magazine distribution

We received Pigeons & Peacocks yesterday for the first time.  While an interesting looking title, I doubt that supply was warranted based on any sales data from our business.  We received two copies and would need to sell both in four weeks to recover our costs.

Just who made this decision to send us this title and why did they decide to put my money at risk?  This is the fundamental question I have about every new title sent to us by magazine distributors who think they are better at putting my money at risk than I am.

If it sells out I will be thrilled.  If it bombs I will be out of pocket.

Magazine distributors cannot have it both ways – controlling what titles we get and at what volume and making us financially responsible for their allocation decisions. yes, this is as it has been forever.  Well, in today’s marketplace something has to give.  I think we are seeing that with newsagency closures on the rise.

One source told me that there have been more newsagency closures in the first four months of 2010 than in all of 2009.  If true, this would be alarming.  I am not seeing any change in behaviour by the magazine distributors to indicate that they are concerned.

Fairfax Media Publication Solutions has communicated to distribution newsagents about the new early returns process for titles taken over from NDD.  This is a good and necessary step if FMPS wants to establish itself as a viable magazine distribution alternative.

The next step is to achieve XchangeIT compliance.  I understand progress is being made in this regard.

The final step is to facilitate a direct relationship with retail only newsagents who already have direct supply relationsips with Gotch and Network.  This will be essential to FMPS achieving retail penetration close to that of NDD.

Pacific Magazines is launching The Outdoor Room with Jamie Durie, a new outdoor entertaining and lifestyle magazine, on September 27.  According to AdNews, it will cover all aspects of outdoor lifestyle from furnishings, renovations and decorations, budget makeovers, garden projects, to pets and wildlife, travel, food and entertaining.

Advertiser support has been strong so I’d expect a big push from Pacific to make the most of the newsagency launch.

I’d like newsagents to be able to set their own supply quantities for new titles.  I’d expect some would ask for more than the projected allocation while others would ask for less. Based on the people behind the title I would be seekingcmore copies in my stores as I expect that this title will do well.

Given that it is our cash at risk it is only reasonable that we play a role in determining just how much cash we want to invest.

While I am pleased that ACP reduced our supply for their latest Weeknights Fast & Fabulous cookbook, we still received around twice what we could reasonably expect to sell – even in today’s marketplace of strong interest in food titles.

For a company which demands on time settlement of accounts by newsagents and often pursues this with ignorant aggression, it is disappointing that the supply model remains unfair to newsagents.

This title has a three month on-sale so why not provide me with 33% of my expected sales and use the Sales Based Replenishment model to provide additional stock when sales show that this is necessary.  That would be fair in terms of demands on retail space and newsagent cash.

Better still, why not give newsagents absolute control over supply?  This makes sense given that we are responsible for paying for the stock. This is where the model is half pregnant and grossly unfair toward newsagents.

By supplying the stock up front as ACP has done for this title and its other long shelf life titles makes newsagents ACP’s banker in many respects. Sure we will ultimately be credited for unsold stock but in the meantime ACP has our cash and given their debt situation I am sure it comes in handy.

I would expect that somewhere within ACP the cash flowing from newsagents for this and similar long shelf life titles is reflected in their financial modelling.

Supplying more stock than we could reasonably expect to sell is effectively a request for us to provide a loan.  This is more true for ACP than other publishers since they own the distribution company and, I expect, have faster access to the cash newsagents pay for these long shelf life titles.

I like the look of Weeknights Fast & Fabulous but I do worry that it will struggle in the more competitive food space of today.  MasterChef is a monster of a title.  Delicious is improving.  Better Basics is hot! Donna Hay continues to cut through with stunning covers.  The bar is higher today than a year ago.  Food titles need to clear that higher bar if they are to at the very least achieve the sales they achieved previously.

Publishers will think they can’t take a trick when they read this blog post.  The delayed billing introduced by Universal Magazines for some of their titles is doing us no favours.  Sure there is a delay for payment but we still have to find the stock.  Plus, the way they handle the delay through XchangeIT means that we do not have accurate data on the shop floor indicating when the title came in.  Regardless of delayed billing, if a title does not start to sell within the first month I am likely to want to return it.  Publishers need to realise that product cost is only one of four factors in the cost equation.

We didn’t have any spare room for Renovate which arrived in-store yesterday.  With no spare space at all and the bagged package quite thick I made the decision to early return all stock.   Despite what publishers say, shoppers I speak with prefer magazines they can browse.  So, bagged titles are given priority when I am considering whether to early return due to lack of available shelf space.  Yes we will miss some sales – it’s a choice I had to make taking into account the titles which would have had to come down to make room for the weighty Renovate.

Ralph magazine closed in June.  I thought that was the end of it.  This morning we received Girls of Ralph. My hunch is that it will not sell – partly because they are leveraging a title which shoppers were not supporting and partly because we are saturated with girls of repurposed content.  I hope that I am wrong and that I do make money out of this new title – I’m not holding my breath.

This title is a perfect example of why we need publishers to take on more of the risk of distributing titles to us.  If did not achieve at least a 50% sell through, we should be paid for space and labour.  An alternative model is that we pay based on scanned based sales – that is, after we have made a sale.  There are other alternatives too where publishers take on a fairer responsibility for the stock they send us.

Newsagents may want to the quantity of Scooby Doo stock received yesterday.  In our case supply was increased without justification.  Yes, yes, we can early return.  We should not have to do this.

I was discussing this with a newsagent late yesterday and they are at their wits end about magazine supply with the cheques they regularly write for the magazine companies equal to or more than the value of sales in the month.  And that is without even factoring in the cost of real estate and labour.

Newsagents have complained about the supply model for many years both formally and informally.  Millions of dollars have been invested by newsagents to provide magazine distributors with more timely and accurate data with a fairer supply model as one of the promises.

While newsagents can and do early return to manage stock levels and cash flow, there is a limit as to what can be achieved.  Plus there is a labour and freight cost with this.

Negative cash flow for magazines is worse today in 2010 than I have seen it in years.  It is the extra one and two copies of a title, like Scooby Doo, which is causing real damage as it is under the radar.

I can see a time when newsagents en masse refuse to pay magazine distributors on time and through this exert cash flow pressure of their own.

The better alternative would be for distributors to agree to a fair supply model with penalties for failures on their part – like sending extra copies of Scooby Doo without justification in the sales data. They need to hold themselves as accountable to us as they hold us accountable to them when it comes time to pay the bills and put up displays.

Network Services has been talking with the various software companies about how to best handle the transition of titles from NDD to Network where the recall date is beyond the last day of trade for NDD.

To their credit, Network has sought input from the software companies on transition options.

Earlier today is a surprising move, POS Solutions published the correspondence from Network.  They have published a request sent from Network to them for input.  It is not a statement from Network as to how they will handle the situation.

My personal view is that POS should not have published this communication as the approach canvassed is far from certain.

Newsagents in Tasmania yesterday received an email from Jonathan Mathys, the editor of Tasmanian Life, setting out the new trading terms relating to the title which used to be distributed by NDD.  The email announces that the next issue of the magazine will be delivered, starting today, by a courier company.  There is no invitation to open an account, just a decision by the publisher.

Judging by communication I have received, the email has not gone down well. The issues raised with me are:

1. Lack of agreed terms.  There is no contract, no request to accept supply.  An assumption has been made that newsagents will take the stock.
2. Supply volume.  The last supplied NDD volume will be shipped.  This will not reflect adjustments since made by newsagents.  While there is a credit / returns process in place, it’s more work for those involved.
3. Margin.  33% if you pay within 3 days if invoice.  25% if you pay within 14 days of invoice.  Invoices are sent electronically within 24 hours of delivery.  There is no comment about the margin if you do not pay on time.
4. Returns.   You hold the unsold stock until the next delivery, eight weeks later, when it is collected. You are given a credit against supply for the returns.  No early return.

To their credit, the email outlined some good marketing initiatives.  It also forecast a rewards program offering cases of beer and weekends away.  I suspect that newsagents would prefer margin since you can’t bank beer or a weekend away.

I like Tasmanian Life.  It’s a good publication for Tasmanian newsagents. I think that the transition from NDD to an in-house managed operation has not been handled as well as it might has been for newsagents.

I understand that the closure of NDD leaves magazine publishers to come up with distribution solutions which work for them.  It is important that they consult widely with their newsagent customers otherwise they risk alienating their retail network and losing sales.