magazine distribution

Magazine distributor NDD has invited newsagents to set required quantities for titles through the Christmas period.  In the past, NDD has weighted supply through the Christmas period.  Giving newsagents a choice based on their local knowledge is a good initiative.

Newsagents may want to check out supply of 30 Luxury Homes from Universal Magazines which arrived in-store in Wednesday.  Our supply in one store doubled.  While I’d accept an increase because the last issue sold out, doubling is too much without our permission – especially given that it has a six month on-sale.  The smarter move if such a bump is forecast would be to send an initial allocation and a second allocation a couple of months in if sales warrant.  The current approach makes me the banker for the publisher, even with delayed billing.

I am meeting with several independent magazine publishers over the next couple of weeks to talk about the relationship between their business and newsagents.  The discussions will be informal and aimed at mutual understanding.  They are not commercial negotiations.  These meetings have come about because of contact through this blog.

As recent moves by the publisher of Australian Traveller have shown, dialogue can lead to better commercial terms for newsagents and better outcomes for publishers.

Newsagents and good independent publishers have a lot in common.  We need each other too – they provide our point of difference and we provide a cheap distribution channel.   I say good independent publishers because not all can wear this label.  The best publishers are those who are honest about print run size, circulation achievement and how they commercially engage with newsagents.

The more publishers I talk with the more I discover that there are considerable differences between publishers.  All we see in our shops are the magazines and sometimes it is not clear which titles are from which publisher, making it hard to assess the impact of their supply model and new title launch schedule.

We did not receive our magazines from NDD yesterday.  It seems the truck went missing and everyone on our run was affected.  While we found out the truck was missing early in the day, after a call, we did not have NDD magazines by the end of the day.

Thankfully, this does not happen often but when it does the knock-on impact is considerable to sales and the roster.

Following my post last week about the NDD Quick Range Review service, a good number of newsagents have taken up the offer to have NDD review the supply range and make adjustments accordingly.

NDD assess title performance and recommends changes. Newsagents can have the recommendations implemented or adjust these further. The recommendations are provided with a sell-through graph showing performance trends for the store.

If you would like an NDD Quick range Review, please email quickrangereview@ndd.com.au with your newsagency details. They will do the analysis and email the report and recommendations to you.

The result is a better balanced portfolio of titles from NDD. The report helps drive better business decisions in that it alerts you to titles which are selling well – these are the titles you could push even further.

Some newsagents are still experiencing bumps from the change in the freight company handling the distribution of magazines.  One newsagent on the central coast of NSW received today’s magazines ten hours late – hours after the supermarkets on either side received their stock.

US publisher Conde Nast announced the closure of four of its magazines yesterday including Modern Bride.  The significance of this move is indicated by the 450 stories on Google News about the announcement.  Two of the four closures are wedding titles.  The move ends what some consider to be self cannibalisation – Brides, another Conde Nast title is expected to benefit from less competition.

Newsagents should take a walk down their magazine aisles and consider what would happen to sales with a more efficient assortment of titles in some overloaded categories such as weddings, fashion, music, crosswords and crafts.  The question I ask is whether I could achieve the sale sales with a significant cut in range.  The answer, of course, is yes.  The bigger question is where is the sweet spot.  The follow up question is how to navigate this with the three magazine distributors here in Australia.

The move by magazine distributors NDD, Gotch and Network to Toll Holdings for freight looks set to significantly increase the cost of returning unsold magazines.  One newsagent told me that their cost will go from $25.00 to $66.00.  This is what they will have to pay for stock they did not order and which has failed to sell.

Newsagents are understandably angry at this cost increase imposed on their businesses.  If distributors let newsagents return only then cover then the cost would be significantly less. NDD performs worst out of the three magazine distributors based on the data I see in terms of sell-through – meaning higher additional costs.

The magazine distribution model which makes newsagents liable for the cost of freighting titles which have not performed is flawed.

Our supply quantity of Australian Business Solutions magazine has been increased by 2 copies with the latest issue. I cannot see any justification in our sales data for this title for the increase. If they are planning a promotion and wanted us to have capacity to grow sales as a result then the usual supply has enough room for that.

These two extra copies of this magazine, or any other, come at a high cost to newsagents when you play such an increase out across the channel.  If they don’t sell, as will probably happen, the channel has provided extra cash (from the extra copies) to the publisher and or the distributor for their purposes.

Magazine distributions should not permit any increase unless sales demand it or unless I agree to it. Where such a rule is reached I ought to be given the additional stock for free. Otherwise we have the system we have today – these two extra copies sit on my shelves until recalled. I am out of pocket as a result.

While my experience of oversupply is much better today than a year or two ago, it still happens.  Those responsible don’t understand the cash-flow impact.

I have been talking to some magazine publishers recently about different sales models, in pursuit of more economic terms for newsagents than the current sale or return system controlled by Australia’s three magazine distributors.

The contact usually comes in the form of a question: which magazine distributor is recommended by newsagents?

This question is more complex than it sounds and is not one I am comfortable answering without knowing more about what the publisher wants to achieve by getting their magazine in to newsagencies.  Some publishers want to be in front of browsers in newsagencies.  Others want sales to drive subscription uptake.  Others want real sales and to develop a long-term mutually beneficial relationship with newsagents.

It is this third category of publisher I am most interested in as they are more likely to invest in the newsagency channel and reward our investment in their titles.

It is clear that there are some independent publishers looking for an alternative which provides them with more direct to newsagent contact.  They are usually open to a direct supply relationship on a sale or return basis for a better than usual margin a firm sale arrangement for an even better margin.

That some independent publishers are looking for alternatives which better suit their business model is good for newsagents.  Our goals and the goals of publishers ought to be more closely aligned than the goals of the magazine distributors.  This is not a criticism, just an acknowledgement of the services they are paid to provide.

Reducing the supply chain will cut costs and leave more money on the table for newsagents and publishers.

The question is whether an independent publisher is willing to break the system and try a evolve a direct to newsagent model. I am certain there are newsagents who would be willing to try this.

PMP, the parent company of magazine distributor Gordon and Gotch, released their 2009 full year results to the ASX on Friday.  The announcement was accompanied by a presentation with details on their trading for the past year and plans for the next.  The key magazine distribution information in the presentation of relevance to newsagents is:

• Magazine volume down 2.5% for the year and 3.4% for the second half.
• The partworks business is slowing.
• EBIT down 6.6% for the year.
• 60 redundancies in the Gotch and Scribo (book) business.

As these numbers show, newsagencies aren’t the only businesses in the magazine space with challenges.

Six years ago, Gordon and Gotch was the least popular magazine distributor supplying newsagents.   Oversupply was rife, returns processing was problematic and internal policies around magazines were weak – meaning we would see unjustified reissues and other challenges.

Since 2004, Gordon and Gotch has transformed much of its magazine distribution business, lifting sell-through rates and introducing internal policies which see newsagents supplied on more equitable terms.

The operational changes cannot counter the impact of economic conditions nor the impact of disruption to the traditional print media model.  These are challenges which we share with Gotch and which will drive the redefinition of both our business models.

One impact of the economic and disruption challenges I expect to see is a rationalisation in magazine distribution.  While the magazine distributors are cutting costs internally, more significant savings would be achieved through maerging businesses.