Magazine oversupply

The allocations experts at Bauer have increased our supply of Elle Australia on the back of a sell through of less than 50%. Five issues in and this magazine is loss making for us and, I suspect, many newsagents. We have promoted the title, given is excellent positioning, co-located a couple of issues and ensured the full cover is on display. It’s not working yet Bauer thinks we need more stock.

With a full allocation of pockets in the weekly & TV magazine sections of the magazine department, Bauer is challenging newsagents with launch of TV Week Soap Extra. In addition to making space we’re dealing with too much stock. This is a title they could have used sales based replenishment for rather than using newsagencies as warehouses.

Further to my post Friday about the breach of privacy by Gordon and Gotch with their publishing of email addresses of many newsagents they claim to be delinquent in paying accounts, The Office of the Australian Information Commissioner offers newsagents an entry point for complaining about the breach and requesting it be investigated. In the states where there is an active Small Business Commissioner you could also complain there.

Before complaining to the OAIC, you will need to complain to Gordon and Gotch. I’d suggest you put your complaint in writing to:

David Hogan
General Manager
Gordon & Gotch
26 Rodborough Road
Frenchs Forest NSW 2086
FAX: 02 9451 6157

I suggest a letter to Gotch documenting the breach of your privacy and asking what Gotch intends to do about the serious matter. Make note of the Privacy Act and that you consider Gotch has breached this.

If newsagents whose email addresses have been published tin the communications about delinquent accounts do not complain to Gotch about the breach the company has the opportunity to consider that it has done nothing wrong.

If you’re on the list and you think its too hard to do anything, think about how a supplier might react if they have access to this list of newsagents how have now been publicly tagged as being late at settling their Gotch account.

In my view, Gotch needs to right this wrong.

We’ve lost money on the discount pack of NW and Shop Til You Drop. The GP from the copy sold has not paid for the space. I wish we could permanently stop supply of these discount magazine packs. Instead, we’re forced to lose money.

The Mega Trading Card Collector Pack units that did not sell when distributed through Network Services have made their way to some newsagencies through Gotch. They – the publisher? the distributor? – didn;t even have the courtesy to remove the old pricing stickers. Appalling.

This scale out of stock that failed to sell is a perfect example of how broken the magazine distribution model is. The stock now doing the rounds again is failed stock. Newsagents are being asked to provide space, labour and cover the freight of stock that fails to sell again.

Magazine publishers who want a healthy newsagency channel need to lobby to fix this. Every time they use magazine distributors they are aiding and abetting this other behaviour that harms us.

We received nine copies of nic & rocco Sweet Sensations. That’s nine copies more than I would have ordered had I been given the opportunity of deciding whether I wanted to invest in the launch of this magazine / cookbook.

That billing is delayed does nothing for me since it takes up space and is a leech title – relying completely on the traffic I generate.

At $19.95 the price is too high. No, there is little going for this title, certainly not enough for be to give it two pockets of space – two pockets because some bright apart decided I needed nine copies. Had they sent three I might have kept it in story. we early returned the lot.

So many titles are coming now with delayed billing that newsagents have caught on and are suspicious about when it’s used … as they should be.

I’m not sure if this is a new policy but I just found out that new newsagents are barred from early returning magazines by Gotch and Network for their first few weeks. In one situation I saw recently a new newsagent had an account for less than $100 for their second month in once they could early return what was not selling.

We are early returning the bagged discount Ultimate Fitness Pack Magbook bundle from Network Services yesterday. That they didn’t have the courtesy to remove the labels from previous newsagencies where the titles failed to sell makes this pack unmerchantable in my view. Network should know better. They wouldn’t get away with this with Coles or Woolworths. Shame on them.

Returning unsold magazines for credit ahead of the distributor-set recall date is important for managing space and cash-flow in a newsagency business.

Early returning would be less necessary if magazine distributors supplied more closely to what newsagents actually sell and if they did not load new titles without newsagent permission. Yes, the failure of the magazine distribution system requires that we early return.

Here is how I approach early returns.

1. Gross oversupply is dealt with on the day of arrival. This would be where we have received four or five times what we could reasonably sell.
2. I review the magazine shelves myself outside of the arrival process – checking title placement and looking for early return opportunities.
3. The magazine label is crucial as it shows arrival date and quantity received. I focus on titles that have been on the shelves two or three weeks and more.
4. If we have more than 60% of stock left I consider the title for early return. We’re in a shopping centre and need a sell-through of 60% to break even on magazines and if we’ve sold 40% or less in three weeks then the title is not achieving what we need.
5. Sometimes I will early return everything supplied and other times I will early return some stock. It depends on space needs and sales to date.
6. Whether I early return is a decision made on the day taking into account these factors. I try and not be swayed by overall distributor behaviour. I don’t seek to use early returns as retribution.
7. If we have sold more than 75% of a title and there are weeks for it to run we will consider ordering more stock.

So, early returning is not black and white. I see it as a senior management function that requires careful attention to the opportunities of each title and the needs of the newsagency business.

I have been working with a newsagency recently where they did not early return at all. This business has been losing a considerable sum of money in part because of gross oversupply of magazines. My implementing a structured and considered early return process we have stemmed the losses and made magazines financially appealing to the business again.

I am confident that there are upside opportunities with magazines. It’s unfortunate that we continue to be oversupplied in a way that forces us to waste time on early returning instead of investing time in growth opportunities.

Yesterday we received more copies of AWW cookbook titles for which we still had plenty of stock. Bauer would know our stock holding from their own data yet they sent us more stock. The only conclusion available is that they found extra stock and decided it’s better in newsagencies with us paying for it than leaving it on the warehouse floor and not generating cash-flow.

When Bauer purchased ACP the commentary was that they would be frugal managers of the business. To me they look mean in their dealings with newsagents – oversupplying more often than before. Their actions in the last six months have seen a return to the bad days of Network Services.

Network used to be pretty bad but through 2009, 2010, 2011 and into the start of 2012 they had, overall, improved. Now it’s worse than ever. New titles coming out when we have no room and more stock of existing titles without sales data justification.

Either the Bauer allocations system is a mess or they are deliberately treating newsagents appallingly and lumping us with stock such that it puts us at a commercial disadvantage.

Did anyone else get more AWW cookbook titles yesterday for which they still had stock?

In our case we early-returned.