The new issue of Vogue (British edition) went on sale this morning. The old issue is not due to be returned until next month. We don’t have the space to have two issues on the sehlevs. While the distributor, NDD, will argue that the old issue may sell, I doubt they would take the risk if it were their money at stake.
The Sydney Morning Herald today reports that Metcash is considering acquisitions in the newsagency channel among others.
THE food and beverages wholesaler Metcash is examining acquisitions worth up to $1 billion as it seeks to apply its expertise in distribution to industries such as pharmaceuticals, newsagencies and hardware.
Gotch could be a target given the challenges at PMP. Network could be a target given the financial challenges imposed on the business by CVC. NDD could be a target because, as the smallest of the three, they need to reinvent themselves.
Maybe Metcash is considering establishing a new newsaget-focused distribution opportunity.
I have no idea if Metcash is in discussion with any magazine distributors or whether they are planning to enter the market. While I don’t plan to let my thoughts run with a what if they buy a amagazine distributor scenario, Metcash is clearly a company for newsagents to watch.
Australian Business Solutions is not performing for us. We are lucky to sell one copy per issue yet the distributor (Network) has increased supply. We have supported the title with a good location, tried co-location and also promoted with posters. It is time to cut our losses and quit the title. I wonder if sales are impacted by sameness of covers. Look at the two issues in the photo. Regular browsers will struggle to notice a difference unless the take the latest issue out of the display pocket and look at the whole cover.
Magazine distributor NDD sent the following to newsagents in the Newcastle area this week:
NDD will undertake a trial delivering NDD product into the Newcastle area via Australia Post for both newsagent and supermarkets for a three week period for onsale Wednesday 3 Jun; Wednesday 10 June and Wednesday 17 June 09.
It is anticipated that your store will receive the NDD Delivery of magazine daytime Tuesday prior to the onsale.
The key parcels and bulks will be stickered with an Australia Post barcode for tracking.
British Football and Inside Football will be delivered by 1st Fleet on the Wednesday.
We have been early returning Swank porn magazine to NDD because it did not sell. We expected that supply would be reduced as a result of no sales recorded – trusting the magazine distribution system. Well, not really. Here we are, months on, zero sales and we still receive the title. The NDD system is failing us. I am not against us carrying porn.
My preference for erotica / porn titles is the same as the rest of my newsagency – branded product with a market presence and good promotion to drive interest. Swank is not such a title. I wish we had more control – it’s my money at risk here.
Embroidery & Cross Stitch is another Express Publications title with problems. We received 9 copies of the last issue and today returned 8. It is junk like these triple packs from Express which detract from beautiful cross stitch titles which look more appealing and often sell better. With a sell through of just 11%, I would expect the magazine distributor to reduce supply. When it comes to Express titles I am not confident of this. On a side issue – I wonder if advertisers know that issues containing their ads are recycled through these triple packs on a never-ending petrol guzzling cycle.
The issue of Fishing Knots & Rigs which went on sale this morning has a barcode which the publisher reusing a barcode which has been used for two other titles in the last year. Express Publications are behind this – the same people who waste our space with double and triple packed bags of magazines which waste our space and cash.
The distributor ought to have refused to distribute today’s title because it fails to meet reasonable data standards.
Art Australia does not sell in our newsagency. We return what we receive. NDD knows this yet they continue to send the title – as a demonstration of their distribution skills (not!). The best way for NDD to respond to this blog post and other complaints about oversupply is for them to fix the problem and deliver supply on equitable terms. Titles with less than 60% sell through are loss making for shopping centre newsagents yet NDD continues to send titles like Art Australia which deliver a 0% sell through.
NDD would be better off investing the money they are spending on legal pursuit of me because posts at this blog on fixing the supply model which is sucking my cash and the cash of other newsagents through oversupply as described above.
Sales of Handyman magazine have collapsed in our newsagency. Yesterday we returned all but one copy of the last issue. This is at a huge cost to our business. The segment is over satisfied with local and overseas titles and the differences between the titles is not great. We will try and cut titles but not all magazine distributors attend to newsagent requests. This is where the distribution model is flawed – if a supplier does not allow newsagents to manage this part of their business then they should not expect newsagents to shoulder the financial risk.
Given the interest here in my EDI post from two days ago, click here for a copy of the ten-page EDI compliance document being provided by Tower Systems at the national EDI / XchangeIT compliance training workshops currently being delivered to 1,600 Tower Newsagents nationally.
While parts of the document are Tower Systems specific,there is sufficient general content to be of help to non-Tower newsagents.
A colleague was shocked to see the hand-written returns coding on magazines on the shelves of a newsagency he visited last week. The image is from the cover of Computer Music. It shows it as a Week 25 return and having a price of $19.95. Imagine the time this business must be wasting on hand writing details on magazines and hand processing returns. They have no stock control as sales are rung up on a cash register. Talk about living in the dark ages. I am disappointed that the magazine distributors let them get away with this.
Newsagents are collectively investing a considerable sum on money in the launch of Australian Ink, a new tattoo magazine which features Pink on the front cover.
The table to the left shows the projected impact (if my assumptions are right) on the cash-flow in one of my newsagencies based on what I expect to sell of Australian Ink, the cost of retail real-estate, the cost of labour and the timing of paying for stock and receiving a credit for returns.
I’d appreciate feedback from others on whether they think my calculations areb right.
While I am using Australian Ink as an example (as I did Cosmos magazine in my March 16, 2006 post), I could easily present numbers for other new titles launched through the newsagency channel. Like other independent publishers before them, I would expect the publishers of Australian Ink to say that they cannot afford to offer delayed billing, payment based on scanned sales or bonus margin for the launch issue.
I appreciate that it takes considerable financial resources to launch a new title.
Newsagencies are slim margin businesses. Every launch has costs as detailed in the table. Collectively, we invest millions of dollars of our money each year in supporting publishers and their title launches. We do this usually without control over new titles sent nor the volume sent.
I’d note that the payment by newsagents for the title in August as shows in the table is not, as I understand it, paid to the publisher until after the issue goes off sale. Certainly this is the case for some titles according to publishers I have spoken with.
I like magazine launches – if the launch is backed by an advertising campaign which drives traffic to my business. I am not so keen on launches which rely on newsagency foot traffic to find sales.
Popular Science was launched in more of a partnership approach last year – better margin, excellent out of store marketing support and excellent collateral for in-store promotion. The campaign has been on-going, beyond issue one.
Here is a list of what I would like to see offered by publishers for magazines launched through the newsagency channel:
This is an topic which should have been on the table during the discussions around a magazine distribution code of conduct. I suspect those representing newsagents missed the opportunity.
As for Australian Ink, we are promoting it boldly with good location and excellent merchandising.
For more information, see my cashflow report from a few years ago. This was presented to newsagents, magazine publishers and magazine distributors.
I received further correspondence from NDD’s lawyers today. They are say that my blog post yesterday compounds damage against NDD. They also say that NDD did not lose the Best Bets and Winning Post distribution accounts. My answer to this is that they don’t have the accounts any more so they are ‘lost’ to the business.
They claim that through this blog I demonstrate malice toward NDD. What I want from NDD is what I want from all magazine distributors – fair and equitable magazine supply arrangements for all newsagents. I publish more examples of NDD oversupply because I see more from them than other distributors. If NDD and their lawyers had their way I would not publish examples of repeated gross over supply.
The lawyers have also claim that NDD closed 68 accounts and not the 600 I reported. I have heard from several sources that it was 600 but since NDD through their lawyers say it was 68 I have to accept that.
Rather than using lawyers to pursue this blog, NDD would be better advised to host meetings of newsagents and seek their views on the matters canvassed here. They would soon see that examples I document reflect experiences of others.
We received more stock of Kitchen Trends from NDD today. This is a reissue of the issue of Kitchen Trends which we still have on the shelves from two months ago. NDD has our sales data and would know that we still have stock, limited but stock nevertheless, and that the reissue is not needed. While I am sure that representatives of NDD will have reasons for sending additional stock, I would prefer to have not received additional stock.
Racetrack magazine does not sell in our shop. We are lucky to sell one copy yet we receive three and four times this. It is as if NDD does not take into account our sales numbers when allocating stock. We feature Racetrack around important race occasions without success. I’d like to cancel the title but have had trouble with that aaction in the past.
O, The Oprah Magazine does not sell well in our shop. Its sell-through is below 50%, often as low as 20%. The low sell-through rate is not reflecting on supply numbers determined by NDD. As the current supply numbers stand for O, this is a cash-flow negative title for us – I am funding Oprah in my shop.
We are promoting ACP Magazines’ Winter Favourites cook book at the front of our newsagency, in front of our busiest Tattersalls counter. We will leave this display in place for seven days, longer is sales are strong and justify the prime space. I love the ACP cookbook range, the regular flow of new titles, the high quality of the product and the consumer trust in the brand. I don’t love so much the volume of stock which is sometimes sent. In my own newsagencies, for some titles, I could be sent 75% less, not lose any sales and not have as much cash-flow pressure.
By shipping the volumes they do, ACP shifts financial burden from their balance sheet to the balance sheets of thousands of newsagents. They are not the only publisher doing this. Indeed, many other publishers are worse because of poor sell-through rates.
While publishers have their defence of the magazine distribution practices I describe, I see the financial impact on newsagents and the helplessness they feel when trying to negotiate equitable terms for the supply of magazines.
Years ago, I called for the Productivity Commission to investigate the magazine model as a post deregulation review. I still think such an independent review is appropriate for all parties – in today’s marketplace more than even in fact.
My concerns are not stopping me promoting ACP’s Winter Favourites. On the contrary, I hope our display in a high traffic area helps it sell well, and quickly.
I received a letter from lawyers representing NDD today claiming that my post on Monday contains false, misleading and deceptive statements. I have reread the blog post and don’t see how they can reach this conclusion.
I wish NDD were as attentive to calls for more equitable supply arrangements with newsagents as they appear to be in worrying how they look to others because of a blog post here.
People magazine has released an iPhone app at the iTunes store which sells for US$1.99. For this, an iPhone user gets software on their phone for downloading and reading stories from People magazine. This is a very smart move.
Source: PaidContent.
Magazine distributor NDD has lost distribution of Best Bets and Winning Post to Fairfax. These losses and those announced earlier this year beg questions over the viability of NDD. Their canceling of around 600 newsagent accounts, withdrawal of Friday deliveries and the talk by some newsagents of the benefits of closing their NDD account give discussion about the future of NDD credence.
While I am sure that the company would say that it is business as usual, to many observers of NDD, myself included, this does not appear to be the case. With most of the titles they distribute outside the top selling magazines and an average sell through rate of 50%, the cash-flow cost to newsagents of a shrinking underperforming magazine distributor is considerable.
Sales of Yachting World magazine are falling yet the magazine distributor has seen fit to increase our allocation. I cannot understand how they justify an allocation increase with a poor sell-through rate. As these things usually go, the publisher will blame the distributor and the distributor will blame the publisher. All I know is that my supply has been increased without justification. If only I had the same control over the distributor when it comes to cash flow!
Australian newsagents are overloaded Photoshop magazines. We have more than the five titles in the photo through the course of the month at my Forest Hill shop. I am confident that we could lose half the titles we receive and still achieve the same revenue from Photoshop related titles. This oversupply is an example of why newsagents need to have control over the titles which gain access to our retail network. Until we centrally manage access to our retail network we will continue to receive more titles than we need. While magazine range represents an important point of difference for us, it is unsustainable for 4,500 newsagents to provide the point of difference.
The code of conduct being discussed by magazine distributors will not address this issue.
I’ve been told that the craft, patchwork, quilting and other magazines from Express Publications are not welcome in craft shops. At least these businesses can exert control over what magazines they take. As I have noted here before, Express Publications abuse the generosity of newsagents in my view.
I have seen data which proves that some newsagents are returning some titles too soon in the on-sale period, thus driving sales on a downward spiral.
Newsagents I have spoken with say that publishers overloading them drives early returns.
Newsagent business data shows a different story. It shows, in the cases I have seen, that some newsagents returned stock less than half way through the on-sale and that they could have expected to sell at least two thirds of the stock they returned. Their early returns stopped them achieving sales their data history indicated would have been made. Early returns of these specific titles for which I have seen data cost these newsagents money.
Early returns based on gut feel can drive a self fulfilling prophecy. The newsagent thinks they are oversupplied and that stock will not sell based on what is on the shelf. Without reference to data they send the stock back early. They don’t have the stock to sell. Sales fall. Eventually the title dies in that newsagency.
Newsagents need to take care when early returning – make sure you are not losing sales. Check your sales history for a title before you make the move. Understand when in the sales cycle you sell a title before removing it early. Smart publishers provide access to data which helps newsagents – such as the data I was shown recently. I’d gladly put newsagents in touch with publishers who are proactive in this area if they are concerned about early returns.
Of course, magazine distributors can reduce early returns by supplying to achieve a 60% or better sell through for all titles and not just the top sellers. Newsagents who see a poor performing title have been known to hit back at this by early returning other titles. I can understand this from a cash management perspective. Magazine distributors often have only themselves to blame in such situations.
The other way publishers can reduce early returns is to supply 30 day stock. By this I mean, eliminate stock we are to hold for longer than 30 days. Many longer on-sale products are supplied in larger quantities to satisfy the selflife. Split the delivery and reduce the cash-flow strain on newsagents. There will be fewer early returns as a result.
Early returning because you have no space is a different story, one for another day because that is an industry problem.
Local is a successful strategy with magazines. People like reading about their local community. SA Life is tremendously popular in South Australia, Tasmanian Life is tremendously popular in Tasmania. What frustrates me is the range of local wedding magazines which are sent far are wide, way beyond the local community reach. I doubt that someone in Forest Hill, 45 minutes out of Melbourne is going to buy a magazine which focuses on weddings in the Hunter Valley in New South Wales. Maybe someone in the wedding game visiting our shop will but this title but not a bride to be – the target market for the White magazine in the photo.
Local magazines are meant for local communities. Publishers ought to understand the cash-flow cost on newsagents when they use the low cost magazine distribution model to send us product like this. The weak relevance to our customers and the long on-sale (six months) make White of dubious value to my newsagency.
The publisher’s website makes their target market for White clear: Wedding magazine for Central Coast, Newcastle, Hunter Valley. I wonder what they have pitched to their advertisers. If they sell, say, 500 copies through newsagencies like mine (as real sales or shrinkage) are the local Hunter Valley advertisers thinking these are sales in their area?