A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Magazine oversupply

Time Out Sydney in Melbourne

tosydWe don’t have room for Time Out Sydney. had we been asked if we wanted the title ewe would have declined. Instead, we’ve brought it in, unpacked it, processed it and then returned it. As newsagents become more angry magazine publishers will see an increase in early returns.

In case you are unsure about newsagent anger – it is fuelled by being held accountable for indebtedness with insufficient control over this.

MAGAZINE PUBLISHERS AND DISTRIBUTORS: FYI, it’s 2015. Technology is advanced. We ought to have control over title range and volume in our businesses. Give us this and we become accountable for indebtedness and we have a reason to look at magazines as more than what they have become because of your inaction.

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magazine distribution

Extra early returns for Christmas

xtrareturnsI broke with tradition and did an additional sweep for early magazine returns yesterday, Thursday, because of space pressures as a result of unwarranted additional magazine supply and Christmas space pressures.

Outside of our usual magazine returns and a reasonable first pass at early returns, this  photo shows the additional early returns I pulled out of a desire to exert more control over my business yesterday.

The planned MPA magazine publisher  distributor code of conduct will not adequately address the oversupply situation nor will it address the uncompetitive nature of how magazines are supplied to newsagents versus our competitors. Until this is fixed, early returns are the only tool newsagents can use.

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magazine distribution

Gordon & Gotch magazine fail #3

image[5] copyYep, the same newsagency as the last two, this time it’s TAN UNRESTRICTED. With no sales achieved from issue 54 through to issue 64, the Gotch magazine allocations experts have decided the newsagent needs to go from five copies to eight copies. This would be laughable if it was not so harmful to the business.

And you wonder why newsagents are getting out of magazines.

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magazine distribution

Too many Christmas food magazines

magsxmasWe have too many publishers publishing Christmas-themed specials. Some are publishing two and more. While I understand that publishers see this as an opportunity to extend the reach of their brand, we retailers need space to do the titles justice.

Our shelves are overflowing with Christmas themed titles.

I doubt we will see a net increase in sales of Christmas themed magazines. The extra range is driving churn among the titles and not making us any more money.

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magazine distribution

How to cut your end of month magazine bill

magreturnsThis photo shows some of the magazines I took off the shelves for early return in one of my newsagencies on Saturday in my weekend cull.

Every Saturday I review all magazines on the shelves, considering the stock on hand, the length of time on the shelves already, the pressure on space and sales history.

The extent of the cull as shown in the photo is average for a Saturday.

Why Saturday? The pace in the shop is different, headspace is different, it’s a management function that for me works best away from everyday.

This is how I manage my magazine accounts – by culling to serve the needs of my business as opposed to the needs of publishers and distributors. The culling is considered, careful – focussing on monthly and longer on-sale titles, not top sellers but second tier and beyond titles.

If I am unsure about early returning a title I check sales history – I don’t want to cut myself out of certain sales.

I take care with publishers who actively support the newsagency channel and are fair in their allocations, publishers like Pacific Magazines.

The weekend cull an opportunity for a fresh eyes view. Being done by the owner of the business clarifies the goal – managing your magazine account.

I trained a newsagent on the weekend cull strategy recently and the result is a 50% cut in their magazine bills and no loss of sales. In their case this has freed up more than $10,000 in working capital, cash that was tied up in the systematic oversupply merry-go-round that is newsagency magazine supply.

If you are not doing this type of cull already and follow my advice, let me low how much cash you free up.

Note: I recommend against early returning the day stock arrives as there is nothing to be gained from this – unless you see gross oversupply.

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Ethics

Another example of Bauer Magazine oversupply

peoplemagI don’t want to be in a position to write this blog post. No, I want fair and justified magazine supply. I don’t want unjust treatment that is not based on data facts.

My story plays out in thousands of newsagencies each week, costing our channel millions of dollars. It disadvantages us.

Click on the image – see for yourself evidence of Bauer oversupplying People. For no reason they increased our allocation by 1 copy. Okay 1 copy is not massive. But it is unnecessary, a waste and a cost to my business.

This is another example of the waste of newsagents sending sales data.

Actions like this increase in supply make us look stupid for working hard to send accurate sales data.

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Ethics

Bauer Media ignores newsagent sales data & sends extra stock when there is plenty in-store

bauer-oversupplyThis is not a new story. What I describe here happens in newsagencies across Australia every week, many times over. It’s been happening for years. This is a crime. There appears little or no interest in key spiller businesses in fixing the issue.

Shame on those involved as you are the people hurting small business newsagents and making us less competitive than others selling magazines. Shame on you.

Newsagents are pressured and penalised to provide sales data to magazine publishers so that those publishers can respond to demand and supply more appropriately. That’s the spin. Sadly, there is little evidence from some publishers that it is more than spin.

Bauer Media has been caught out again this week ignoring newsagent data and oversupplying a title with no justification for the supply.

While Bauer allocations people will have excuses, they are worthless as we have heard them before. Many newsagents feel that the company deliberately oversupplies to serve its won purposes.

Take a look at the image. You can see the initial supply of 8 copies of AWW Slow Cooker 4 on June 6, 2014. 1 copy was returned and 3 copies were sold on June 6, June 14 and July 20. yesterday, Bauer supplied an additional copy. The newsagent early returned it – incurring freight and labour costs. The newsagent was effectively fined by Bauer for Bauer’s own oversupply.

Warehouse, trucking and newsagent resources were wasted in this. It’s shameful.

Take a careful look at the image. This is data from the newsagency software being run in this newsagency treated so poorly by Bauer. Take a careful look at the detailed data in this small business. If this small business has access to such well-organised data and can access it in seconds then why not Bauer? Are newsagent IT systems better than Bauer’s IT systems? It would seem so. Either that or Bauer has the data and deliberately ignores it.

The example from this newsagency is one of many I receive regularly from our channel.

Okay it is only one extra copy of one title. Multiply that across our channel and not that it happens many times a year and you soon see the financial cost on newsagents for labour and freight plus the cash flow impact which I’d say is in the millions of dollars.

The newsagent held data is great for business management but it is bad in that it proves consistently poor allocation actions by Bauer against newsagents.

My experience is that no amount of complaining about institutional oversupply by Bauer will drive change within the business. Plenty of newsagents think this too and it’s a reason they strike out at the company with aggressive early returns of Bauer distributed titles.

Early returning is the only way we can effectively deal with this oversupply.

Publishers using Network and who are concerned about early returns could consider this when wondering why newsagents early return their titles.

Smart newsagents like the one who provided me their data have the evidence and they are getting angrier. I can understand them wanting to strike back.

Footnote: I have masked identifying details to protect the newsagent.

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Ethics

Justified early returns

bauerdiscountWe had no space for the additional SKU from Bauer – Elle and Bazaar and so we early returned them. What’s unfair is that we have to send back the whole bag. What a waste of my money! I know newsagents who compensate by early returning other titles for ‘balance’. Asking me if I have room for a new SKU would be a smarter move Bauer.

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magazine distribution

Nic & Rocco reissue of damaged stock by Bauer wastes newsagent time and money

magssweetsensatAlmost a year ago, Bauer Media issued Nic & Rocco Sweet Sensations. I blogged about it at the time. Today, they sent it out again. This time it’s stock that has been around the block. Many copies are damaged.

What a waste of time and money! What an appalling and unfair treatment of newsagents. I consider it to be unethical.

There should be no reissue of any title without newsagent permission. Bauer demands we pay them on time yet they do not provide reasonable levers with which to control our level of indebtedness.

Shame on those at Bauer who facilitated this abuse of newsagents.

I’m early returning Nic & Rocco Sweet Sensations.

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Ethics

Is it unethical to send more stock of a title a newsagent without justification?

Imagine the surprise of a newsagent this week when they received additional stock of Modern Wedding Styling magazine when they still had stock on the shelves from the August allocation. There is no sales history to indicate they will get through the initial allocation. So, the newsagent topped the supply this week and early returned it.

The newsagent has lost time and money on unwarranted allocation. The publisher has copped the cost of shipping out the stock that was topped this week. They will probably cop a return fee and maybe a topping fee.

The distributor could have saved the publisher and newsagent costs had they used the data they have from this newsagent and not sent the extra stock in the first case.

What happened in this situation could be considered to be a poor allocations, poor management or deliberately actions to generate fees for the magazine distributor.

It’s say it’s not a poor system as that’s an excuse Network has used for decades.

It’s say it’s not poor management because network has had plenty of time to address that.

I think the supply reflects a commercial decision to apply and this is what I’d label unethical. Whoever participated in or facilitated this situation ought to be ashamed of themselves.

This is another example that makes a mockery of the pressure newsagents are put under by XchangeIT for data accuracy. There is no evidence of magazine distributors being put under similar pressure.

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Environment

Evidence Bauer Media sales based replenishment of magazines to newsagents is not based on sales data

Thank you for sending your sales data.

Based on the information you have provided, we have raised an extra order on your behalf.

This order will be delivered to you on the next available delivery day.

Outlined below is a list of what the order will contain.

This is the opening of an email this week from Bauer to a newsagent. The Sales Based Replenishment (SBR) system / experts at Bauer advised he was getting two additional copies of Top Gear. The problem is, he has only sold two copies and has four copies of the initial supply in-store. The sales data sent to Bauer was for the two copies. This is not evidence to support the Bauer claim to supply more. Their email is wrong, it makes this newsagent trust them even less.

It’s not the first time Bauer has said the sales data made them do it to justify sending extra stock. Nor is this newsagency the only one in Australia to receive such an email from Bauer where there is no evidence in the sales data to support the claim.

This action makes Bauer’s systems look broken and their allocations people stupid or deliberately abusing newsagents to serve the company.

My suspicion is that the Bauer SBR system, if it is a system, is broken and raising new allocations without any evidence – causing newsagents to incur more costs over which they have no control and for which they are 100% liable.

This is unfair. It disadvantages our channel. It makes us less competitive against supermarkets.

Looking at Top Gear sales for this newsagency for 2014, I see no evidence in the data for the newsagent to be suppliers more than three copies each month yet the initial Bauer allocation is six copies. Then, weeks into the month, they allocate two more.

No wonder this newsagent does not trust Bauer. The data informs his position on this.

This is another example that makes a mockery of the pressure newsagents are put under by XchangeIT for data accuracy. There is no evidence of magazine distributors being put under similar pressure.

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Competition

Magazine publishers who make supermarkets more appealing than newsagents risk the future of our channel

For years there have been differences between how suppliers who supply newsagents and supermarkets with the same products treat these competing retail channels. While newsagents have complained, they have done nothing about it. I think we are approaching a time when we will need to act.

The challenges now are about much more than better gifts with purchase for supermarket shoppers.

The supply model used today disadvantages newsagents as it encumbers our businesses with financial,. labour and space costs that our competitors do not have. But even that is not why I say we are approaching a tipping point.

Price is the issue. More and more I am seeing different pricing in supermarkets for titles we sell in newsagencies.  News Life Media and Bauer Media are the main publishers engaged in this. They must be doing it to drive traffic to supermarkets and away from newsagents for their products. Why else would they make their products so much cheaper in our competitors?

Why price Inside Out $2.00 less in Coles than the newsagency 50 metres away?

Why bundle weekly Bauer titles in supermarkets at a discount to nearby newsagents?

The only reason can be to drive supermarket sales.

Think abut the long-term implications – either newsagencies close or they reduce their reliance on magazines. What that may not hurt many of the titles sold by Bauer and News Life Media, it will hurt them and it will hurt many other publishers.

Today, the Australian newsagency channel is the largest single magazine retail channel in the country. But for how much longer? Those publishers who appear hell-bent on directing shoppers away from us need to consider the bigger picture for all publishers as well as for small business newsagents and the vital and quintessentially Australian role they play in there communities. Thankfully, not all publishers are so inclined to kill our channel.

Publishers: every action you take against us makes magazines less profitable for us and informs our own actions. Every time you facilitate supermarkets presenting your product as better value from them you harm our businesses.  You’ll blame us when we are less interested in your products or quit as you have blamed us in the past, not thinking for a moment about the role you played in us deciding as we have done.

Every benefit you give supermarkets, every time you make them more appealing than newsagents is another decision against the future of the Australian newsagency channel. Shame on you as we have served you well. It is newsagents who have been key to your success and newsagents off of whom you make more money.

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Competition

Network fixed journal delayed billing error

dbillNetwork Services late this afternoon issues an email to newsagents advising that the journals distributed today from Universal magazines are , indeed, delay billed. While this is welcome news I suspect some newsagents will have processed returns already – because of lack of advice from Network and because they don’t need journals at sub-par margin.

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magazine distribution

Newsagents frustrated at journal supply

journalI’ve heard from several newsagents about the Paper Pocket branded journals received today from Network Services.  These are from Universal Magazines. They are part of the calendar offer newsagents were given the opportunity to opt out of. Billing is delayed. While they are 33% margin, that’s short of where they need to be to be interesting to many newsagents. I have suggested to Universal that instead of opt out, they go with opt in. They are reviewing distribution plans for next year.

The products themselves look good. It’s the terms and the push model that frustrate newsagents.

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Calendars

It’s a mystery

mysteryNetwork Services sent us a new product: Bungees. Mystery Pack it says.  Well, it’s a mystery to us why they would send us this item. No thanks. 25% if an offensively low GP for a toy item. It makes us less competitive when suppliers send us unrequested product that it not appropriate to our business model.

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magazine distribution

How newsagents can act on calendar supply by magazine distributors

As promised a few days ago, here are my thoughts on how newsagents can act on the supply of calendars by magazine distributors where we have little or no control on supply and where margins are considerably lower than what we can achieve ourselves through direct relationships.

If you have been supplied calendars that you do not want and are facing costs associated with storage and return, you could consider bringing the matter before an appropriate authority for review. However, before you start, think about what outcome you want – what is your core issue.

It is one thing to think a situation is unfair and another entirely to have proof to support your complaint. If you do not have proof that will stand up to scrutiny there is no point is pursuing the matter.

Read the contract you signed with the magazine distributor you are contemplating acting against – read what you agreed to.

PREPARE YOUR CASE.  Have you been oversupplied? Have you been supplied stock when you previously said no?  What do you want? What outcome are you seeking?  A registrar, mediator or judge will want you to be clear in articulating what you want. So, if you are being oversupplied, what do you want?

I can imaging a complain being that the supply model makes your business uncompetitive as it forces on you costs that detract from the more efficient and profitable running of your business.

MOUNTING YOUR CASE. Where you make your complaint will differ from state and territory to state and territory. My suggestion is to start with an entry level forum like a Small Business Commissioner. In Victoria I have used the office of the SBC to resolve a several issues. It’s inexpensive and informal. It also shows the other side that you are serious about resolving the dispute. Also, it can be a reasonable precursor to more formal action of the matter is not resolved.

Here are the entry point places where I’d mount an initial complaint for mediation / resolution by state:

Don’t rush to make the complaint. Make sure you have your evidence, that you know what you want as an outcome and what you will do if mediation fails.

I’d be glad to help any newsagent through this process. Mounting an ill prepared, undocumented and emotion-charged case will not help those involved nor the channel more widely.

Each case will be unique. It needs to be from you, in your own words, speaking to your situation. Merely lodging a complaint will pressure the magazine distributor involved to be present for a mediation in your state. In some jurisdictions the numbers of complaints against companies are noted in reported to parliament.

SO, WHAT DO YOU WANT? You never go into any legal or quasi-legal fight without knowing for certain what you want. When it comes to calendar supply, I suggest that newsagents want one or more of:

  1. Absolute control over what calendars they are sent.
  2. Trading terms that are competitive with other calendar suppliers.
  3. No cost of returning unsold stock.
  4. Mutual respect in supply and return management.

REMEMBER. You will need to be prepared to sit across the table from people better resourced and probably more articulate than you. You will need to have a thick hide and be prepared for them to play the person and not the issue. You will need to be prepared to be public about your fight so that other newsagents can support you.

Here are some questions and answers:

Why should individual newsagents mount their case? My experience in business is that authorities are more likely to listen to complaints from individuals.

The distributors are bigger? For decades newsagents have felt and acted helpless. One day someone will act and show the way forward.

Will government care? The organisations I suggest in this post have been established by governments to provide low cost and structured places where disputes like these can be resolved.

What if publishers hate me? Who cares? They are part of the magazine distribution process and play a role in oversupply.

I am too small why should I do this? If you do suffer from calendar oversupply and complain about it, you need to have the guts to act on your complaint or stop complaining.

How can the magazine distributors Gotch and Network avoid this? Stop calendar oversupplying. It’s a behaviour they knowingly engage in. This is my preferred outcome – that they voluntarily supply based on what I ask for.

Why have the associations not done this? You’d need to ask them. Magazine / calendar oversupply is the issue newsagents rate as the most important they currently face.

FOOTNOTE: I will help any newsagent as much as I can to deal with magazine oversupply. Call me on 0418 321 338 or email me.

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Calendars

A single drop of long on-sale magazine titles not appreciated by newsagents

magspaceWith more and more newsagents reducing space allocated to magazines newsagencies are no longer geared to warehouse stock sent to last through a long on-sale. Whereas in the past holding bundles of stock for three months was acceptable, today it is not.

Technology should be used to apply product based on sales through the on-sale. Publishers will say this is not viable for them.

My message to publishers is that the model of supplying to us stock to hold for three months through an on-sale is not viable for us even if all supplied product will eventually sell. Today’s efficient newsagency does not have the luxury of the space required.

I am more likely to cut off long on-sale titles supplied in this way.

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magazine distribution

Expensive magazine partworks returns

Several newsagents have contacted me about the freight costs in sending boxed of unsold part 1 of new partworks back to the distributors. My experience is that distributors will cover this if you contact them and explain that the allocation of oversupply is their responsibility. If the supply model was more accurate such wastage could be avoided.

I was talking about this with a non circulation product supplier recently. They were shocked that newsagents had to pay to send back unsold stock, especially where newsagents had no say in the allocation of stock in the first case.

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magazine distribution

Overloaded with The Block magazine

blockoversupplyWe have been sent three times more copies of The Block magazine than we sold last year. That doesn’t make sense to me. This is a perfect title to be supplied using the Bauer Media Sales Based Replenishment program and not using newsagencies as warehouses.

I decided to early return stock at the weekend and reduce our exposure. Space is too tight.

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magazine distribution

A good example of poor title allocations

changebasetelegWe often sold out of the 3 copies of the telegraph we received from network Services so they increased us to 7. I;d have thought 5 was okay but not 7. A review of our history shows volatility. It does not make sense for them to more than double supply. It makes me wonder if they are dumping excess stock they have to allocate. Better in our shop than their warehouse.

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magazine distribution

Newsagents respond to survey on magazine oversupply

I recently asked newsagents to provide specific examples of what they consider to be magazine oversupply.  Here’s what I asked for: Please list details of what you consider to be magazine oversupply: Title name, most recent supply, average net sales. Please use a separate line of text for each title. This data will be published on the newsagency blog as part of a series about the broken magazine distribution model that disadvantages Australian newsagents.

  1. Your Stars Magazine Supply since Autumn 2013 2 (jumped to 3 for Winter) TOTAL Sales since April 2013 Autumn 14 increased to 5
  2. British Football Weekly Supply 21/8 = 2 Never sold a copy in 5 years Have cancelled supply but it keeps re-appearing….
  3. Mustang Monthly Supply 21/8 = 3 Normal supply = 2 No sales in last 12 mths
  4. Tamiya Model Magazine Int. Supply 21/8 = 3 Normal supply = 2 No sales in last 12 mths
  5. Just to balance the ledger here’s G & G titles EWW 4 2 INSIDE OUT 5 3 DELICIOUS 6 3 MR WISDOMS SUDOKU 6 3 TATTOOS DOWNUNDER REISSUE 5 0 TRAIL ZONE 2 0 TATTOO CANDY REISSUE 15 0 SATAC UNIVERSITY GUIDE 3 0 FEAST (N/A) 7 3 JUST BIKES 21 11 MARIE CLAIRE (N/A) 8 4 IT GIRL 14 6 ANH PRES DETOX 6 0 CLASSIC ROCK 6 3 FUN TO LEARN BAG O FUN 12 6 VIC FISHING MONTHLY 4 0 BETTER HOMES & GARDENS (N/A) 34 25
  6. BetterGolferRedist 13 0 Dolly 20 5 Extreme Action 6 0 FourFour2 4 1 INKED GIRLS REDIST 3 0 INSIDE SPORT 3 1 SCOOBY DOO MYSTERY MAYHEM 3 0 SCOOBY HIGH SCHOOL 4 0 SIMPSONS WINTER WINGDING 6 0 TMNT-TURTLES MUTANT MISSIONS 4 0 INKED GIRLS 7 2 CLEO MINI 6 0
  7. Oversupply is more than I request. Womans Weekly 46, average 8 per week Thats Life 32, average sales 13 per week The issue we have is that we have to pay freight costs for any over-supply without any chance of recovering this cost on any unsold magazines
  8. weekly telegraph 17 and our average is 5 sales and it has been going on like this for 5 years
  9. Power Torque, 7, 0 Delivery Magazine 5, 0
  10. LIMELIGHT 14 COPIES AV SALE 7 COPIES BELLE 38 COPIES AV SALE 20 COPIES FRANKIE 44 COPIES AV SQLE 25 COPIES
  11. Symply Too Good No 1 – 9, sold 4 in last year Symply Too Good No 2 – 9, sold 3 in last year Symply Too Good No 3 – 9, sold 3 in last year Symply Too Good No 4 9, sold 2 in last year Cosmo Brides – 12, sell av. of 4
  12. GOT 12 NW magazines last week and selling 5-7 last 10 weeks, this week we get 21
  13. GOT 12 NW magazines last week and selling 5-7 last 10 weeks, this week we get 21
  14. Monocle, 5, 0.6 Aust Ironman, 5, 0 Aust Horse Performance, 15, 0.4
  15. lol
  16. GO CAMPING
  17. Reader’s Digest Last Issue received 12 Sell 1 every 3 months
  18. Catalogue, rec’d 6, av 1, usually receive 3 Select AFLK Albums, usually rec 2 or 3 at a time, just received 6 when we have 7 on hand, assume end of season trying to clear warehouse. Very angry as I have to pay to post back from remote area, costs a fortune, wipes a good part of profit on any sales, grrrrrrrrr
  19. mens health magazine, the last three issues getting 8-9, selling 3 max. latest issue we get 21
  20. Cleveland western, 60, 0 Commando Library, 2 every week, 0 lovatts Mega, 6, 1.4 bristle busters, 8, 2.3 mens fitness, 6, 1.4 Just Cars, 16, 4.6 AWW, 40, 17.6 Country Homes, 7,3.6 Grass Roots, 13. 5.6 Kit Homes, 6, 2.2 Watch, 8,2 New Internationalist, 10,0 Performance Horse, 9,1 Family Tree, 12,2 Rhythms, 8, 0.6 Delivery, 11, 0.6 Power Torque, 11, 0.2 4wd Touring, 18, 0.4
  21. AUST FLYING SUPPLY 4 SALES 0 FLIGHTPATH SUPPLY 6 SALES 2
  22. GETTER GOLFER SUPPLY 2 RETURN 2 SUPPLY 2 RETURN 2 SUPPLY 3 RETURN 3 THIS TIME ROUND SUPPLY 9 AND NO SALES YET ……

This is all the responses received without any editing by me.

5 likes
magazine distribution
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