Author: Mark Fletcher

Vodafone has signed on as a major sponsor of the Wallabies, Brumbies, QLD Reds and Western Force in what is reportedly a multi million dollar deal. Vodafone has just cut newsagent commission by 37.5% while maintaining commission for Coles at 16% and, reportedly, Australia Post at 11%.

Newsagents now earn a merge 5% from Vodafone recharge sales. A $20.00 recharge earns $1.00 for around five minutes work. Coles is paid $3.20 for the same transaction. Newsagents hand the recharge revenue over daily whereas Coles gets to hold the cash for a month.

Vodafone’s commitment to Australian small business is well demonstrated by their attack on small business newsagents. Newsagents have more outlets and are open, usually, longer hours yet Vodafone has hit them hard. Maybe this is necessary so they can fund their rugby sponsorship.

Vodafone is demonstrating poor corporate social responsibility by financially hurting those least able to weather a cut in commission. Newsagents need Vodafone support more than rugby teams. Our businesses employ more people, Vodafone logos in our retail network are seen by more people every day than at a rugby match. We support Vodafone at the point of purchase, when recharge is top of mind.

The rugby sponsorship is about making Vodafone look good to the public. What the public does not know is what is going on behind the scenes. It’s like fashion and sweatshops. Thanks to news reports we are more aware of the pressure of some major brands on workers in poor countries to produce high fashion products for a few cents so they can be sold for obscene profits. Vodafone is our on the rugby field touting itself as a good corporate citizen by sponsoring this loved sport while at the same time ripping 37.5% commission from newsagents – not supermarkets, not Australia Post, but newsagents. Yeah, the poor and the voiceless are at the mercy of Vodafone and Vodafone has demonstrated how they deal with these folks.

Newsagents have been let down on this by the Australian Newsagents Federation (ANF) – a national association which has a commercial relationship with the company through which newsagents transact Vodafone recharge business. The ANF has failed to gain any ground in its meetings with Vodafone or Bill Express (the aggregator) on this matter. Indeed, following one meeting with Vodafone, the ANF bereted newsagents over lack of discipline and tried to explain that Coles offered better discipline and this was why they earned more than three times what newsagents earn on Vodafone recharge.

If Vodafone wants to be judged a good corporate citizen by Australians it needs to be fairer to small businesses like newsagents. It needs to reinstate a more equitable commission structure. It needs to demonstrate respect for newsagents as valued retail partners and not sweatshops to be exploited so they can fund expensive sports sponsorships.

See my earlier comments on Vodafone here, here, here and here.

Representatives of News Limited have been visiting newsagents in NSW asking them to appoint the local Gloria Jeans coffee outlet a sub retailer for newspapers. From what I can tell there is no discretion about proximity of the Gloria Jeans to the newsagency or other retail outlets selling newspapers already services by the newsagency. It seems that a national deal has been struck by News Limited and Gloria jeans and newsagents have no opportunity to bring their local knowledge and business acumen to the situation.

It would be interesting to know whether usage clauses in Gloria Jeans’ leases allow the sale of newspapers.

Newsagents are the best outlets to sell more newspapers if that is what News Limited wants. Taking sales from newsagents by putting newspapers into more outlets like Gloria Jeans will not deliver the kind of growth newsagents can achieve. (Okay so News will say they are attracting incremental sales from this new outlet. I disagree.) Gloria jeans will not do special in store display or actively support newspaper promotions. Hell no other retailer supports the many special newspaper features and events like newsagents.

By getting their product into more and more outlets publishers are diluting attention of consumers and this can only hurt newsagents.

Newspaper sales in my newsagency were up by more than 10% 2005 compared to 2004 and that is in a mediocre centre with flat traffic. This is because we made decisions right for the business, decisions which were against publisher policy. In a dead shopping centre my results are proof that the right marketing can boost sales in a newsagency. This is where newspaper publishers ought to be focusing their attention – on the newsagency channel rather than outside it. Their attention should be on engaging with newsagents as business people and not as servants. They should reward success and they should fix their cover price problem.

In posting this I risk upsetting News and other newspaper publishers. They don’t like public negative comment about their tactics. I don’t like hearing about a poor decision which will hurt newsagents. Our small business channel has enough challenges. We don’t need a national publisher facilitating the loss of more traffic from our stores. This blog entry is a plea for active business engagement with News rather than competition.

See my earlier post about newspapers in Starbucks.

I’ve heard a couple of rumors about Australia Post looking for a loyalty program it can offer its retail customers. There is talk of accruing points based on products purchased which can be redeemed for gifts. If what I’ve heard is true it is more evidence that Australia Post sees itself more as a retailer than a postal service. The sooner the government divests itself of this retail chain which competes aggressively with small business the better.

Yahoo7 has launched. The new sites provides stronger competition for ninemsn. My only complaint is that Yahoo7, like ninemsn, does not drive traffic to newsagents – their bricks and mortar partner.

Newsagents didn’t receive their electronic invoices for Gordon and Gotch supplied magazines on time for today and this meant their computer systems didn’t receive advice of a price rise for New idea. While the loss of revenue won’t be that much, it’s frustrating that poor lines of communication by the distributor (Gotch) let them down.