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magazine distribution

The Gotch no physical returns project can help improve magazine engagement

The no physical returns project commenced early this year by Gotch is proving to be successful among plenty of the newsagents who have been carefully selected by Gotch to participate.

Once newsagents have enjoyed no physical returns, they will work hard to ensure they meet the criteria for this to continue.

The project also focusses attention at Gotch and publisher businesses to supply closer to anticipates sales as there will be no stock for them to repurpose.

Kudos to everyone involved in getting the project this far. 

I urge newsagents not involved in this project so far to ensure they manage their data well, so they can be considered. Gotch looks at your compliance as measured by XchangeIT. To measure well you need to accurately receive electronic invoices, scan all returns, provide sales data electronically and not purchase top-up stock elsewhere if you are short supplied.

The hurdle is relatively low. Every newsagent should be able to meet the requirements.

A by-product of meeting the requirements is knowing more about magazines and having the ability to leverage this knowledge to save time managing magazines and, yes, improving sales of magazines.

While there is plenty more to do on the magazine front, this project is some good news for newsagents and their engagement with magazines.

In writing about this I understand I am opening the topic up for criticism by some who are not part of the trial. If that is you I encourage you to drive compliance in your business. Your software company can look at your data and provide advice and help. Others reading this will say why bother doing anything for magazines? To them I say many newsagents do care. Let them care, let them leverage what they see as an important product category. Sure have the blues yourself, and keep them to yourself. This post is good news.

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magazine distribution

It’s only a matter of time before the war on waste turns to print

The new ABC show about waste is getting plenty of traction. This is on the back of a similar BBC show. It is only a matter of time before the focus on waste engages with print, especially magazines with a sell through of under 66% where a third and more, often plenty more, of what is printed does not sell and is waste.

Here’s a clip from the ABC show, to give you an idea of the approach:

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magazine distribution

Newsagents frustrated to receive Stationery News

I have been contacted by newsagents who received Stationery News magazine today and were billed for a full year subscription – when they did not subscribe.

This has been going on for at lest two years – newsagents being sent the title, unsolicited, with a charge to their magazine account with the distributor.

It takes time to fix and causes considerable frustration. Yet, no seems to be able to fix it permanently.

The experience is another magazine supply frustration that takes newsagent attention away from being better retailers.

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magazine distribution

Old issue of Tiger Beat sent to newsagents

The December 206 issue has just ben sent to newsagents with a recall date of Week 5, 2017. Hmm, that has passed. The newsagent who sent me a photo tells me it is a reissue. The dates alone make this problematic for Gotch. Their system should have stopped this from happening – unless there is something we are missing here.

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magazine distribution

Wonderful response from a publisher of support from a retailer

Check out the terrific public post on Facebook by the folks at Mekong Review where hey talk about wonderful support from a retailer in Sydney.

The compliments are well deserved by the folks at Journals as they have create a genuinely innovative business. Oh, and FYI, Journals is not a newsagency.

The rest of the post by the publisher offers opinion on the distribution model newsagents will find interesting.

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magazine distribution

Gross profit from magazines

I was at a magazine retail business in Los Angeles two weeks ago where they were arriving new stock in for the day. I got to see an invoice. This shows gross profit of 34% from the magazines supplied.  yes, the model is sale or return.

Where there is an extraordinary difference between the magazine distribution model in the US and that of Australia, this gross profit percentage is interesting.

Retail space in the US costs less as does labour. These two data point differences compared to Australia highlight the challenge of the 25% GP we see in Australia today. We are far worse off that our US colleagues. This needs to change for magazine sales in newsagencies to grow, which I firmly believe they can.

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magazine distribution

Truck roll over affects FNQ magazine deliveries

Gotch has advised that a truck roll over has impacted runs 678, 679, 722, 723 and 724. Truck rollover. All stock is to be returned to the Townsville depot credit. They have asked the shortages not be reported.

Talking with Gotch management tonight, I expect a further update from them to newsagents once they have specifics of the stock damaged.

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magazine distribution

Gordon and Gotch forecasts changes to newsagent magazine distribution model

Gordon and Gotch sent this message to newsagents earlier this week:

Dear Newsagent

Since the industry consolidation in March this year we have been reviewing a number of processes that have been in place in our industry for many years. In our survey in July newsagents again said the work involved in processing and returning physical returns was cost prohibitive and time heavy.

We have now completed a six month review of EDI sales versus return data processed and the outcome of this has been encouraging. Approximately 350 newsagents have been identified as fully compliant as well as meeting the gold level standard through XchangeIT.

We will be advising these newsagents in January that as of February 2017 they will not have to make any physical returns excepting partworks and specific trading cards.

The full criteria on how you can meet the standards required will be posted on our website in January but an overview is:

  • GGA will use the services and technical support of XchangeIT for this program to generate the initial integrity, timing and continuity checks on the data files received.
  • XchangeIT will also run monthly variance checks across a sample of GGA titles for each newsagent and produce a regular customer classification.
  • GGA will use the top tier customers (Gold Members) from the XchangeIT classification process and run further validation checks for all returns processed.

We believe this to be a step in the right direction and hope that the number of newsagents participating will increase throughout 2017. We will be doing quarterly reviews and adding newsagents who meet the criteria.

We will contact you again once the details have been posted on our website in January.

May I also take this opportunity to wish everyone a Merry Christmas and Happy New Year!

Sincerely
David Hogan
General Manager
Gordon and Gotch Australia Pty Limited

While this move has taken a while to happen, that is has been made is welcomed by plenty of newsagents. Gotch needs to not stop here though. I have pitched that in my discussions with them this year and prior. They need to keep evolving.

On the decision 350 are fully compliant. I suspect the number is greater than this. The challenge is the reliance on XchangeIT to measure compliance. There are instances where this is less than ideal.

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magazine distribution

Gotch helps newsagents ensure they have the top titles

Screen Shot 2016-12-06 at 5.37.05 PMI love the list from Gotch yesterday listing the top 50 titles. This is a good first step.  Next, I would love the list to be accessible online, by MPA category and segment. Then, I’d like the ability to click to easily order a title. This is how we can expand range and help sell more magazines, especially magazines in the long tail – niche titles that often get lost in the mix. This is what many newsagents want – an easy way to specialise without the risk of a pandora’s box being opened and unwanted titles being sent.

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magazine distribution

Yes, the Gotch allocations system is broken

New Statesman (1)Last week I wrote about a newsagent being sent 31 copies of New Statesman, up from the usual 3 or 4. This week they have been sent 42 copies. Here is the evidence of escalating oversupply by Gotch. 3 or 4, then 13, then 31 and now 42.

What a waste of time and money.

last week I thought the 31 might be a transposition of 13 from the previous issue. I have no explanation for 42 other than the Gotch system being broken.

Their competitor is gone. They have one job – to get allocations right. And now this.

I feel for the publisher and their investment wasted in at least 40 of these copies.

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magazine distribution

Gross oversupply of New Statesman or bad management at Gotch?

New StatesmanThe unjustified massive increase in supply of New Statesman for one newsagent, from 13 to 31 – probably a data entry issue – is a headache. I suspect the folks at Gotch will say it was a mistake. This is happening so much that to me it looks like a broken technology system in need of urgent replacement. Why would there be data entry at all?! Human error was the problem a decade ago so I wonder when Gotch will have a state of the art allocations system that stops mistakes like this.

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magazine distribution

What happens to magazines newsagents don’t sell and why are newsagents treated differently to supermarkets?

Small business newsagents have no control over the range of magazines they receive. Nor do they have control over the volume of magazines they receive.

An average newsagency sells 55% of all magazines received. 45% of what is sent to the business fails to sell and is either returned for resale or dumped.

Unsold magazines are handled in two ways:

  1. Some newsagents are given permission to rip covers off unsold magazines with the covers returned to the magazine distributor for a credit with the rest of the magazine being disposed on however the newsagents choose.
  2. Other newsagents have to return all unsold magazines, at their cost.

There is also a mix between the above two points where a newsagent may return covers of some titles and full copies of other titles.

In supermarkets, my understanding is they do not return unsold product. They get to trash it locally.

The amount of paper water must be considerable. Yet no one appears to care about this.

That magazine titles continue to be sent to small business newsagents in a volume that is often far greater than would ever sell is a financial and operational overhead on newsagents.  It disadvantages us because of what we have to do to process returns. Since our competitors are not confronted with the same costs it gives them an advantage over us.

Shame on those in a position of power who have refused to act on this.

The big issue here is the waste of paper, labour and fuel on the 45% of magazines printed that do not sell.

What a waste to the environment and a waste of small business newsagent resources.

Despite lots of talk, little has changed in terms of the magazine supply model. Sales data provided by newsagents is not used to drive a more efficient and more fair supply model.

While the model for supermarkets evolves and serves those big businesses, small business newsagents are stuck with a model that is out of date and environmentally unfriendly.

What newsagents want is for supply to more closely match sales. It is a simple request. Those setting supply have the data. Yet too often they ignore it – probably for reasons that serve their ad model. Plus, supply is too often a manual process when it should be automated and 100% data driven.

I think our best chance of addressing the continues oversupply and cutting the 45% failure rate to 10% or less is to target Greens senators. We need to educate them about the wastage of paper, labour and fuel in the magazine returns process. We need their engagement politically to force the matter to be addressed.

If nothing is done, more newsagents will get out of magazines.

For the record, click here to see changes I proposed to the magazine supply model, changes that would benefit Australian publishers.

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Ethics

It is time newsagents stopped returning unsold magazines

IMG_0218The service that collected our magazine returns has cut back and now picks up only once a month. They say they may stop altogether because they don’t make enough from providing the service.

Magazine returns are a high cost for us, for those newsagents who have to send back full copies.

The photo shows some of the current returns boxed up waiting for collection at the end of the month.

Since I had no control over supply it is unreasonable I have to carry the storage cost and freight cost of these returns. But I knew that going into the business so I shouldn’t complain – except that magazine publishers have brought on competitors who don’t have to do returns, who don’t have the stage and freight cost.

It is time those of us doing full copy returns tapped into the benefits of the many newsagents already exempt from full copy returns.

The business where I took the photo has no store room. It is in a Westfield mall with a high cost of space. The returns take up space that could otherwise be earning income. Opportunity cost is a factor.

Unless I have absolute control over magazine returns I should not have to send this failed to sell product back.

This system is horribly out of date. It places newsagents at a disadvantage to other retailers brought on to compete with us. Unless it changes soon I suspect more newsagents will stop seeing magazines.

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magazine distribution

Magazine publisher offers better margin for direct supply

A niche magazine publisher has offered a newsagent a better deal for the title that what is available through Gotch. The offer came as a result of the newsagent querying why the magazine in in non newsagency retailers before newsagents get stock.

This was of interest to the newsagent as they have been a big supporter of the title. They were concerned non newsagent retailers nearby could take sales from them.

Here is part of the response they received.

You’re more than welcome to purchase the magazine wholesale direct from me if you want the magazines as soon as they come back from the printer. I sell them wholesale for $6.50 each inc GST and they retail for $12.95. I believe this is a much better profit margin than what the distributors are offering newsagents. I have a minimum order of 10 copies though, and postage is additional (just depending on quantity).

I suspect this price of $6.50 a copy is lower than the price charges to Gotch by the publisher.

It is dangerous for any publisher to open their own direct supply relationships as it damages the overall offer and could confuse return arrangements and other aspects of the supply model.

I’d like to see this publisher at least stop supplying now newsagency retailers after newsagents have the title. Then, I;d like to see them invest in our channel ahead of others as we are the magazine specialists.

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magazine distribution

Are newsagents ready for a world of permanently discounted magazines?

In a newsagency at Adelaide airport earlier this week I was surprised by the extent of discounting of key magazine titles. While this has been happening for years, the extent on show in Adelaide was greater, leaving me to wonder when we will see this in all retail outlets.

Bauer and Lovatts are the two publishers engaged in this Adelaide location. While only two publishers does not sound much, their level of engagement is considerable. Take a look at these four photos from the one business. I could have included more photos of more facings beyond these:

IMG_2015

IMG_2014 (1)

IMG_2012

IMG_2011

Anyone shopping here could reasonably wonder whether they should pay full price for any magazine. Indeed, the scale of the promotion in the business is so strong I expect it would damage shopper perception of the value of the titles – but, hey, I am not an expert in this area.

This promotion does not make sense to me as the retailer as it appears designed to lock a shopper into a publisher. I want to promote the whole magazine department, not just one publisher, certainly not one publisher where the margin dollars I make are cut as a result of a promotion like this.

But I suspect this retailer is not losing margin dollars as I suspect the publishers are compensating them to the value of the margin from a full cover price. When publishers have offered this type of promotion to newsagents they have not compensated to the value of the full cover price from what I recall. Even then, if they did, it would not be ideal in that you are not promoting the broad offer you have in-store.

I have made no secret over the years that I do not like campaigns like these discount bundle offers. I think they are bad on many levels. yet some publishers appear addicted to them.

While publishers have told me that transit is ideal for these bundled promotions, I have seen them too often in supermarkets, convenience outlets and petrol outlets. This does not augur well for newsagents who see magazines as a point of difference, something to value, something through which they attract key traffic. Educate that traffic to hunt for a bargain and you see your value as a specialist retailer devalued.

My question for newsagents is: Are you ready for discounted bundles of magazines to become the new normal?

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magazine distribution

The broken magazine supply model: Gross oversupply of Just Bikes magazine

We usually sell one or two copies of Just Bikes magazine. We are being supplied 40 copies of the latest issue. 40!

Representatives of distributor Gordon & Gotch will say it is a mistake. The thing is – too many mistakes like this are being made. To make matters worse, the process of resolving such mistakes is time consuming and fault prone, costing newsagents plenty.

I suspect magazine publishers don’t know how bad the situation is.

UPDATE: 18/8 – Turns out I am not alone. Something is seriously broken here.

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magazine distribution

My magazine early return advice for newsagents

The early return of magazines is vital to the management of space, cash-flow and labour in the newsagency. My advice is that you not wait for a magazine to reach its recall date for it to be returned. Returning a magazine before the recall data is an early return or a supplementary return.

While not liked by magazine publishers, early returns are the only reasonable mechanism newsagents currently have for managing magazines in the newsagency over which they have control.

My advice is newsagents need a process to ensure early returns are done with consistency.

For early returns to work for you and for you to not deny your business magazine sales you could otherwise achieve, here is our best-practice early returns advice:

  1. Early return from your shelves.
  2. Early return at a time in the month designated for the process and not as titles come in.
  3. The early returns process needs to be completely separate to magazine arrivals into the business.
  4. Check for early return opportunities at least monthly, toward the end of the third week of the month.
  5. Do your early returns as a separate process to regular returns or putting new magazine titles out.
  6. Do not early return magazines the day they arrive. The only exception would be if you have been sent a magazine very late in the month and you are absolutely certain it will not sell.
  7. In my opinion, magazines should not be on your shelves for more than four weeks, unless they are continuing to sell well.
  8. Look out for the Magbook titles as they are expensive and usually sell in low volumes. We suggest early returning within the month of supply if they are not selling.
  9. Look out for the Beginners Guide titles as they are expensive and usually sell in low volumes. We suggest early returning within the month of supply if they are not selling.
  10. Look out for the Express titles as they are expensive and usually sell in low volumes. We suggest early returning within the month of supply if they are not selling.
  11. Look out for the AWW cookbooks as they have long on-sale periods and unless you are selling reasonable quantities each month you will not be covering the space cost.
  12. Check each title before you early return. For example, if you received 10 of a monthly and three weeks in you have sold two, you could early return four copies.
  13. Do not early return before week three of the month unless you have severe space issues. Giving titles time to sell could help you achieve more revenue.
  14. Ignore delayed billing in your early returns assessments.
  15. Treat early returning as a management issue. Whoever does it needs to be thoughtful in their approach and engaged so as to not deny certain magazine sales.
  16. If you find yourself regularly early returning a title, ask for fewer copies.

If you do early return leaving less stock that you would usually sell and then sell out – I think the distributor ought deny any request for extra stock.

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magazine distribution

Bauer Reader Rewards could result in data being sent to Network Services

Re my earlier post about XchangeIT claiming newsagents are incorrectly sending sales data to the new closed Network Services. There is evidence the Bauer Reader Rewards barcodes that are required to be sold when redeeming magazines are resulting in sales data being sent to Network.

XchangeIT has advised that such instances are not part of their advice to newsagents of a problem. Evidence from some newsagents suggests otherwise.
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magazine distribution

MPA trial report released by ACCC and reveals little of value

Click here to access to report by Boston Analytics into the magazine distribution trial established by the MPA and run in selected newsagencies earlier this year to trial possible changes to the magazine supply model.

As I have written here, here and here (and more – search MPA at this blog) previously, the trial was flawed. It did not test a model that would serve the needs of newsagents and the majority of Australian magazine publishers.

A big challenge faced by publishers is the reduction in floorspace allocation for magazines in newsagencies. The MPA trial did not test any measures that would arrest floorspace allocation moves by newsagents. Further, everything changes when Network Services was closed earlier this year.

The solution as I see it for a bright future for magazines in newsagencies was outlined here in October last year where I urged magazine publishers to respect newsagencies as magazine specialists.

My proposal is simple – make newsagents the magazine specialists by only supplying them.

This single move, of choosing to place titles exclusively in the newsagency channel, would encourage newsagent support. I am not talking here about one or two titles. No, I am talking about hundreds of titles, popular titles, titles in the top 200 even. Place these exclusively in the newsagency channel and you change the game, you get the attention of newsagents, you push back against the supermarkets and you respect your product.

While I am confident that a bold move such as I outline here would benefit publishers and newsagents it would need careful negotiating, involving many titles and requiring thoughtful newsagent engagement. And, yes, there would need to be a discussion on margin. Rent and labour in retail are considerable expenses and titles not paying their way serve no purpose in any retail business. However, margin can be considered in various forms. For example, there could be a base stocking fee or some other levy to support the category.

If sought after product is only available in one channel then the two main parties to such a relationship, the publisher and newsagents, ought to benefit. We would have a shared commercial objective, far more so than exists today.

This call by me was published by industry journal Mumbrella. No publisher contacted me to discuss it.

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magazine distribution

Talking the magazine supply model last night

Screen Shot 2016-07-20 at 6.28.58 PMI was involved in a discussion with several people on Twitter and directly last night as a result of my comment on a Tweet about Andrew Bolt’s book that had been sent to newsagents. It was an opportunity to let more know about the low margin for us from magazines and newspapers.

Sharing this information is vital as it provides context for some of what people see in newsagencies.

The discussion started because of my response online. I have not seen the ANF engage in such public representation of our channel. That’s another opportunity they miss.

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magazine distribution

Stationery News should not be sent to newsagents

IMG_0310 (2)I have been thinking about the scaling out of Stationery News to newsagents as a subscription unless we cancel. My opinion is this should not be done as it abuses the magazine supply model.

All other titles we receive are done so on a sale or return basis. Stationery News ought not be supplied unless newsagents explicitly order it.

I would love to know how the current model came about.

While I like reading the magazine. It is not commercially worth the annual subscription fee in my view, not in today’s world with more efficient and access friendly sources of news.

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magazine distribution

What’s with the Stationery News reissue to newsagents

It seems the latest issue of Stationery News has been sent to newsagents, again. This time marked as a firm sale – meaning they are unable to return it.

This appears to be a mistake by Gotch. The challenge is the Gotch communication lines are clogged and emails are delayed in getting a response.

I’ve had at least ten calls plus emails. Here is one that sums up the situation:

This morning on the Gotch distribution they supplied a magazine, more a pamphlet, called “Stationary News” as a firm sale item with a cost of $55 and a retail of $60.50 ! When I rang Gotch , after a 40 minute wait, the helpful customer service office said that he had received a few calls in regard to it and he had lodged a query but they had been unable to work out why or how this had been allocated. He also stated that the more contact that they had from Newsagents the sooner something would be done about it.

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magazine distribution

Happy: a terrific niche music and arts magazine looking for distribution

happy-mag_issue2Happy magazine is a start-up Aussie magazine serving a niche in the music, art, culture space. It is genuinely unique and comes from a place of passion of the creative team behind the title. However, like any indie magazine start-up, the challenge with Happy magazine is how to reach people who will buy the magazine. There is no newsagent distributor relationship in place.

Any magazine specialist would like to have Happy in the range.

Talking with the editor last week, I said I would write about Happy here, so newsagents are aware of the title and so you can comment on indie titles like this and how you might engage with them.

Many publishers visit here to check the temperature of the newsagency channel, please share your thoughts.

Here is the intro email from the editor:

Hi Mark,

Many thanks for the chat a moment ago.
Happy has been an online publication since 2013 and here are some stats on that:
In Jan we launched a very small but extremely well received A5 magazine: http://store.hhhhappy.com/
We jumped very quickly into the territory of 200+ paid annual subscribers but now feel to progress the publication we need to develop our sales department and get it in front of more eyes.
Our team is small and sales focus almost entirely on industry contacts, labels, releases etc.
If you’d like any further info by all means let me know!
Cheers
Radi
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magazine distribution

Why I think newsagents should turn off early return facilities in their newsagency software

A newsagent I am working with is confronting an above average decline in magazine sales. Working through their data I can see they have been driving some of the sales decline by early returning magazines based on settings in their newsagency software, settings that were too severe and that did not take into account any marketing, free gifts or other activities that could see a spike in sales of some titles.

In more that ten cases recently they have early returned issues of different magazines only to try and reorder because of unexpected demand.

This newsagency they early returned copies of the 100th anniversary issue of Marie Claire, an issue that sold out. This is nuts!

While I understand concerns about the costs of magazine oversupply, going too hard the other way can hurt the business.

Following settings set in newsagency software, some newsagents will early return without considering anything about a specific issue – the free gifts, a new TV campaign, some other social media or a very hot cover that drives sales.

My advice is to not early return the day of on-sale except in genuinely exceptional circumstances and where you have thought about this carefully. Rather, put the product out, give it a crack and take a look at sales toward the end of the month.

This is what a magazine specialist would do.

I urge all newsagents to review your approach in your newsagency software to early returns. If you think your approach is right after the review – good. All I encourage is you think about it and ensure you are not magazine magazines to drive a decline in sales through ill-considered early return settings in your software.

The more newsagents early return and lose certain sales the more likely publishers will pus for their products to be placed in a more diverse, non newsagency, mix of retail businesses.

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magazine distribution
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