growth of 12%

FOR MORE INFORMATION:  Mark Fletcher (Tower Systems) 0418 321 338; Steve Mclean (Access International) 07 5526 9737.

Tower Systems has been serving Australian retailers since 1981.  Its software is currently running in 1,532 newsagencies around Australia and 1,000 other retailers.

Access International has been supplying phonecard product to Australians since 2002.  Steve McLean has been in the phonecard channel since 1999. The company has a reputation for a true what you see is what you get offer – no hidden charges!

I am excited by the synergy this relationship offers as we work together to develop other products which can deliver excellent GP to newsagents.

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About us

Report on Vic newsagent Bill Express meeting

Seventy newsagencies were represented in a meeting held in Melbourne yesterday to discuss Bill Express and the company’s removal of marketing subsidies which it used to promote the service into newsagencies. One hundred newsagents apologised in advance of the meeting for not being available to get away from their shops.

The newsagent-only meeting opened with three brief presentations:

  • A summary of activity around Bill Express relating to its future.
  • A summary of ACCC investigation into matters around representations to newsagents prior to their signing of agreements to take on Bill Express.
  • An outline of proposed Federal Court action commenced by a group of newsagents convened through NANA and being prepared by Melbourne based QC Charles Sweeney and briefed by former General Manager of the ACCC and Barrister Hank Spier. The proposed court action is to focus on three respondents: Bill Express, Technology Business International and the Australian Newsagents’ Federation.

What followed was a discussion about the various options available to newsagents including the legal action proposed by the ANF against Bill Express over the contracts newsagents have with the company.

Some newsagents spoke to their specific circumstances, highlighting the difference in agreements and terms around Bill Express and related contracts with newsagents. Others spoke about the issue of due diligence of the agreements before they were put to newsagents. Others spoke to their contact with the company over the last six months and the challenge of accessing information necessary to them protecting their interests.

Concern was raised as to why VANA had not acted on this matter for Victorian newsagents. Ron McKinnis, VANA Chairman, spoke to the meeting, took on board the concerns raised about VANA apparent inaction and committed to taking these back to VANA.

While newsagents attending were angry and hurt at the serious financial situation they are in over Bill Express, the meeting was cordial, productive and co-operative.

All bar one person attending the meeting voted to support the Federal Court class action which has been commenced by NANA. The details of these newsagents have been provided direct to the legal counsel for inclusion in the list of newsagents prepared to financially support the action. The legal team will be in direct contact about progress of the matter through the Federal Court and assistance they may require – either financial or evidentiary as necessary.

We anticipate having a process established for other newsagents who want to offer direct support to the legal team in the same way.

The benefits of the NANA instigated Federal Court action already on foot over the proposed ANF action, as put to and discussed at the meeting yesterday are:

  • It is independent of any party which may have a conflict in this matter.
  • Work on the case is well advanced.
  • Newsagents are not required to join any association to be part of or to support the action.
  • No Association is controlling the agenda or briefing legal counsel.

In the course or organising the meeting Adam de Jong and myself took many calls from newsagents in tough circumstances. There were tears of stress over the financial hardship they now find themselves in over Bill Express unilaterally changing the terms of their agreement. While these stories were difficult to listen to, they reminded us of the personal impact the actions of Bill Express is having. They redoubled our commitment to yesterday’s meeting and ensuring that newsagents achieve a just outcome from the Bill Express mess.

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Bill Express

Publish your own magazine

MagCloud is a new easy way to publish your own magazine. You create the content, upload a PDF and they take care of physical fulfillment including printing using the Indigo technology from HP. This is a similar approach to the self publishing sites which handle books which are printed on demand. All amazing stuff, especially for short run, local and or special interest magazines.

While the MagCloud model talks about distribution through mail, there is no reason this cannot work with a retail pitch. Imagine being the true magazine specialists with local area magazines – exclusively in your newsagency. Another use could be for one-shot titles on issues which are very hot. For example, say your city is hit by the worst weather in 30 years, publish a magazine of photos as a record of the experience.

Another example could be of local sports finals – people love to read about themselves and family members in a professional publication. This service or at least the technology behind it could make producing local magazines easier.

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magazines

Walk through Sophie Randall

mc_sign.JPGWe are organising a walk through one or more of our Sophie Randall card and gift stores for anyone wanting to see the operation from a non-consumer perspective and, in particular, to see how we handle multiple stores off the one central point of sale technology platform. With more newsagents owning multiple retail outlets, this is a technology of growing interest for newsagents.  Tim Batt is organising this can can be contacted on timb@towersystems.com.au.

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newsagent software

Chasing a bigger sales basket

sales_basket.JPGWhen I saw the items a customer was purchasing on Friday last week I had to take a photo as it was a perfect example of the newsagency working across multiple categories to build a better basket.

The customer was buying Country Style magazine, a birthday card and a small inspirational booklet from Compendium. Total value in excess of $17.00 – considerably more than our average sale value.

In choosing gift and gift related items to add to our newsagencies we focus on card giving occasions, especially those which lend themselves to impulse purchases. Adding value to card sales is easy if we buy well for the business. This does not mean we ignore basket building opportunities around other categories of products – cards are the easier opportunity.

Old style marketers tell newsagents to pitch up-sell opportunities across the counter and to use noisy posters to promote discounts and the like. While there is a place for the old school noisy approach occasionally, sustained business growth comes from smart buying and even smarter product placement. In the case of the inspirational booklets, we have them on display as you enter the card aisle. This adjacency is smart, the shop pitches the up-sell for us, the customer makes their own choice without any pressure.

We track basket performance in our Tower Systems software. This helps us improve on our own performance and drive more efficient sales.

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Gifts

Growing lottery sales

I was fortunate to meet with Dr Katakis, the CEO of Intralot yesterday.  While not the purpose of the meeting, we did talk about the threat made by Tattersalls to turn off access to their product in my business.  He provided some contact details within Government agencies which should help resolve the matter.

Tattersalls would be well advised to accept that they have lost their monoopoly and that it would be in the best interests of their products and brand to put their big stock away and focus on developing their business in partnership with the retail channel rather than the current approach of legal threats of swift economic penalty if you do not follow their every demand without question.

I want to grow the sale of lottery products regardless of the brand.  Intralot products will appeal to one demographic of player and Tattersalls to another.  I want the full suite of products to succeed.  Physically separating them as Tattersalls demands makes this goal a challenge to achieve.

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Lotteries