Magazine oversupply

We early returned all copies we received the launch issue of The Amazing Place, a new travel magazine from Australian publisher Citrus Media. Our travel section is full so it was either cut a title to take on this new title or return this title. After considering sales and other factors we decided to not take this new title.

If only the magazine distributor has respected us and asked if we wanted to take on the new title and bankroll the publisher’s new venture. They will say they don’t have time. Well, they need to find time as newsagents are showing how they will respond to this – they will and do early return.

Publishers and distributors can’t just send new stock like this, not now, not with today’s competitive magazine world that they created. Back when publishers and distributors supported newsagents as the premier magazine channel we would have kept this title. Today, we have to run our magazine department on a more competitive basis.

This is the world magazine publishers and distributors created for us yet it is a world they refuse to accept. They treat us today as if we were still in the 1990s. This sees our competitors given unfair advantage over newsagents only leaving us with the mechanism of the early return to fight back.

Supermarkets are paid for space, they control what they get they don’t have to return unsold stock and I suspect they are protected if a title bombs. Newsagent get none of these advantages so we are left to wield the only weapon we have.

While I am against uneducated early returns, I do support the considered early return, as we have done with the launch issue of The Amazing Place.

I am disappointed with the last issue of Australian Good Food from ACP (Bauer). The publisher has sent us two copies – the current issue and an old issue. They have also increased supply. So, we have a thicker product and more product. Like many newsagents, I don’t have the shelf space, especially at this time of the year.

I suspect newsagents will early return some stock since we are not compensated for shell space used – unlike our supermarket competitors. We are not, yet.

While publishers use free back issues as a gift to drive sales, with Australian Good Food now dead I can’t see the value of attracting new readers.

To counter my recent complaints about unilateral and unjustified action by Gordon and Gotch in cutting supply for magazines in one of my newsagency, check out the 52% increase in supply of the Moshi Monsters magazine without any justification in our sales.

The oversupply of this title and the cuts in supply of other titles – to way below our average sales – suggests that Gotch is in all sorts of trouble. This must be worrying for publishers with titles being distributed by the company. If I were a publisher I would be concerned about whether they can get supply right.

I am not making this stuff up. People reading these posts can click on the images and see the data which Gotch has for making supply increases or cuts. There are no excuses for this behaviour by Gotch.

Gordon and Gotch has once again showed their skill at magazine distribution by increasing our supply of Quilts & More magazine by 50%, two copies, with the latest issue. Any reasonable assessment of our sales history (click on the image to see this) indicates that an increase in supply is not warranted. All I can think is that Gotch wanted to place the stock somewhere and not in their warehouse.

The CEO of Gotch claims that the company does not oversupply newsagents. Here is one more example of oversupply. Sure it is only small, two copies. Multiply this across hundreds, if not thousands, of newsagents and you get a feel for the impact it could have, the cost it could impose, on newsagents.

Gotch says we have control through early returns and their website.  This is not true. Control would be me having absolute control over all titles and quantities and nothing being supplied outside of this. Gotch refuses to give newsagents this level of control yet they use it as a defence to the ACCC and the like to hit back at complaints such as the one I am making on this blog.

In 2012 we need to focus our attention on this behaviour as it is financially harming the entire newsagency channel and costing us millions of dollars.

Further to my post yesterday documenting a case of magazine oversupply, here is another example – for The Puzzle Wizard World of Crosswords.  As the data in the photo from my newsagency software shows, sales have been volatile.  However, not sufficiently volatile to justify an increase from fourteen copies to seventeen as has just happened.

Click on the image for a much larger version.

I can’t see any justification in our net sales for the supply of three additional copies.  Sure we sold out of 12 copies for the February issue but this was a once off.  The two issues immediately prior sold six and nine copies respectively.  The two issues after the sell out of twelve copies sold eight and nine copies respectively.

So, why the increase from fourteen copies to seventeen.

If the justification from Gordon and Gotch is that this is what their allocations system determined then they need a better system.  If it is because they had to allocated the stock supplied by the publisher somewhere then their system is broken.  If it is because an allocations staff member decided we could sell the stock then they need re-education.

It offends me that a company with no financial risk in my business can spend my money in this way.

Is what has happened here with The Puzzle Wizard World of Crosswords an example of oversupply of magazines?  I think so.  Take a close look at the data and see what you think.

The best way magazine distributors can respond to this type of blog post is to change their behaviour.

Some people at Gordon and Gotch are unhappy at what I write here about oversupply.  If what I am told is true, they have been known spin what I write, responding behind my back to complains I make.  Like anyone reading this blog, they are welcome to respond here, to my face as it were – for all to see.

I share this information as background to this blog post which documents, in my view, evidence of another decision to oversupply by Gordon and Gotch.

Click on the image to see a screen shot from my newsagency software showing supply and return data for Jumbo Ring A Word, a imported crossword title distributed by Gordon and Gotch.

My reading of the sale and return data suggests that we should get five copies of this title.  It is the kind of title which should sell out by week three before there is any increase in supply.

Without sales data support, the Gotch allocations system moved me from five copies to seven and now to eight.  While I am sure that they will have their excuses, the data is all you need to make your assessment.  As I have noted, maintaining supply at five copies is what I would suggest is reasonable.

Maybe they increased by a copy because it is the holiday edition.  I’d accept if the base off of which they increased me was reasonable.  Seven is not a reasonable base, as the data shows.

So, is this evidence of oversupply by Gordon and Gotch?  I think so.  Should I be concerned?  Maybe not if it was just this one title in one of my newsagencies.  Newsagents reading this will know, however, that this does not happen for just one title and not just in their business.

Think about that for a moment.  One extra copy by 4,000 newsagents.  That’s a high cost to the channel.

Every single increase in supply of a magazine beyond what I could reasonably sell sucks cash, time and space from our businesses.  That it happens with consistency is, in my view, unconscionable.

The problem is that when newsagents complain about oversupply Gordon and Gotch they act as investigator, prosecutor, judge and jury.  They say that oversupply does not exist.

What do I want Gordon and Gotch to do?  Here’s a start…

1. Let newsagents decide what trigger they want for an increase in supply.  I think supplying to avoid a sell out is nuts for many titles.  Some newsagents may like this.  I don’t.
2. Make it easier for me to select the titles I range.
3. Agree on compensation for titles which fall below an agreed performance threshold.  Say, 50%.  Newsagents should not have to fund warehousing this inventory.

I am not out to bully Gordon and Gotch as their CEO alleges.  No, I want a fair magazine distribution system, one which treats newsagents with economic respect.

Based on our sales of People’s Friend magazine, I expect that we could have sold at least five copies of The People’s Friend 2012 Annual. We received two copies last week and both have sold.  While we are chasing more stock from Gordon and Gotch, it is frustrating that we were not supplied sufficiently to satisfy demand.

I understand that the problem may be at the publisher end in the UK.  If this is the case I hope that Gotch has taken them to task as it is disrespectful to the weekly purchasers of their product to not have access to sufficient stock of the annual.

If the problem is within Gotch then they need to look more carefully at these types of add-on items and place them where they do sell.  I’d be frustrated if I can’t get more stock and they end up with considerable returns from other newsagencies.

While this is a book size title, we were able to sell it by placing it at the front of the magazine fixturing, with the magazine.  I mention this in case readers remember my criticism of The Friendship Book 2012 recently and how the size makes it a challenge to display.  At least with The People’s Friend 2012 Annual we are able to locate it with the magazine and reach the target shopper perfectly.

More generally on the issue of magazine undersupply, magazine distributors can report to publishers on lost days.  They know the quantity they supply per store, they know sales and especially the date and time of sale of the last copy.  This enables them to calculate the on-sale days for which each store did not have stock of any issue of a magazine.  I wonder if distributors provide this data to publishers.

There is no reason in  our sales data for magazine distributor Gordon and Gotch to increase our supply of the air-freighted Heat magazine.  With our sales data showing that we sell 2 copies, occasionally 3 (twice our of the last 12 issues), Gotch has decided to increase supply to 6.  No phone call asking if they could borrow our cash, just an increase in supply.

It is behaviour like this which makes newsagents hit back at magazine distributors and, inadvertently, some magazine publishers.

Gotch should have a system which advises my of a planned increase and I should have the opportunity to say yes or no.  It is my money, retail space and labour they are taking advantage of after-all!  Why not ask my permission?  Because that does not suit their model which requires the trucks to be as full as possible.

Gotch will say it is a ridiculous idea to let newsagents say yes or no to a change in supply.  They will have reasons why it will not work.  Smart technology which respects newsagents and the investment they make in magazines could help better connect newsagents and the category and lead to an increase in sales.

What happened to my newsagency with Heat magazine this week is just one example of poor magazine distribution management by Gotch.  Publishers of popular titles need to be aware of the damage this behaviour is having on the newsagency channel and on their titles.

I know, I should not be shocked by the decision by Gordon and Gotch to increase supply of a title with a sell through of 30% to 45%.  But I am.  I am shocked that in this tough marketplace with flat or declining magazine sales Gordon and Gotch would send me more of something which struggles to sell in my newsagency.

Gotch’s own data would reflect that I usually sell 4 copies of this title.  They have increased me from 10 to 14 copies.

In my view, this is unconscionable conduct.  Given the renewed interest at the ACCC in unconscionable conduct under new Chairman Rod Sims maybe they could take a look at this.  I am sure I have not been singled out by Gotch for being knowingly grossly oversupplied.  Indeed, I know from other newsagents that Gotch is performing particularly poorly at the moment on oversupply.  Newsagents carry the cost.

Magazine publishers who wonder why newsagents early return titles without thought have the reason right here.  Newsagents use early returns to hit back at poor behaviour.

I’ve not gone to Gotch about this particular issue as I should not have to do this.  They say they are the magazine distribution experts.  I guess they are if you look at it from their perspective.  These extra four copies are sent in an effort to get my cash and thereby become the banker, again, to the Gotch model.

For a company committed to building real partnerships with our customers, Gotch is failing based on consistent behaviour like this.

I consider their continued oversupply to be a breach of contract let alone appalling customer service.

Every magazine publisher with a title distributed through Gotch should be concerned by this behaviour which hurst the newsagency channel.