Author: Mark Fletcher

etravelblackboard is reporting that (former government owned) Qantas owned Jetstar airlines and Government owned Australia Post are seeking to gain approval for Australia Post to sell Jetstar tickets.

While this story does not directly relate to newsagents it demonstrates the development of Australia Post well beyond the brief it was created to serve. When will the government realise how conflicted they in owning this retail and commercial giant? How many small businesses have to suffer before the government reins in Australia Post and directs management to re-read the Act?

I appreciate that many newsagents run Licenced Post Offices. I have no quarrel with them. My quarrel is with the 863 government owned retail outlets.

Here are the opening paragraphs of the story at etravelblackboard:

AFTA has revealed Australia Post has requested to be exempt from licensing regimes in Australia, including TCF membership, to allow the sale of Jetstar domestic tickets from its corporate outlets (Post Offices) and licensed post offices (Post Shops) and has urged travel agents across Australia to take action against the proposal immediately.

A letter sent to AFTA by the Department of Justice (Consumer Affairs) in Victoria acting on behalf of the Standing Committee of Consumer Affairs (SCOCA) advised the request from Australia Post for the proposed arrangement with Jetstar, and subsequently SCOCA is now investigating whether an exemption was consistent with national competition policy and the objectives of the present regulatory regime.

Australia Post in conjunction with Jetstar has proposed a service for booking and payment in real time, and if any exemption is granted, it would also be open to travel agents selling on the same basis. It is also further envisaged that any exemptions offered would also be extended to other airlines where the same arrangements are in place according to AFTA.

Here’s some data from a study I am doing across 120 newsagencies, looking at sales of each product category on each day of the week. These numbers reflect basket penetration for the day.

The strength of Sundays for newspapers compared to other days is a surprise and a danger for newsagents when you consider that in most cases 60% of newspapers are sold alone.

The risk to the channel of loss of newspapers is huge. Newsagents need to reduce single item sales of newspapers but to do this they need publishers to allow old rules to be set aside.

The Age on Saturday carried a piece, Newspapers’ dog days – getting on with online. The article provides a good summary of the situation and provides context for newsroom cuts. I’d like to see consideration of implications for the supply chain. Newsagents rely on newspaper traffic for consumer relevance. A fall in newspaper sales puts that at risk. Indeed, coupled with a fall in lottery sales (as they move online) newsagents need to reinvest elsewhere to create a strong future. So, it’s not just newsrooms, the impact of the shift of advertising from print to online will affect many businesses and employees.

So, Amazon has announced plans to sell books by the page. Interesting. What next? Magazine articles and not the whole magazine? Newspaper articles for sale and not the whole product? I wonder. I could spend $5.00 on all Julia Roberts stories or a few cents on a good fad diet story in a particular title. The move by Amazon will have repercussions for all publishers, not just book publishers – as analysts have considered the move today.

If Amazon can stop us thinking of a book and start thinking of a page why not the same for magazines and newspapers? There is a middleman business opportunity here.

It will happen.

Hmmm, the newspaper, magazine and book supply chain just got turned on its head. Interesting times. Challenging for retailers. That’s okay though because out of this will emerge new models and that’s part of the fun of business.

I have a fax from The Age advising of a trial whereby they are promoting The Age to cafe owners for reading copies of the newspaper for their patrons. I have a couple of problems with this: it will convert some existing full price newsagent customers into discount customers (with newsagents making 33% less on the transaction); and, it will lose some sales since customers purchase a newspaper to browse in a cafe.

I appreciate that Fairfax needs to experiment in an effort to boost readership but to do so without consultation with its distribution partners (newsagents) and to the detriment of its existing retail partners is, in my view , poor form.

Fairfax continues to ignore excellent opportunities for increasing sales in newsagencies. Better posters; traffic area product displays; reward for sales growth and removing retail newsagent rules would each do more for sales and readership than this cafe campaign.

Here’s the impact of tomorrow’s lottery superdraw on sales as at 5pm today. What is usually a blended balance of business cross newspapers. Lotteries, magazines and greeting cards, we’re significantly skewed in lottery sales. That’s good! However, it demonstrates the risk to the retail network if lottery sales move online. We need this traffic and these boosts to drive sales elsewhere.

The sales kick last week as a result of Princess Mary covers on all three major Women’s magazines ended up being between 5% and 30% depending on the newsagency demographic. We found Mary works well as an upsell product. Ask and enough people take the bait and purchase.

This from an Oct. 31 Senate Estimates Committee Hearing where they were discussing the Australia Post advertising of franchising opportunities:

Mr McCloskey—We have had a number of trials under way—pilots—for a number of years now and we have concluded that really that the franchise model as an additional, complementary model to the other parts of our network—we have a corporate network and we have a licensed network. We have come to the conclusion that where Post shops are concerned there is benefit to be had in having a niche within our network of franchised outlets that allow us to control the offer, control the presentation, and it would operate quite differently to the existing licensed part of the network.

By control the offer I suspect that they are talking about Post branded product. Am I alone on this? It seems ludicrous to me that what was established as a national postal service is now another Coles Myer: buying product in huge volume, taking a percentage and passing it on to the retail network for sale as Post branded. 4,000+ outlets selling their branded product in direct competition with independent small business and a raft of big businesses. The government has no role owning a business like this. Especially since they are doing it all under the guise of an essential service like postage.

This isn’t about postage folks!

Maybe the government should establish another airline or another telco or a network of pharmacies or a supermarket chain? What is happening is ridiculous.

The full transcript is here.

The government owned Australia Post increased its dividend this year to its sole shareholder from 60% of profits to 75%. This increase came about after a request from the government ministers. The details can be found in this transcript of the Environment, Communications, Information technology and the Arts Legislation Committee.

It would take more resources than I have but one could determine the amount of this profit earned at the cost to small businesses where Australia Post directly competes for stationery, greeting card and other business.

Not only is Australia Post achieving its own form of privatisation by stealth (as discussed previously), this government owned business has been busy branding all manner of products so that it can, in my view, ensure it’s piece of retail action in the franchised stores as well as LPOs.

Here’s a list of the items Australia Post branded in the latest stationery catalogue: copy paper; wireless mouse; wrist rest; CD wallet; optical mouse; Internet keyboard; DVD-R; diskettes. Visit any PostShop and you’ll see plenty more.

Why does not government continue to own a retail business so focused on grabbing stationery sales from small businesses like newsagencies? Every move Australia Post makes to increase its retail sales extends its mockery of the Government’s small business policy.

Newsagents don’t have an Australia Post postal service brand to leverage off in branding their own product. We don’t have access ot postage product for fair margin. We don’t benefit from essential services considerations such as store location, rent and operational benefits. We don’t have the guaranteed traffic of customers accessing the Australia Post exclusive services.

The damage being done to the small business sector by Australia Post is such that an inquiry is required to determine the impact. Given the Government’s conflict of interest, the inquiry ought to be stridently independent.

AAP reports:

Carsales.com.au Ltd have approved plans to combine the business with PBL’s online classified business.

News Ltd has extended its offer for realestate.com.au since its stake has passed 50%.

These news items when considered in the context of flat or falling sales for classified focused over the counter product (Trading Post; SMH, The Age) underscore the need for retailers and in particular newsagents to bring on stream new traffic generators to replace newspaper sales traffic.

News Corp ought to reconsider its decision to refuse small business newsagents’ request for fuel price relief. Talking to some colleagues over the weekend it is clear that the fuel price hike is hurting to the extent that some may shut their distribution businesses down. The denial by News of newsagents being able to pass on the high cost is proving to be the last straw.

In an email bulletin to newsagents (28/10), the Australian Newsagents’ Federation indirectly and subtly invites newsagents to consider boycotting IPG, distributor of a range of titles to newsagents. They have done this as a result of IPG entering into a newspaper supply arrangement with News Ltd for supply of newspapers to major city hotels. Here is the text of the bulletin:

My concern is the double standards demonstrated here. Newsagents recently had the commission they earn on Vodafone recharge transactions cut by 37.5% and the ANF berated newsagents rather than suggest any action; newsagents have just had their application for fuel price relief rejected and the ANF has remained silent of any possible action; newsagents have lost the Apple iTunes recharge opportunity to Coles and the ANF has published excuses rather than suggested action.

As an industry association the ANF is clearly having difficulty representing newsagents on issues to do with some suppliers compared to others. Like any industry association, the ANF needs to be consistent. They will achieve greater respect from newsagents if they achieve this.

On IPG the ANF would better serve newsagents by developing a tactical response. Indeed, given that this is a situation the ANF has had knowledge of for more than a year, one cold reasonably expect that this was done last year. The ANF should: inform newsagents of the facts (without emotion); build business plan assistance for the newsagents affected; write to the customers contracting with IPG (informing them that they are putting Australian jobs at risk); create a public relations campaign (small business being done over by big business; buying Australian versus buying through a UK company; keeping jobs local); make representations to News Ltd (with these being put on the public record); seeking out other opportunities for the affected newsagents; providing standard form contracts to enable newsagents to lock in current arrangements.