magazine distribution

No!. It is not time to kill off Universal Magazines. It is, however, time to develop a magazine supply model which is fair to independent publishers such as Universal Magazines, Australian newsagents and consumers.

I published a blog post here under this headline on October 29, 2008 in frustration about my inability to control the supply of product from Universal Magazines. After years of getting nowhere with suppliers on achieving an equitable supply arrangement for many I felt I had to strike out and bring the supply model issue to a head. That morning, Universal was on my mind because of what I saw in my shop.

In the months since the initial blog post, Universal executives have dug deep into the magazine supply model to understand why I and other newsagents who commenter to the post were so angry. The result of their investigation and reflection is improvements to processes and around the supply of their titles which did not exist last year.

From my own face to face discussions with the folks at Universal I also understand more about their goals. Interestingly, we agree on many discussion points. It is the magazine supply model between their business and my newsagency (and newsagencies around Australia) which is the barrier to an idyllic relationship.
magazine distributors lept to the defence of Universal quickly in October last year. The reality is, the blog post was more about them and decisions they make and not so much about Universal – it is breathtaking that they did not out their role in the problems at the time.

Hopefully, over the next few months, progress will be made on the model so that independent publishers and Australian newsagents can achieve a more mutually beneficial and rewarding relationship.

February 10, 2009.

For transparency, here is what I wrote back then:

Universal Magazines is the most financially inefficient publisher in Australia in my view, based on data I have seen. Oversupply and long shelf lives mean that their titles are more often cash-flow negative for small business newsagents than not. No amount of representation appears to be able to resolve the situation. The only option is to take the step to ban all titles from Universal Magazines.

This would mean that we no longer carry: Backyard Design Ideas, Build Home – Victoria, Build Home – NSW/QLD, Contemporary Home Design, Kitchens & Bathrooms Quarterly, Luxury Home Design, Melbourne Living, Outdoor Design & Living, Poolside, Poolside Showcase, Renovate & Extend, Sydney Living, Westcoast Living, Bargain Shopper Sydney 2008, Bargain Shopper Melbourne 2008, Choosing a School for your Child, Dogs Life, Life etc, Wellbeing, Sydney Eats with Cheap Eats, Complete Wedding, Crusty Demons, Dirt Action, Australian Road Rider, Trailrider, Australian Country Collections, Australian Beading, Homespun, Quilters Companion, Scrapbook Creations, and Outdoor Design Source.

While this may appear to be a drastic step, the reality is that overall we would be better off. In one newsagency, the P&L would benefit by over $1,000 by killing off all titles from Universal Magazines.

While this may seem like an unusual step for a magazine specialist to take, I see no choice given that I am not permitted to adequately control supply quantity and trading terms and given

Newsagents represent a tremedous asset to publishers. The sooner we manage ourselves as if this is true the better.

If, say, 500 newsagents decided to kill off Universal titles, I am sure that the company would take notice. Sure they may look for other retail outlets. They may also engage in useful negotiations with newsagents about fairer trading terms including payment for non performance of their titles.

So, I don’t want to kill off Universal Magazines. What I want is a magazine supply model which is fair to my business, supplies what will sell and on terms which are equitable.

In February 2005 I spoke at a breakfast meeting of publishers in Sydney and presented a suggested list of magazine key performance indicators. In cleaning up last night I found the list and thought I’d publish it here for comment.

1. Scale out to reflect title performance in that outlet with proposed supply to be no more than 25% above recent sell through rates except in exceptional circumstances where the additional product is expected to sell due to cover feature or special promotion. With higher scale out to be accepted for an additional fee paid to the newsagent.
2. Offering of a carrying fee for titles which do not meet minimum performance criteria so that the newsagent is paid to carry the title. The carrying fee to cover labour, real-estate and any other fixed costs.
3. Introduction of a penalty payment to newsagents for any issue with a sell through of less than 50% on an escalating scale based on a falling sell through.
4. Newsagent to be able to easily and electronically alter order quantities (i.e. without having to call a call centre and wait on line for too long) and with no maximum number of titles to be adjusted each week or month.
5. Newsagent changed supply figures not to be altered without reference to newsagent unless such change absolutely supported by sales data.
6. No cut of supply below current recorded net sales.
7. No reissue within six months of last issue of a title.
8. Delayed billing of at least 30 days for any new title.
9. Returns to be credited within 48 hours of provision of electronic returns data or 7 days of provision of physical returns form.
10. Returns to be called no later than the date of the next issue of the same title going on sale.

Magazine KPIs are mainly needed for titles outside the top 200. Inside the top 200 the supply model is, overall, good – although somtimes I would like to be abl to get extra stock more easily. Th real problem is the titles which generate around 20% of our revenue. These titles are cash flow negative. The KPIs I suggest above, if adopted, would make them at least cashflow neutral. The cash saved would help us have more resources to reinvest in our businesses.

I provided this to the ANF for their work on magazine performance KPIs at the time.

My Home is one of a bunch of magazines from Express Publications which are problematic for newsagents. Like other Express titles, My Home is oversupplied – not only in my newsagencies but others from what I have seen. A sell though of 30% – 40% is appalling, loss making. My Home is usually bagged with a back issue as a “free” gift. Most Express titles are bagged with “free” gifts, making them unfriendly to browsers and therefore harder to sell. The publisher may want to revisit the pitch they make for the free back copy – since they do this just about every month it is hardly special as they claim.

If it were up to me, I’d put Express Publications on notice: improve your sell through rate to above 60% or pay newsagents a financial penalty to respect the real-estate and labour investment. I would be looking for $2.00 per unsold copy per month.  If they don’t like these terms then we should be able to cancel the title, permanently, from distribution.

The moew successful publishers supplying newsagents should join us in this mission because it is the cost of titles like My Home which takes our attention and capital away from their titles.

Some bright spark decided we should receive 12 copies of the Renovators Organiser, a publication with a six month on-sale period. The Renovators Organiser is difficult to efficiently display because of its odd size, it has a high cover price, a very long shelf life and does not easily fit the magazine category as it is more of a book. We have returned nine of the twelve copies we were sent in one newsagency and seven of the ten copies sent to another newsagency. We made these decisions decision based on sales of renovation magazines in our newsagencies.

The publisher, 27 South Pty Ltd, and the distributor, Network Services, will probably be unhappy with what I have written. I’d ask them to put themselves in the shows of newsagents. Someone sends you $240.00 worth of an item you did not order, have never sold and which is unlikely to sell.  They expect you to keep this on your shelves for six months and pay them for the stock on 30 day terms. Every time this happens it takes our capital and attention away from top selling magazines and other more important parts of our businesses.

If a publisher has a great idea of a fringe magazine or related product they need to finance the risk of putting stock on our shelves. It is unreasonable theyt use newsagent money to fund their business.

Further to my earlier post about the lack of Olympics themed magazines, I have found Beijing – the complete guide to the 2008 Beijing games at our Frankston newsagency. I am surprised that this title was not more widely distributed.  It has enough general appeal to to warrant wide distribution.

The magazine supply model continues to confound.

Magazine distributor Network Services has joined other magazine distributors and decided to drop paper based magazine returns forms for newsagents with compliant software and business practices.  This move is most welcome.  It gets newsagents closer to genuine time savings from returns scanning.  The less newsagents hve to interact with the Network website for tasks their sofwtare can transact automatically through to Network the better.

The company has also announced a move to weekly returns from January 1, 2009 – again for compliant newsagents.

These moves reinforce the need for newsagents to have up to date magazine distributor approved software and that its use is based on compliant business practices.  The benefits for newsagents, beyond time savings, are more accurate allocation, faster credits for returns and better business data on which to make decisions.

All of this is further evidence that DOS is dead when it comes to newsagency software.

As I blogged a few days ago we did not receive Take 5 stock on Wednesday. While replacement stock arrived late that day, the damage was done as the photo which I took yesterday shows.

We sell around 75% of our Take 5 copies on the on sale day. Even being without stock for two thirds of a day can hurt our figures for the week. If I had accepted what the Network Services call centre operator first advised, I would not have received replacement stock until Friday.

Magazine distributors need to take more attention of the magazine sales decay curve for weeklies in newsagencies. Doing so will help them better understand the high cost of missed deliveries and, hopefully, encourage them to be more proactive at rectifying the situation.