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Ethics

Fairfax publishes an ill-informed crack at newsagents

Check out this piece published by Fairfax:

Cardigan brigade

It is pretty tough for any bricks and mortar retailer at the moment as wave after wave of online players hit our shores.

And it is not just big department stores like Myer which are losing the commercial plot.

Our newsagents are also wringing their hands at the thought of losing their own lotto bonanza to online players like Lottoland, as well as the slow migration of Tatt’s lottery to online.

Luckily for our newsagents they’ve got the hilarious Australian Newsagency Blog to help ward off the online threat.

The blog, which appears to be backed by the  Australian Lottery and Newsagents Association (ALNA), has some sage advice for newsagents on “ways lottery retailers could, through their actions, push back on Lottoland”.

This includes “always have the youngest person working at the lottery counter.” Make sure you provide free breath mints at the counter for staff, and “blokes should not wear cardigans or jumpers”.

CBD would like to pass on this advice to the new bosses at Myer and David Jones, they need all the advice they can get.

Here is my response, send by email to the journalist responsible:

Whither journalism?

Basic principles of journalism were ignored in the article, Cardigan Brigade, published by Fairfax yesterday.

The Australian Newsagency Blog was established by and is written solely by me. I have no affiliation with ALNA. That would be obvious from the About page on the blog and from a phone call to me, on my mobile phone number published on the blog.

In the article, Cardigan Brigade, your correspondent claims newsagents have a lotto bonanza. What is the basis for this claim? Where is the evidence? Had basic enquiries been undertaken about the income and required business costs your journalist would not have included the claim.

The blog post to which your correspondent refers includes vital context to my advice, context which you have ignored as it did not suit the narrative of your piece.

Shame on Fairfax for sloppy reporting, for misrepresenting my blog and for publishing false and misleading information about small business newsagents.

I have a question for you: what or who brought this blog post to your attention?

17 likes
Ethics

A breach of trust: the theft of a newsagency business

A long term newsagency family with two businesses was finding things tough. They had been trying to negotiate a solution to an expensive lease in a shopping centre, relying on help from an advisor with whom they had had a commercial relationship for such matters.

With each offer rejected and cash reserves perilously low, they decided to close the business. The landlord agreed.

They were shocked to discover a close business associate of their advisor, someone well connected with the company their advisor is part of, signed a lease for a newsagency business for the space they vacated, a considerably better lease than they were advised the landlord would agree to for them.

Their many years of work building goodwill for the business was lost when they gave up the tenancy. That goodwill is the gain of the party stepping into what was their space.

While I am no lawyer, here are questions one could ask the advisor, the business they are part of and the landlord:

  1. How do you explain your associate getting a better rent deal than the newsagency family, who are also business associates?
  2. When was the first discussion with the landlord about a possible change of tenant?
    1. Who instigated the discussion?
    2. What specifically was discussed?
  3. Did you disclose the details of all discussions between yourself and the landlord with the newsagency family? If not, why not?
  4. Why did you not ever disclose that another party, also a business associate, might be interested in the business of the newsagency family?
  5. What are your financial dealings with the associate who has not got the tenancy?
  6. Is the associate who has not got the tenancy in a commercial relationship with your business similar in nature to that the newsagency family had with your business?
  7. How many other times when you have been negotiating on behalf of a business associate has the landlord rejected their offer only to subsequently accept an offer from another party with whom you are associated?
  8. What are your qualifications to represent any tenant in negotiations with landlords?
  9. What are your qualifications to represent the interests of the newsagency family?
  10. How was the transaction but to Tatts? What specifically did you or your associate represent to Tatts?

I would also seek access to all correspondence, written and electronic, between landlord representatives, the advisor, the now new tenant and any related parties.

This could be a case worth litigating as I see it happening too often. It would only be through litigation that the matter could be properly and fully explored. However, our channel being what it is, individual newsagents rarely litigate.

Note: To avoid litigation against me and to protect those involved, identifying details of this story have been necessarily left out.

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Ethics

News Corp. papers continue pressure on Tatts and small business newsagents with Lottoland report

The Weekend Australian today runs what to me reads like another Lottoland press release, continuing the News Corp. support for Lottoland.

Dirt campaign, really? What Tatts did is provide newsagents with resources to use if they wished, resources that reflected what Lottoland offers in terms of products. Tatts did this at the urging of lottery retailers. Click here to see part of the Tatts campaign. This is hardly dirt.

In the article, there is also mention of the Lottoland focus on ALNA, the body representing newsagents nationally in the fight against the Lottoland betting business.

Mr Brill earlier this month said he believed the government had been misled into believing that ALNA represented the views of 4000 newsagents nationally, when its membership was 707 paid members.

ASIC documents, he said, raised questions about ALNA’s ability to operate as a going concern, let alone to represent the interests of its members.

“Rather than address the shocking state of its financial affairs, ALNA has inexplicably taken part in a $5m lobbying campaign to convince the government to ban online lottery betting, which will leave newsagents at the mercy of a Tabcorp monopoly,” the Lottoland chief said.

All the money in the lobbying campaign was spent prior to the $11 billion merger between Tatts and Tabcorp, which was completed late last year.

In a letter to NSW Racing Minister Paul Toole, also obtained by The Australian, Mr Brill says Tatts had funded a $5m national campaign to eradicate Lottoland as a competitor and to preserve its market power.

Lottoland is the company that launched chef in Australia attacking newsagents, all newsagents, mocking us, belittling us, all to sell what was pitched as a lottery product when, in fact, it was a betting product.

While I can no longer find the first ad they aired as it is no longer on YouTube, this one is still available:

They ran their ads mocking newsagents relentlessly. We were their first and prime target for more than a year. Back then there was no talk of wanting fairness for Australians or offering of support for newsagents. No, they only did that when federal parliament got closer to banning their model.

I complained to the advertising standards council and ACMA about their ads, without success. It think there was a standards issue with their actions. There was success by others against Lottoland on standards.

The report in today’s paper reads like it was written by the Lottoland PR people as it lacks genuine reporting and it lacks balance in my opinion.

The NSW Public Lotteries Act says a licensee has to be of “good repute, having regard to … honesty and integrity”.

Disciplinary action can include sanctions and suspension of licences. Tatts subsidiary NSW Lotteries Corp holds three licences in NSW.

Lottoland, which takes bets on overseas lotteries, offered news and lottery agents across Australia a profit-sharing arrangement, under which newsagents would receive 20 per cent of profits generated from every bet on overseas lotteries that they referred to Lottoland.

Where is the question of integrity and honesty in terms of Lottoland and what they have done to the newsagent channel. For most of their time in Australia they waged a successful campaign turning traffic away from newsagency businesses. Where is News Corp. on this? Why is this not a story?

Non Australian tax paying Overseas betting agency wages war on small business family newsagents.

Where is that headline in the News Corp. newspapers?

The Lottoland PR machine is good. It has the right connections and it has apparent easy access within News Corp., which itself could benefit from investigation. It is being aided and abetted by state based VANA and NANA support. As I noted yesterday, this maintains a decades-long split in our channel.

While federal politicians go through the legislative process, lottery retailers need to be focussed on their over the counter pitch.

My view that newsagents have nothing to gain from a relationship with Lottoland has not changed.

But back to business. On October 11, 2016 I suggested on this blog ways lottery retailers could, through their actions, push back on Lottoland. here they are again as I think actions over the counter are what are needed still:

  1. Ensure your lottery customers receive excellent customer service every time. Excellent customer service is:
  2. Always smile.
  3. Never sit behind the counter.
  4. Never charge a credit or debit card surcharge.
  5. Always have the youngest person working at the lottery counter.
  6. Provide free breath mints at the counter for staff.
  7. Provide hand sanitiser for staff and customers to access at the counter.
  8. If anyone behind the counter wears reading glasses, take them off when talking with customers – do not leave them on and look over them.
  9. Blokes should not wear cardigans or jumpers such as what we see in the Lottoland ad.
  10. Be cheerful when paying out a prize on tickets purchased elsewhere.
  11. Be cheerful when people say the same thing over and over. The alternative is having no one in your shop at all.
  12. If you sell candy of any sort, every so often offer a free tasting. Look for more ways to add value to the shopper visit.
  13. In winter offer free soup at lunchtime.
  14. In summer offer access to cups and filtered water.
  15. If you are on the high street, have a bowl of water for dogs.
  16. Celebrate all wins in-store on your noticeboard as well as on your business Facebook page.
  17. Run a second chance draw and actively encourage every customer to engage with this. Be generous with the prize.
  18. As an alternative for a second chance draw, host a BBQ event in the shop for the prize draw. Di this once a year, quarterly or six monthly with the prize commensurate with the frequency and business size. For example, in a shop with $250,000 in lottery commission, second chance draw prizes should value at least $10,000 a year. In fact, if it were my business, I’d be more likely to go with $24,000, $2,000 a month. Yes, you have to be that bold I think.
  19. Establish a community noticeboard and welcome free notices. Somewhere on the board have a subtle sign: Your support of this business helps us support your community.
  20. Share links to news reports about data security breaches by hackers with comments like: shopping in-store is safer or Our shop is a hacker free zone. Print the stories and place them on your community noticeboard.
  21. List every local community group you support on the noticeboard with a certificate.
  22. Thank community groups you support with a note on Facebook like: We are grateful for the opportunity to support the work of xxx community group.
  23. Ensure your staff understand what Lottoland is and isn’t and are able to explain why purchasing lottery products from your business is better for them and the community.
  24. From out the front of your shop make sure it looks appealing to passers-by.
  25. As people step into the shop make sure the pitch is fresh and enjoyable. Get rid of anything that looks or feels like an old-style newsagency.

All newsagents selling lottery products need to urgently ensure their businesses look nothing like the Lottoland depiction. You have to distance yourselves from the Lottoland depiction.

This work is urgent. No one will do it for you. Tatts appears asleep at the wheel on Lottoland. Or, as I suspect, they like the idea of educating people to move online.

30 likes
Competition

NANA weighs in on Tatts move on newsagent commission

NANA sent out this email earlier today. I’ll let it speak for itself:

Lotteries announcement – no surprises – let’s watch the leopard change its spots
The announcement earlier this afternoon from Tabcorp/Tatts Group Lotteries comes as no surprise. The competitive pressure caused by alternate online wagering products, in NANA’s opinion, is having an impact on the shoddy treatment that Tabcorp/Tatts Group has dished out to lotteries franchisees for too long.

Remember, Tabcorp/Tatts Group is currently and has been for some time, directly competing against lotteries franchisees in the online space. Their 31 December 2017 financial reports emphasise they had already achieved 16 1/2% of total sales online. There is every likelihood that figure is now higher as their attempts to redirect sales to online continue.

NANA is not sure how “the Lott” can do anything regarding a remuneration model. “the Lott” doesn’t have any commercial relationships with Newsagents in NSW and ACT. “the Lott” is a branding exercise. In NSW and ACT your lotteries franchise is with NSW Lotteries Corporation Pty Ltd.

Just about every day the outlet survey program interrupts your business and raises often insignificant and almost pointless matters which require correction. NANA received a referral from a Member Newsagent today. His shop was visited by a NSW Lotteries area manager on the day before a site survey inspection. The area manager said all was good. The survey resulted in a breach notice. If the full time staff of NSW Lotteries cannot get things right, why should Newsagents then be disadvantaged? The survey staff are not Newsagents or lotteries agents. Many appear to be part-time students or backpackers. NANA recently had cause to request that one surveyor be taken off the account – they turned up in joggers, tracksuit pants, a t-shirt and baseball cap. The only thing missing was the “hoody”. The same surveyor refused to correctly identify themselves. Surveyors are taking photographs of your shop which are in direct contravention of the method specified on Retailers Web. Their habit of taking a panoramic photograph from each of the corners of your shop gives them a total floor plan. This is a security issue. It is also in direct contravention of the stated standard from NSW Lotteries. They know it, NSW Lotteries know it, but nothing changes.

The strong identification by Tatts Group of one newsagency group is clear evidence that the “quid pro pro” for blindly supporting Tatts Group’s $5M campaign to deny Newsagents of another income stream is being delivered. Unless you as a lotteries outlet are prepared to turn your terminal off or starve Tatts Group of income from sales, collective bargaining under the guise of an ACCC endorsement is a ruse.

Neither Tatts Group Lotteries, Tabcorp nor NSW Lotteries Corporation Pty Ltd creates public infrastructure like hospitals, schools and sporting groups. They bought a license from the NSW Government. They pay a license fee. If the NSW Government held onto the business themselves (like in Western Australia) they would still have the income. License fees are paid and the NSW Government accepts fees into consolidated revenue and then it decides how to spend the money, the same way as it decides how to spend any other money it receives. They could be using the money for anything, there is no way to tell.

Tatts Group and the other entities may donate money to good causes. That is different to what they claim. If they do donate, that’s good news.

How much aggro have the recent changes to Powerball caused you? They were warned but appear to have done nothing in advance to address obvious concerns raised by Newsagents..

How does a leopard suddenly change its spots.

NSW Lotteries Corporation Pty Ltd could have extended the moratorium on selling lotteries products in chain supermarkets. They have been asked to extend it by the NSW Government as a show of support for Newsagents and other lotteries outlets. There has not been an extension.

NANA looks forward to working with Tabcorp/Tatts Lotteries and NSW Lotteries Corporation as we enter a new age of positive engagement. NANA also looks forward to working closely with VANA, our sister organisation in Victoria as we work together to ensure that the largest combined block of Newsagents in Australia get a fair go from the lotteries franchisors.

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Competition

A Theft Policy is key to reducing the impact of theft in any retail business

Issue this Theft Policy in your business, have all team members sign it and place it is a place where team members can see it every day. Doing this establishes your commitment on the issue as well as your policy and practices related to the issue. Following through on the policy is key for without discipline in this area the cost of theft in your business will be higher than it should be.

THEFT POLICY OF THIS BUSINESS

  1. Theft, any theft, is a crime against this business, its owners, employees and others who rely on us for their income.
  2. If you discover any evidence or have any suspicion of theft, please report it to the business owner or most senior manager possible immediately. Doing so could save a considerable cost to the business.
  3. We have a zero tolerance policy on theft. All claims will be reported to law enforcement authorities for their investigation.
  4. From time to time we have the business under surveillance in an effort to reduce theft. This may mean that you are photographed or recorded in some other way. By working here you accept this as a condition of employment.
  5. New employees may be asked to provide permission for a police check prior to commencement of employment. Undertaking the police check will be at our discretion.
  6. Cash is never to be left unattended outside the cash drawer or a safe within the business.
  7. Credit and banking card payments are not to be accepted unless the physical card is presented and all required processes are followed for processing these.
  8. Employees caught stealing with irrefutable evidence face immediate dismissal to the extent permitted by labour laws.
  9. Employees are not permitted to remove inventory, including unsold, topped, magazines, unsold cards or damaged stock from the store without permission.
  10. Employees are not permitted to provide a refund to a customer without appropriate management permission.
  11. Employees are not permitted to complete sales to themselves, family members or friends.
  12. Every dollar stolen from the business by customers and or employees can cost us up to four dollars to recover. This is why vigilance on theft is mission critical for our retail store.

PLEASE SIGN AND DATE YOUR ACKNOWLEDGEMENT:

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Ethics

It is time for Gotch to change its management of AFL and NRL

Newsagents this week received more AFL and NRL trading card stock when plenty of their initial allocation remains unsold in newsagency businesses.

Gotch has the sales data to know what remains unsold. Their allocations people and/ or processes appear to have ignored this evidence prior to proceeding to supply m0re stock.

I have heard from several newsagents who shared exampled of blatant oversupply. The costs of this oversupply include the costs of labour, space and freight – as the cards need to be returned, at the cost of the newsagent.

That we are having to raise this in 2018 is extraordinary. 

I suspect oversupply of AFL and NRL cards is not an issue for the retailers supplied by Gotch that compete with newsagents. If my suspicion is right, newsagents are commercially disadvantaged by the Gotch treatment. It makes them less competitive.

Gotch has the data to facilitate fair and accurate supply decisions. Any inventory drop after the initial supply should only be on the basis of sales. This is easy enough to do for any company that has an even half decent IT system in place.

Disadvantaging small business retailers like newsagents as happens with the current AFL / NRL card supply model needs to stop. Newsagents will stop it by quitting magazines, as some have already.

To be clear: I have seen data from newsagents showing there is no justification whatsoever in supply and sales data for AFL / NRL trading cards yet where Gotch has sent new, unneeded, stock. This is Gotch doing exactly what they have said countless times they will not do. I thin it is deliberate, wilful.

Other magazine publishers should take note. If you see retail outlets pull out of magazines, it is because of behaviour such as I have outlined here. You will be impacted by oversupply situations like this. beyond cutting magazine space or getting out of magazines altogether, newsagents will also early return to mitigate cash flow challenges that flow from oversupply.

Magazine publishers should agitate Gotch on this issue. Their commercial relationship will be more influential with Gotch than newsagent agitation has been. Gotch needs to understand the financial impact on their business of oversupply to newsagents.

22 likes
Ethics

The competitive neutrality inquiry into the ABC and SBS is a small business fail for the government

For years, newsagents have called for an inquiry into the competitive neutrality of the government owned Australian Post retail businesses. I wrote about it here in 2005.

One argument is that Australia Post leverages its essential service status to gain access to advantageous tenancy arrangements that are not accessible to newsagents and other small businesses that compete with them. Another argument is that Australia Post leverages its protected monopoly status in leveraging supplier deals.

Australia Post, through its corporate stores directly competes with small business newsagents.

Successive governments have demonstrated no interest into an inquiry.

Fast forward to 2018. The ABC runs a report critical of government economic policy and is hassled by News Corp and wham! we have a competitive neutrality inquiry into the ABC.

The politicians and big business put themselves ahead of the needs of small business retailers like newsagents.

The Australia Post and ABC matters are related in that they are about competitive neutrality.

I say that Australia Post does more economic damage to small business newsagents and other retailers than the ABC digital strategy does to News Corp. and other media companies.

The politicians show their hand by moving quickly on the ABC inquiry and ignoring calls on the Australia Post matter. Big business is their friend. We are not – despite the nonsense they peddle at election time.

My view is underscored by the $30 million given to Foxtel recently without any business case being made and without any requirement on transparency re its use. Oh, and the elimination of TV broadcast licences because of the cost of digital transformation for TV networks. If only we had a government that cared about small business to the same extent.

We in small business need politicians who are as focussed and energised for us and those we serve as those in Canberra who do the bidding of big business. No, actually, we need politicians who serve the whole country rather than so many we have today who serve their mates ahead of the vast majority of Australians. Shame on us, we get those we vote for.

30 likes
Competition

Lotto betting closer to being banned in Australia

See this release just now from ALNA:

Lotto betting to be prohibited in Australia

Australia’s national industry body for newsagents welcomes the unanimous passing of the Interactive Gambling Amendment (Lottery Betting) Bill through the lower house, to protect consumers

FOR IMMEDIATE RELEASE

Australia, 9 May 2018: Australia’s national industry body for newsagents and lottery agents, the Australian Lottery and Newsagents Association, is pleased that parliament has unanimously supported an amendment to the Interactive Gambling Bill that will bring important new consumer protections by closing the loophole that lotto betting sites have been operating out of.

Adam Joy, CEO of the Australian Lottery and Newsagents Association said, “Today the lotto betting amendment to the Interactive Gambling Bill passed with unanimous support from the House of Representatives, and without even a division. This will protect Australia from synthetic lotteries.

“We are encouraged by the clear intent of the parliament today to rebuke online betting on lottery outcomes in Australia. This is a win for Australians and an endorsement of the Australian Parliament, and we look forward to the amendment passing in the senate in due course.

“The Federal Interactive Gambling Act already made it illegal to sell a scratchy online and play a poker machine online, and the federal government moved last year to further strengthen the act with an amendment to ban online in-play betting on sports and banning credit betting, as well as making it illegal for unlicensed operators to offer online poker. And today, we welcome the passing of an amendment that closes a further loophole in the Act by banning online betting on all lottery outcomes.

“Given the misleading and divisive campaign run to try and prevent the passing of this Bill, we would like to see this Bill sent to the Senate quickly. In the meantime, the Australian Lottery and Newsagents Association will continue to provide strong advocacy for our members, including to help newsagents receive better deals on the products that they are legally permitted to sell, making sure that they aren’t excluded from access to the digital economy, and providing support to assist them in accessing the opportunities from the Federal Budget.

“These include the instant asset tax write-off extension, an extension of unfair contract terms protections, and the new funding provided to the Australian Financial Complaints Authority to give our small business owners access to free, fast and binding dispute resolution.”

The Australian Lottery and Newsagents Association is the only national association representing newsagents and lottery agents in every state and territory of Australia, and are the only newsagents’ association with a national ACCC collective bargaining authorisation. As such, it is the only association that is negotiating nationally with Tatts for further improvements.

ALNA represents over 2,000 small businesses, many of them family-owned, who rely on the sale of official government regulated lottery products. There are over 4,000 lottery retailers in Australia.

On behalf of those businesses and their staff, the ALNA thanks the government for its efforts to bring forward this important reform to protect Australian consumers. In particular, we thank Minister Fifield for his strong leadership, and Michelle Rowland for her bi-partisan support and stakeholder engagement, and also the Minor Parties and Independents. It is evidence that Australian political representatives, no matter what party they are from, understand what is important to fight for.

This is not stopping Lottoland. Here is an ad in the SMH newsfeed just now:

Maybe now VANA and NANA will get behind a single national voice for the good of the whole channel.

11 likes
Ethics

VANA in conflict with ALNA as a result of commercial arrangement with MyLotto24

In a move set to further consume politicians and regulators and divide the newsagency channel, VANA, the association representing some Victorian newsagency businesses has endorsed MyLotto24, a business that invites punters to bet on the of lottery draws.

What are the directors of VANA thinking? Not thinking at all in my opinion. I get that they are excited y the percentage of commission from deposits newsagents take and the trail commission for online deposits from accounts they introduce and commission VANA will make if a commission has been negotiated. However, the future of most Aussie newsagency businesses is not agency business. The days of the agency are over.

The article published today by Fairfax raises a few concerns including this quote by Chris Samartzis, the VANA spokesperson, speaking about the ban to be considered in federal parliament:

“The unintended consequences of a blanket ban will only serve to erect a monopoly with zero competition in the market place.”

The monopoly was erected more than 100 years ago when states established their own lottery businesses.

There are other issues with the inadequately researched article by Fairfax such as the mention of 1,200 outlets but I’ll leave them for another day.

The Australian newsagency channel was healing. Actions in recent days by NANA and VANA have taken representation of newsagents back years. I question whether a unified approach is possible from this.

ALNA has run a strong national campaign on this matter and offered strong representation on other national issues, issues  beyond lotteries. It is unfortunate two small state groups try and grab attention from important issues of national importance for all newsagents.

31 likes
Ethics

WHY YOU SHOULD VET EVERYONE WHO ASKS FOR ACCESS TO YOUR BUSINESS DATA IF YOU HAVE YOUR NEWSAGENCY FOR SALE

When you list your retail business for sale, I suggest you have a clause in the agreement with the broker requiring them to get approval from you before they provide any business data to any party enquiring.

I am aware of several situations in our channel where a party has enquired and used the data obtained through the broker about the seller’s business to directly approach the landlord to seek to take over the lease.

I have been told of parties using the business data and a relationship with a landlord to facilitate them getting a business for no goodwill.  I am told of newsagents who have lost considerable sums because of this.

My advice is that you should personally approve every party you permit to have access to your business data and that you make this decision after careful through and consultation.

Yes, there are unscrupulous parties in our channel who fake interest in buying a business to provide them access to information they can leverage to their advantage and your disadvantage.

I appreciate the temptation to provide data to every party that enquires about purchasing your business because you are most likely keen to sell. Please do not let your keenness blind you from careful consideration of every decision you make through the process. You can’t take back data you have shared. It could be that you realise too late that a party on the other side is not honourable, as have others I have spoken with.

What I have written here is more relevant for shopping centre based businesses than those in high street situations as shipping centre landlords are, in my opinion, more likely to work with other parties to the detriment of an incumbent tenant. I have seen this happen too many times in our channel and in other retail channels, to the harm of the seller.

  • Be careful who you trust.
  • Vet everyone who seeks access to your data.
  • Control who has access to information about your business.
  • Make thorough notes abut every discussion.

I get that some will see my comments here as paranoid. That’s okay. All I can do is share my opinion. I could considerably focus attention by naming names. I won’t do that here because they would sue for sure. All I can sale is seller beware.

36 likes
Ethics

Lottoland campaign against newsagents and their national association, ALNA, turns nasty

In my opinion, the campaign run by Lottoland has taken a nasty turn with this press release issued today:

LOTTOLAND AUSTRALIA CALLS ON FEDERAL GOVERNMENT TO REVIEW PROPOSED BAN IN LIGHT OF PEAK BODY REVELATIONS

May 1, 2018

The CEO of Lottoland Australia, Luke Brill, today called on the Federal Government to review its proposed legislation banning online lottery betting in light of revelations that the body supposedly representing newsagents is financially broke – and has misled the public about its membership numbers.

Mr. Brill said that the previously unpublished documents, which had been obtained from the Australian Securities and Investments Commission (ASIC), confirmed that the parent company behind the Australian Lottery and Newsagents Association (ALNA) was facing financial ruin.

“These ASIC documents raise serious questions about the financial situation at ALNA and its ability to continue to operate as a going concern, let alone to represent the interest of its members,” Mr. Brill said.

“According to ALNA’s own auditors, the organisation is in financial disarray, with the auditors telling ASIC that there is ‘significant uncertainty’ as to whether the group will continue as a going concern.”

Mr. Brill also said that ASIC records confirmed that the Federal Government had been misled into believing that ALNA represented the views of 4,000 newsagents nationally, when it fact its membership numbers are substantially lower.

“We’re shocked and disappointed to find out that a body that the Government believes has over 4,000 newsagents nationally as members has in fact only 707 paid members – about 80 per cent less than claimed,” he said.

“This raises major questions about the true intent of ALNA and whether it has misled not just the Government and others MPs, but whether it has also misled the public.”

Mr. Brill accused ALNA of acting against the interests of newsagents by advocating for laws that would hand Tatts (now Tabcorp) an unprecedented monopoly, and appealed to the Government to reconsider the proposed legislation before it was too late.

“Rather than address the shocking state of its financial affairs, ALNA has inexplicably taken part in a $5 million lobbying campaign to convince the Government to ban online lottery betting, which will leave newsagents at the mercy of a Tabcorp monopoly,” he said.

“Given these revelations, we are asking the Government to put a stop to the planned legislation and start listening to newsagents on the ground.”

ALNA has responded with this release:

Response from the Australian Lottery and Newsagents Association (ALNA) 

1 May 2018

Adding another string to their ruthless bow of propaganda and deception, Lottoland have twisted facts and figures about Australia’s national industry body for newsagents.

The Australian Newsagent’s Federation (ANF) Board of Directors who trade as The Australian Lottery and Newsagents Association (ALNA) has instructed their lawyer to investigate all legal avenues against the false allegations contained in Lottoland’s press release dated 1st of May.

Adam Joy, CEO of the Australian Lottery and Newsagents Association (ALNA) said, “The Australian Lottery and Newsagents Association is solvent and represents approximately 2,000-member small businesses. Any rumours to the contrary are unequivocally false and salacious. We have always been transparent and have nothing to hide. Our accounts are independently audited every year and are all available through ASIC, and clearly identify the solvency of our organisation.

“There has not been any misrepresentation of figures of any kind by ALNA – only by Lottoland who have been aggressively spreading defamatory rumours based on inaccurate and incomplete information.”

Lottoland has continuously worked to mislead consumers, governments and the general public, and are now seeking to maliciously defame the very same organisation they sought to conduct business with on three separate occasions.

“We find it ironic that Lottoland are attacking an honest Australian not-for-profit small business association when Lottoland’s very existence and history are based on stunts, loopholes and deception. Today’s defamatory comments further demonstrate that it is not the kind of business Australia deserves.

“From facing legal action for illegally and deliberately misusing trademarks of other businesses, being misleading regarding the winnings available, denigrating newsagents and then wanting to move their customers to Lottoland, and now making false allegations about the industry body that represents approximately 2,000 of these Australian small businesses, Lottoland continue to operate in a highly unethical manner,” explained Adam Joy, CEO of the Australian Lottery and Newsagents Association (ALNA).

Lottoland are based in the tax haven of Gibraltar, and have been granted a licence that allows them to run its Australian online business out of the Northern Territory while only taxing its gross profits earned on punting on horses, trotting and greyhound racing — three categories Lottoland doesn’t even operate in.

And they do all this while operating outside of the much tighter regulations, consumer protections, and higher taxes that official regulated lotteries adhere to.

Here are the facts:

“ALNA are the only national association representing newsagents and lottery agents in every state and territory of Australia, and are the only newsagents’ association with ACCC national collective bargaining authorisation.

“The Australian Lottery and Newsagents Association has a strong relationship with government for this very reason, and is known as a credible, effective organisation – because we are,” stated Mr Joy.

ALNA has clearly articulated to the government that we represent approximately 2,000 small businesses. ALNAs documents submitted to the government in relation to the concerning issue of lotto betting point to there being over 4,000 small businesses operating as lottery retailers whose customers have been impacted and mislead. As the only authorised national body it is not uncommon for us to refer to industry statistics.

Mr Joy explained, “ALNA only ever represents the position of its members and its board, which are newsagents and lottery agents across Australia. And in the interests of Australia’s newsagents and lottery agents, we independently and fairly advocate for them based on their feedback and requests. Our concerns regarding Lottoland have always been based on our members’ feedback, and independent of any other business.”

Auditors have determined that ALNA fairly present its affairs in all material aspects and have a clean report that is transparent and thorough and has disclosed all information required.

The last line of the extract that has been included in Lottoland’s misleading media release, states that ‘the auditors opinion has not been modified in respect of this matter’. For those who may not understand accounting terms, the Auditors are actually stating that the ANF (trading as ALNA) is solvent and is trading within the confines of the law. Any suggestion to the contrary by deliberately misrepresenting ANF financial information is unethical and defamatory. The correct information is publicly available through ASIC.

The false comments made about ALNA are in reaction to a soon-to-be-passed amendment to the Interactive Gambling Act, meaning the banning of betting on lottery outcomes. The Federal Interactive Gambling Act already makes it illegal to sell a scratchy online and play a poker machine online, and Lottoland’s business offering is another questionable model that is deemed inappropriate online. In other words, the main reason for the impending ban is consumer protection.

As Lottoland now faces the closure of the loophole that it operates in, it has pulled out stunt after stunt in desperate attempts to hoodwink the public.

Lottoland are an online wagering company and if they want to enter the lottery market, then they should consider a lottery license and completely change their product to one that is honest and operates within those much tighter regulations to offer consumer protections. Their business  is operating out of a legislative loophole and their approach is tricky and dodgy, and ultimately one that consumers should be concerned about.

The Lottoland release and the media coverage they get, especially on News Corp. platforms, speaks to the tough work faced by ALNA representing newsagents. Getting Tatts engaged and then politicians was there work of ALNA, on the back of relentless attacks on and mocking of small business newsagents by Lottoland.

13 likes
Ethics

Lottoland launches a petition

Lottoland is begging Australians to sign a petition to keep them in business in Australia. Here is their pitch:

WHY WE NEED YOUR HELP

The Federal Government announced in late March that it wanted to ban all forms of online betting on lotteries – the products Lottoland Australia currently offers to our more than 650,000 customers.

The Government says the ban will help newsagents but the truth is that there is no evidence our products have had any impact on news and lottery agents.

Why not?Because we do NOT sell any products that are also sold by news or lottery agents.

We do NOT compete with them.

In other words, the legislation is unnecessary.

YOUR CHOICE, YOUR MONEY

If the legislation is passed by Parliament, hundreds of thousands of Australians like you will be stopped from betting on lottery outcomes online.

We know you enjoy the occasional flutter, especially on multi-million dollar overseas lotteries such as El Gordo in Spain or EuroMillions.

That is why in just a little over two years, more than 650,000 Australians have joined Lottoland Australia.

It’s your money and it should be YOUR choice.

WHAT YOU CAN DO

If we want to convince the Government to reconsider its proposed ban, we need to act. We need your help.

What can you do? Plenty.

  • You can sign this petition.
  • You can write, email or phone your local Federal Member of Parliament.
  • You can write to your local newspaper or call your local radio station opposing the proposed ban on online lottery betting.

Make your voice heard!

VOTE FOR CHOICE!

Give them their due, they are fighters. In fact, they came out fighting in Australia at launch, attacking and mocking small business newsagents, relentlessly.

I am not signing their petition.

4 likes
Competition

Gordon and Gotch dumps awful Mother’s Day gifts on newsagents

IF YOU ARE A MAGAZINE PUBLISHER, READ THIS. THIS RIGHT HERE IS A REASON NEWSAGENTS EARLY RETURN, IT IS WHY MORE ARE REDUCING MAGAZINE FLOOR SPACE AND EVEN QUITTING THE CATEGORY ALTOGETHER.

Gordon and Gotch sent Mum’s Gift Pack 1 to newsagents yesterday. It is priced at $14.99. Inside is a collection of what can best be described as junk. The random and unconnected items look like they are freebies collected and put into a pack.

Check it out.

This is junk. Newsagents contacted me saying they would be ashamed to put it out which poses the question: WTF GOTCH?

Pushing junk like this on newsagents, stealing their time and space, holding their cash, it makes a mockery of the magazine distribution model.

Whoever signed off at Gotch on this Mum’s Gift Pack going out to ought to explain to newsagents why they thought out was a good idea.

I have seen photos of packs from several newsagencies, as I did not receive this at my own stores, and I cannot make any sense out of this move, none whatsoever.

Having to put up with nonsense like this gets newsagents reconsidering their commitment to the category. That ought to worry legitimate publishers and have them calling on G0tch to explain what they have treated newsagents so appallingly, again.

In my opinion, the supply of this pack by Gotch to newsagents through the magazine distribution model is unethical, socially irresponsible and ignorant.

If the folks at Gotch are true to form they will remain silent on this issue. They do not engage. It’s a single lane one-way road on matters like this. And that is another reason newsagents look at cutting back on magazines. It is almost impossible to have a conversation with the company and when you do it usually costs more than the amount you are fighting over.

Things were supposed to improve when Network Services closed. They have not. They are worse.

This Mum’s Gift Pack represents another failure baby Gotch to understand the newsagency channel, another failure by Gotch to demonstrate respect for newsagents.

I urge magazine publishers using Gotch to approach their Gotch account manager and seek an explanation. Gotch needs to get its magazine distribution model right before distributing other products and even then they need to talk to newsagents before making that move.

19 likes
Ethics

News Corp. gives space to Lottoland to make their case

Oh please, seriously? News Corp. gave space to Lottoland CEO Luke Brill to spin more in an effort to keep their business in Australia viable. This appeared in The Daily Telegraph on the back of support from News Corp. on Sky News. Why is the company supporting Lottoland?

Here is Brill’s opinion piece from The Daily Telegraph:

OPINION

Lottoland boss says Aussies will lose out with proposed government betting legislation

IF YOU believe the politicians and bureaucrats in Canberra, Australians should not be allowed to bet on what the federal government describes as “synthetic” lotteries, such as those offered by Lottoland, where you can bet on the outcome of overseas lotteries.

And yet, if you are 18 or over, you can go into your local TAB and bet big dollars on an animated racing game offered by Tabcorp.

The recent announcement by the government of plans to ban “synthetic” lotteries means that Australians won’t be able to wager on overseas lotteries like the US Powerball or EuroMillions through Lottoland — but having a punt on cartoon horses running imaginary races on fictionalised tracks is somehow perfectly fine.

Nothing “synthetic” about that!

As our American friends would say, what baloney.

Let’s face it.

Lottoland CEO Luke Brill says his betting agency doesn’t offer products sold by newsagencies.

The government’s proposal looks like a ham-fisted and totally unnecessary move designed to protect and entrench the monopoly currently enjoyed by Tabcorp-Tatts, which by their own admission spent some $5 million of shareholders’ money last year trying to run us out of town.

If the legislation is passed by Parliament, Tabcorp-Tatts will end up controlling the entire lottery market — online and offline.

This will mean reduced choice for hundreds of thousands of Australian customers who enjoy a flutter on the results of overseas lotteries via Lottoland.

And it means the little guys — the newsagents — will be at the mercy of this huge monopoly.

Ironically, the government claimed it was acting in the interests of newsagents when justifying the legislation, even though there is not a shred of evidence to suggest Lottoland harms newsagents.

Lottoland does not offer products sold by newsagents.

In fact, we want to partner with newsagents and pay them for promoting our products and referring customers to our services.

To that end, we are offering newsagents an 11 per cent revenue share on all bets that are referred to us.

This is significantly higher than what Tabcorp-Tatts offers newsagents for in-store purchases only, and is a whole lot more than what newsagents get from Tabcorp-Tatts’ burgeoning online revenue, which is, well, nothing.

We believe in giving our customers more rather than fewer choices. We believe in a level-playing field that encourages rather than restricts competition and innovation. This is an important fight for our customers, for competition, and for newsagents, that we have to win.

Lottoland ought be judged buy their actions. Think back to their TV campaign when they launched into Australia, attacking newsagents mercilessly, hurtfully and deliberately. Shame on them.

In my opinion, News Corp. owes newsagents an explanation for their apparent support of Lottoland. The airtime and space go beyond free speech and giving a fair go. Newsagents have not been given this by the company on this issue.

Click here to see why I think newsagents have nothing to gain from a relationship with Lottoland.

15 likes
Ethics

How important is consistent branding to Tatts?

One argument Tatts makes in support of regular image refresh at the retailer level is the need for brand consistency. I am told their reps say the company wants customers in-store to see a corporate image consistent with their marketing collateral used on TV, online and elsewhere.

This argument would carry weight if Tatts was consistent in its application of this desire.

Check out how how the shop at the Qantas terminal in Melbourne airport looks as of last night.

This corporate image is quite old – at least two, maybe more corporate image generations ago. Yet here it is, in a high profile location seen by many visitors to Victoria.

I am surprised Tatts permits it. Oh, and I do see it as 100% on Tatts and not the retailer.

If I was a Tatts retailer and under pressure re my corporate image I would be using photos like this one to make the case that how current a business looks is not that important, as Tatts appears to be inconsistent in its roll out of a consistent image … or at least that is what the evidence in the marketplace suggests.

This particular store is interesting in that the image is not the most recent prior to the current. That, to me, makes it useful in terms of the case I make here.

In addition to the corporate image is the matter of the digital screens, the additional in-store marketing infrastructure spend that Tatts says is vital to sales growth.l While I doubt there is any evidence from stores supporting that argument by Tatts, a high profile stores such as this one at Melbourne airport should have the screens, almost as part of the Tatts campaign. Yet, it is the other way, a step 10 or 15 years back, maybe more, suggesting the Tatts claims have no foundation.

While there could be regulations such as airport requirements, I suspect not given that the folks at Melbourne airport are focussed on their retail offer. Surely they see this offer as out of date, old-school.

Tatts needs to explain why the image of this business is okay while others with more a more recent image need to upgrade. They need to make a business case that stands up.

In my personal opinion, I think Tatts continues to place too high a financial burden on its small business retail network to upgrade image and install digital marketing, a burden that is not rewarded with the sales revenue boost that Tatts says will flow.

19 likes
Ethics

Here is why I think newsagents have nothing to gain from a relationship with Lottoland

In my opinion, there is no value for small business newsagents in supporting or working with Lottoland. here is why:

  1. Lottoland launched in Australia mocking newsagents. Their attack on newsagency businesses and those who run them was relentless and hurtful. It cost newsagents respect and revenue.
  2. Lottoland now wants to partner with newsagents because federal parliament appears set to ban betting on lotteries. Boo hoo to them.
  3. Lottoland is an online-first business. Everywhere it operates it is about online sales. Any partnership with high street retail would be contrary to their core operation. I suspect if they did partner with retailers, online would always be their core focus.
  4. Lottoland is coming at this the wrong way around. If a high street pitch was important to them they should have put it in place when they launched into Australia.
  5. Lottoland says it wants to pay taxes and be a contributor to the Australian economy. If this was the case they would have established this from the outset and not pitched it now, moments away from their core offer being outlawed.
  6. Lottoland has been dishonest in its representations. Last year, they claimed to be talking to newsagents. No genuine approach had been made. From where I sit it looked like smoke and mirrors.
  7. Lottery products are highly regulated around the world. There are many reasons for this, most are good reasons. While I do not like the monopoly approach in Australia, the regulation is important and necessary.

The issue here is not about newsagents and their businesses. Nor is it about regulation or protection. Newsagency businesses need to live or die as a result of the actions of the owners in running a compelling and appreciated local businesses for the communities in which they serve. This and local community desire will determine if newsagency businesses survive.

The issue here is about Lottoland, their operation and their ethics.

They launched into Australia running a campaign over which they had 100% control. That told us about the company and what it stands for.

Their TV commercials were, in my opinion, dishonest and disrespectful. They are reaping what they sowed.

Footnote: the newsagency today cannot be the newsagency Australians remember from the past. Today’s newsagency is a shop leaning into change, offering different products thoughtfully selected and carefully curated for local community needs. Whereas in the past people walked in the door of a newsagency for papers, magazines and lotteries first. Today, many newsagencies have people walking in for more high-end sought after lines with papers, magazines and lotteries becoming the impulse add-on.

17 likes
Competition

XchangeIT failed newsagents on the Gotch data change

XchangeIT claims for itself a key role in data quality when it comes to magazine supply and return data in the newsagency channel. It is the copy, meting out punishment for poor data.

Last week, in the middle of the Gotch data structure change, XchangeIT oversaw faulty data sent to newsagents. data contrary to what newsagents had been told they would receive.

XchangeIT communicated to newsagents through their own software. They did not tell the software companies, the parties to whom newsagents turn for any tech question on matters such as this. They turn to software companies as they are more likely to open hours newsagents are open and are more likely to answer calls when newsagents call.

The help desk team at my software company, Tower Systems, found out about the data problem when newsagents canned. They had to then track it back through XchangeIT. The time wasted could have been avoided had XchangeIT been transparent in a timely manner with those at the front line of helping newsagents through what was for plenty of them a stressful situation.

Poor job XchangeIT.

Footnote: All through last week, help desk call traffic was up every day by more than 300%. This is because of queries, uncertainty and nervousness. By the end of the week things looked good. However, this week, call traffic is up too as there were others who did not do anything and now realised they should have. This is frustrating.

17 likes
Customer Service

XchangeIT and Gotch too late with title price change information

Disregard for newsagents and the software companies that serve them was on show today with the late announcement by XchangeIT and Gotch this morning of price changes affecting magazines that has been on sale for several hours.

For businesses that bemoan poor tech compliance by newsagents they set a poor example. Their late notice caused stress for some newsagents.

Title Woman’s Day Woman’s Day Woman’s Day Woman’s Day
Issue Description 18 December 1 January 8 January 15 January
Title Code 91135/14236 91135/14236 91135/14236 91135/14236
Issue Code 2140 2150 2160 2170
On Sale Mon – 11/12/17 Mon – 18/12/17 Thu – 28/12/17 Mon – 08/01/18
Cover Price $4.50 $4.99 $4.99 $4.50
Title New Idea New Idea New Idea New Idea
Issue Description 18 December 1 January 8 January 15 January
Title Code 12781 12781 12781 12781
Issue Code 8800 8810 8820 8830
On Sale Mon – 11/12/17 Mon – 18/12/17 Thu – 28/12/17 Mon – 08/01/18
Cover Price $4.50 $4.99 $4.99 $4.50
Title TV Week TV Week TV Week TV Week
Issue Description 16 December 30 December 6 January 19 January
Title Code 91400/91401 91400/91401 91400/91401 91400/91401
Issue Code 2140 2150 2160 2170
On Sale Mon – 11/12/17 Mon – 18/12/17 Thu – 28/12/17 Mon – 08/01/18
Cover Price $4.99 $5.99 $4.99 $4.99
Title NW NW NW NW
Issue Description 11 December 1 January 8 January 15 January
Title Code 91961 91961 91961 91961
Issue Code 2090 2100 2110 2120
On Sale Mon – 11/12/17 Mon – 18/12/17 Thu – 28/12/17 Mon – 08/01/18
WA/FNQ On Sale Thu – 14/12/17 Thu – 21/12/17 Thu – 28/12/17 Thu – 11/01/18
Cover Price $5.20 $5.20 $5.20 $5.20
Title OK OK OK OK
Issue Description 1 January 8 January 15 January 22 January
Title Code 91039 91039 91039 91039
Issue Code 2050 2060 2070 2080
On Sale Thu – 14/12/17 Thu – 28/12/17 Thu – 04/01/18 Thu – 11/01/18
SA/FNQ/TAS On Sale Mon – 18/12/17 Thu – 28/12/17 Mon – 08/01/18 Mon – 15/01/18
Cover Price $4.99 $4.99 $4.99 $4.99
Title Who Who Who Who
Issue Description 18 December 25 December 8 January 15 January
Title Code 88844 88844 88844 88844
Issue Code 7690 7700 7710 7720
On Sale Thu – 14/12/17 Thu – 21/12/17 Thu – 04/01/18 Thu – 11/01/18
WA/SA On Sale Mon – 18/12/17 Thu – 28/12/17 Mon – 08/01/18 Mon – 15/01/18
Cover Price $4.99 $4.99 $4.99 $4.99

 

16 likes
Ethics

Is the UK campaign against The Sun influencing campaigns here?

The campaign in the UK against the Murdoch owned The Sun newspaper is legendary, with plenty of newsagents being public about their refusal to stock the title. Given this tweet in the lead up to the Queensland state election I wonder if about the traction  for a similar campaign here.

Australians are no longer influenced by @rupertmurdoch propaganda rags and will continue to #BoycottMurdochMedia every day. I actually saw a sign up in a newsagents window saying “We don’t sell Murdoch’s propaganda rags here” 😂 I Love democracy #QLDvotes #Auspol #insiders #qt

There is the question of the role of the newsagent as censor and there is the question of the role of any newspaper in engaging in an overt political campaign to serve it s own interests as we have seen in recent years in Australia.

5 likes
Ethics

I was wrong about Gotch, they don’t care about newsagents

In my post last week about the missteps by XchangeIT and Gotch on the data handling for the new Gotch gift offer, The Market Hub, I said that I thought the issues wold be resolved at the Gotch end, negating the need for newsagency software change and therefore costs falling to software3 company owners and newsagents.

Thankfully, it appears that The Market Hub from Gotch will be established as a separate supplier through XchangeIT, negating the need for any software changes. Why is this relevant? In my opinion it reflects the poor preparation by Gotch and XchangeIT for this project and an arrogance that they expect others to invest capital on their behalf. But they are from the magazine distribution side of the business so I guess that is their usual approach.

Turns out I was wrong. Gotch does not plan to operate within the IT standards they helped to establish. They have advised they will use the magazine file structure to send gift produce delated data, breaking the standards. They will do this with XchangeIT watching them, yes, the same XchangeIT that fines newsagents for poor data management.

I think this disregard by Gotch of the IT standards they imposed on n newsagents speaks to their views on the future of the channel and, in particular, the distribution of print product.

If they believed in the channel they would invest in the right tech approach to their data challenge.

If they respected newsagents they would follow the IT standards they themselves helped to bring into place.

If they believed in their own future they would invest in that. Instead, they have invested in product and marketing but not in ensuring data flow within the standards they established.

I think this looks bad for Gotch. However, I suspect most newsagents will not fully grasp why this is an issue. This will make it easy for Gotch to say I am wrong and that my software company is the problem.

Here are questions and answers that define what is happening and why I have written here and previously as I have:

  1. Does the gift product data from Gotch and sent through XchangeIT meet the data standards they participated in developing? No.
  2. Can Gotch fix the problem at their end? Yes.
  3. Will Gotch fix the problem at their end? They have said no.
  4. What does Gotch want done? They want the software companies to change how the magazine data file is used, to enable the misuse of the file structure by Gotch to work with established newsagency software.
  5. Who does Gotch propose pays for the software changes? So far, me and the other software company owners.
  6. How could this problem have been avoided? Through discussion with the tech stakeholders long before launch as that would have taken away the time challenges given that the Gotch gift product range has now been launched.

Gotch may defend their position by saying my concerns are driven by my work with newsXpress. Such a statement would be untrue. My concerns here, as explained, are purely tech standards related.

If Gotch cared about newsagents they would respect the IT standards as much as they expect (and demand) newsagents respect them.

12 likes
Ethics

Would you include returned magazines for which you have received a credit in the stock you sell with your newsagency business?

A newsagency business changed hands this year where the vendor included returned magazines as part of the inventory for which then purchaser paid.

The stock take was not undertaken by people skilled in newsagency business stock takes.

The solicitor for the purchaser had never aced for a client in the purchase of a newsagency before.

The accountant for the purchaser had never acted for a client with a newsagency business before.

On the shelves at settlement was thousands of dollars of stock of magazines for which the vendor had been given credit by their magazine distributor. The magazines were not topped. Some were nine months old, yet there they were, on the shelves, for sale to shoppers.

The expert in the transaction was the vendor. They are at fault here. They defrauded Gotch, and through them the magazine publishers. They deceived the purchaser, causing them to pay for stolen goods and, through their actions, encouraging the purchaser to sell stolen goods.

My advice to the purchaser was to engage a new lawyer, to pursue the purchaser, to consider pursuing their original lawyer and to advise Gotch formally of what was discovered.

Gaps in handling magazines allow unscrupulous operators to get away with crimes like those outlined above.

Gotch should verify all return claims. Publishers should demand it, and be prepared to pay for it. While I understand they do spot audits, which have found discrepancies that have led to newsagents paying compensation, that is not enough. The situation I have outlined above should not have been allowed to happen.

Every returns over claim should be caught.

Gotch and the newspaper publishers should consider working with the ACCC on an authorised process for handling the change of ownership of a newsagency business. This could ensure the stock take is undertaken by a registered, skilled and ethical stock taking business.

Sadly, it is not the first time I have heard a story like this and, I suspect it will not be the last.

It has been a tough baptism into newsagent life for the purchaser. Hopefully, they have learned to be more curious about situations they encounter in business for the first time and to have a healthy questioning about those they deal with.

8 likes
Ethics

Gordon and Gotch moves into gift wholesaling and fails to adhere to data standards (with the help of XchangeIT)

Earlier this month, Gordon and Gotch launched The Market Hub, a wholesale business offering toys, gifts and other items.

In my opinion, Gotch should get its magazine distribution business right first. There are too many mistakes, too much oversupply, poor newsagent customer service and a poor tech platform through which newsagents connect.

As I have noted previously, Gotch could grow magazine sales for publishers by providing better service to newsagents, through a better tech platform. Indeed, the poor Gotch tech interface is a big barrier to newsagents taking on new titles.

There are items offers by Gotch through The Market Hub with a suggested retail price that is higher than the original supplier suggested retail. This potentially sets the participating newsagents as expensive and creates a false margin perception in my opinion.

Some items in the Gotch offer need understanding and support to drive sales success. Simply purchasing product and stocking it is not enough for such items.

FAILURE TO ADHERE TO DATA STANDARDS.

It is in the data side where I have concerns with how Gotch has gone about the launch of The Market Hub. Gotch sent to newsagents an EDI file using a format designed for magazine data. XchangeIT passed through the file, without testing.

The file contained errors. Gotch and XchangeIT people were clueless and, in my opinion, disengaged. It fell to the COO of my newsagency software company to detail the errors in the Gotch file sent by XchangeIT.

A big challenge was that Gotch was the supplier. The way the standard plays out is that having one company provide data for two very different types of products through one file format is problematic. yet, for several days, Gotch and XchangeIT resisted establishing a second supplier for Gotch to send through their data for The Market Hub. 

While I don’t know about other software companies, XchangeIT agitated my newsagency software company, Tower Systems, to change its software to serve the approach Gotch and XchangeIT wanted to take. What this meant is they wanted me to personally fund, to the tune of many thousands of dollars, changes so they could bend XchangeIT data to work with standards not designed to accomodate the data they wanted to send.

I made it clear to them that out of all of us at the table, Gotch, XchangeIT and Tower, only I was being asked to personally fund any work. I refused. Instead, Tower outlined an approach they could take with no cost – by sending the data from a separate supplier.

Thankfully, it appears that The Market Hub from Gotch will be established as a separate supplier through XchangeIT, negating the need for any software changes. Why is this relevant? In my opinion it reflects the poor preparation by Gotch and XchangeIT for this project and an arrogance that they expect others to invest capital on their behalf. But they are from the magazine distribution side of the business so I guess that is their usual approach.

What should Gotch and XchangeIT have done differently? They should have engaged the software companies before sending the file. They should have followed the standards. The should have established a separate supplier for this new Gotch business. They should have thoroughly tested the data they sent.

Instead, they worked in secret and rush to newsagents flawed data, compromising the integrity of the data standards that XchangeIT ferociously protects when it comes newsagent data. It is a pity they are not as tough with themselves and Gotch as they are with newsagents.

20 likes
Ethics

Newsagency management tip: understand what insolvent trading is

A business owning three newsagencies went broke months ago, owing close to two million dollars. The liquidators report was released recently, declaring that the business had been trading while insolvent for at least two years. This finding could have serious consequences for the directors.

ASIC defines insolvent trading:

An insolvent company is one that is unable to pay all its debts when they fall due for payment.

Yes, the definition is that simple. The director of the company to which I refer above was a blowhard, a gunna my mother would have called them. Gunna do this or that, with an attitude that they were an amazing business operator. Except, they were not. Many suppliers to the channel were left out of pocket along with banks and the ATO – and through the ATO, all Australians.

In my experience, often, the louder someone is about how great they are in business the worse they are.

ASIC provides advice on what to do if your company is insolvent:

If your company is insolvent, do not allow it to incur further debt. Unless it is possible to promptly restructure, refinance or obtain equity funding to recapitalise the company, generally, your options are to appoint a voluntary administrator or a liquidator. The three most common insolvency procedures are voluntary administration, liquidation and receivership.

ASIC has plenty to say on insolvent trading, including:

If dishonesty is found to be a factor in insolvent trading, a director may also be subject to criminal charges (which can lead to a fine of up to $220,000 or imprisonment for up to 5 years, or both). Being found guilty of the criminal offence of insolvent trading will also lead to a director’s disqualification.

ASIC has successfully prosecuted directors for allowing companies to incur debts when the company is insolvent, and has sought orders making directors personally liable for company debts. ASIC also runs a program to visit directors, where appropriate, to make them aware of their responsibilities to prevent insolvent trading.

If you think you may be insolvent, reach out to someone you trust for advice and to be by your side as you navigate the challenges.

The newsagent in my story did not want help. They said there was no problem.

16 likes
Ethics
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