Author: Mark Fletcher

I heard today from a former newsagent today about the challenges he faced in dealing with two major suppliers following the sale of his business. One newspaper publisher insisted that his solicitor hold a cheque for $15,000 until final account was paid even though he had an exemplary payment record. It took this supplier a month to finalise return credits – the final amount owing was $2,500. Another supplier allocated final return credits to the incoming newsagent and it took a month to get this sorted out and the appropriate credit arranged.

The Government’s role is to ensure that the Australian Postal Corporation Act 1989 establishes the proper basis for continuing provision of postal services consistent with the Government’s social and economic objectives.

This is from an Adviser to the Minister for Communications Information Technology and the Arts writing to me last month in response to my complaints that Australia Post corporate stores are taking business from small business newsagents like me.

I have written to the Minister as well as other Ministers and Opposition members in the Parliament several times to draw to their attention to how far Australia Post has strayed from providing a postal service and that in doing this their 865 government owned stores are using the respected Australia Post brand to take business from independently owned small businesses.

How this can be defended as a social and economic objective of the Government is beyond me. I have told the government that the actions of Australia Post will contribute to the closure of some independent newsagents. Their response is spin.

…Australia Post is continually reviewing its services by examining costs, revenue and performance, including the capacity to meet contemporary customer needs.

Government sets the policy. They can, if they choose, direct Australia Post to focus on mail services and retreat from pursuing stationery, greeting card and other product lines which are already well covered by major and independent retailers.

My newsagency is opposite a government owned post office. They price compete with us on a range of products. We cannot match their buying power, nor their brand recognition. We cannot also match their sweetheart landlord deal which enables them to trade for half a day Saturday and not at all on a Sunday and therefore avoid huge penalty rates. If they want to compete with businesses like mine they ought to be forced to open as we do. This would force them to increase their prices. That they can close when they choose is proof that Australia Post uses its government ownership to leverage an unfair advantage.

The letter from the adviser ends:

Thank you for bringing your concerns to the Minister’s attention.

I doubt the Minister is even aware of the concerns for if she were she would want to understand more about how the policy of her government is hurting small businesses like mine. My newsagency was selling stationery for decades before Australia Post got into stationery. We were selling greeting cards for decades before they started. A Government concerned about small business would want to know how an enterprise they wholly own is ripping millions of dollars of sales out of the independent retail sector so they can be paid to Australia Post executives through performance bonuses and back to the Government in dividends.

The blood of businesses which close a result of competition from Australia Post will be on the Howard Government’s hands.

Newsagents are getting loaded up with tertiary education guides – not just from their state but others. Guides sell well in their local states. Interstate sales are weak. With cover prices up to $20.00 and newsagents having to pay well in advance of them selling or being returns, they are usually cash-flow negative. It’s an unreasonable grab for cash by the tertiary entrance committees and magazine distributors involved. A fairer approach would be for newsagents to control the quantity of stock they receive and have billing delayed until December with a January settlement. The current situation is unfair to newsagents.

Chemists get money from the government to fund broadband access in their stores. I was shocked to discover this yesterday. It’s one of a bunch of perks the government provides chemists. While I don’t begrudge their negotiating prowess with the government, I am shocked that the government looks after chemists like this while at the same time kicking newsagents in the guts again and again. Newsagents pay for their own broadband.

For years now magazine publishers and distributors have been working on a project to access sales data on a daily basis from newsagents. While suppliers have complained that lack of sales data is the cause for resolving core issues, few have actually taken the necessary steps to resolve the issues. With accurate sales data suppliers can more accurately supply product so the benefits are considerable. This cuts costs for newsagents and suppliers by reducing over supply and resolving undersupply. Suppliers can get accurate sales data if they choose. All they need to do is:

Compensate newsagents for accurate sales data. The sooner the newsagents providing accurate sales data make money from this the sooner many other newsagents will do what they need to do to provide similar data on time.

Rate the newsagent software suppliers. Recognise the providers of compliant software with a rating and a recommendation which directs newsagents to them compared to those companies which flout the standards.

Be public about IT companies letting the project down. For example, one competitor does not provide sales data through its software. It has a record of claiming its software is compliant when it is not. Suppliers, by their silence, let this competitor get away with this and this extends the resolution of the sales data mess.

Be clear on the industry benefits of sales data. Show newsagents what this looks and feels like.

While newsagents are not helping themselves in resolving the sales data mess, suppliers can take steps quickly to sort this out and have newsagents more fairly competing with the major retailers thanks to, finally, providing accurate sales data on time.

For newsagents to compete with supermarkets, petrol, convenience and coffee outlets they need to get smarter in managing data. This means they need to ensure that their IT suppliers adhere to industry standards. One company failing to meet standards lets the industry down. It is time for people to be silent about the cost of this to all newsagents.

If the newsagency channel continues to ignore this issue they will continue to miss out on the financial rewards of providing sales data and competing with the big guys on an even footing.

The weekend manager at our newsagency resigned by SMS text message on Wednesday. No warning, just a text saying thanks for the ride. This person had been in the role for two months. While the current affairs programs are quick to run a story about bosses who sack people by text message I suspect resignation by SMS will attract little attention.

This resignation is frustrating not only because of the staffing impact but also because the person involved was too gutless to have a conversation about their desire to cease working with us. I wish I could register her name on a database so other potential employers could be warned about her.

My software company, Tower Systems, competes with POS Solutions. We are the two major newsagency channel IT players. In their newsletter to newsagents last week POS Solutions claimed:

“Recognized as a leader in magazine management POS Browser continues our commitment to saving time in handling ,magazines. Xchangeit, customer email putaway notifications, detailed bar-coding of titles and Automatic billing of customer and sub agent orders is just a few features built to provide better service and save time. Automatic early returns for over supply of magazines help your cash flow; report on slow selling magazines by distributor to adjust supplies.”

The POS Browser software does not meet current industry standards. It has not passed the XchangeIT magazine management standards agreed by the magazine distributors three years ago. POS Solutions has failed to deliver on these standards for the users of its DOS software – the majority of its customer base.

POS Browser and POS DOS could only make their claim of “leadership” if their software met industry standards as it is these standards which facilitate best practice in magazine management. Crucially, the standards provide for sales data to be passed back to suppliers so they can balance supply.

I doubt that the three magazine distributors consider POS Solutions to be a “leader in magazine management”. I suggest that this recognition is only in the minds of the POS Solutions marketing people.

My company is being let down by magazine suppliers and other stakeholders as they refuse to enforce the standards they established. Their inaction allows POS to claim leadership and get away with it. Outside my company and POS there are two other significant software suppliers to newsagents. As I understand it they also comply, leaving POS Solutions alone at the barrier of non-compliance.

Newsagents are only as energetic about compliance as their software provider. To this end, POS Solutions’ lack of attention to industry standards is holding the whole industry back as the newsagent channel is as weak as its weakest link.

When the Directors of POS Solutions read this they are likely to shoot off an email or two to me, call their lawyer and write to the ACCC. I’d welcome the issue of their inability and apparent reluctance to provide compliant software being debated in a more formal forum.

Newsagents need to carefully evaluate software and ensure it meets the various supplier compliance requirements. Compliant software companies have nothing to fear from such comparison. That the newsagency industry has standards which are not enforced provides POS Solutions a break they do not, in my view, deserve.

Disclosure. I am the Managing Director and sole shareholder in Tower Systems International (Aust.) Pty Ltd and have written this entry as fair comment. The Directors of POS Solutions are welcome to publish a response.

In June 2005 I blogged about Epic 2015, a brilliant flash movie by Robin Sloan and Matt Thompson. It was an update on their darker Epic 2014. I mention Epic today, more than a year after my original post since there are many more readers here now who may not know about Epic. Before you watch it, think for a moment about how much has changed online in the last year. Google alone has evolved dramatically – forward in its mission to index all information in the world.

Newsagents could be the dinosaurs of this changing world. To ensure they (we) do not become extinct, newsagents need to be aware of the changes happening around them and within the businesses of their suppliers. One way to understand the possibility of the extent of change is to watch Epic.