A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Get your free gum while you still can

blogmyspace.JPGUPDATE 10/10: The post below refers to a MySpace profile which has been made private in the last 24 hours. When I found the profile by accident using Google it was public. Following Julz’ comments (below) I have slightly modified the original post.

Julz
is 17 and works at a Nextra newsagency somewhere in Brisbane. She dislikes her job as she has told the world through her MySpace blog:

so everyone knows how much i disslike my job at nextra right?

well…..

i’m QUITTINGG!!!!! wooooottttt

and have a new job at David Jones in the city – young contemp womens fashion

n e way enough with the smileys…ok one more…

so come visit me at nextra, i’ll only be there like 2 weeks more, and get your free gum while you still can!!

Julz is entitled to her view. What concerns me is that she seems intent on taking out her dislike for her job on her employer – or am I misunderstanding the line about free gum? I’d like to know what Julz has said to her employer about the job and how her employer responded. Have they made an effort to make the job more enjoyable while continuing to serve the needs of the business? How would David Jones’ management feel if they read Julz’ comments – would they still give her a job?

Blogging provides Julz and millions like her a place to publish her feelings and opinions. She, like her My Space friends, needs to understand the consequences. For example, I’d expect that human resources departments will trawl through My Space and other public places for what is not submitted in resumes. This blog entry would knock Julz out of contention.

There are jobs in this world which are not great, especially if you’re 17 and just starting your working life. The best way to make those jobs bearable and even enjoyable is to work with your boss. Maybe there is not one else to do the crap tasks. So be it. Maybe discussion will lead to compromise and a more enjoyable job. Bitching about it at My Space and quitting for a job at David Jones does not fix a problem Julz is likely to take with her.

I am all for employees venting publicly – as long as they have taken the matter as far as they can within the business in pursuit of a fair resolution.

PS. I’m not spending hours trawling My Space for what people working with me think. Julz’ blog came up via a Google blog search for newsagency references.

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Newsagency challenges

Big business and cancer fund raising

It’s good to see mainstream media asking some questions about the big business approach of the National Breast Cancer Foundation. This Fairfax article (Sydney Morning Herald and The Sunday Age) asks questions but does not dig deep enough. In a previous post I documented the deal done by the NBCF with Woolworths for the distribution of their Pink Ribbon magazine.

If you believe the spin put out by the NBCF, the deal helps them reach more people. I’d say that is nonsense. Instead of Pink Ribbon being prominently displayed to a broad cross-section of the community, a new style Pink Ribbon is to be distributed as a -tip-=on, a free stuck on giveaway, with Women’s Weekly. Pink Ribbon readers want to buy the magazine. I know from what they say at our counter that they are frustrated that they have to go to Woolworths (Safeway).

The NBCF has decided that they would rather be on a supermarket shelf than on the shelves of a magazine specialist, that they would rather cozy with big business than small business.

It would be good to see Fairfax follow-up their story with more on the NBCF and their corporate deals. They should research whether these corporate deals lead to a disconnect with the community as I suspect is the case. Take Pink Ribbon – you are more likely to have had a conversation with a newsagency employee about the issue than would happed at a supermarket checkout. Isn’t awareness part of the NBCF mission? Based on the Pink Ribbon actions I am guessing not.

In the meantime, more newsagents are refusing to participate in other NBCF fund raising activities.

As the article by Fairfax suggests, cancer fund raising ought to be about the bigger picture rather than a body part.

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Newsagency challenges

Halloween, a strong new season for newsagents

bloghalloween.JPGOkay so it’s American and based in occult and other ‘scary’ things. Halloween is fun. At least that’s how we’re seeing it in my shop and, thanks to great marketing collateral from newsXpress, 90+ other newsagencies. We have embraced Halloween and even though we’re only a few days in are already experiencing strong sales. We have cards and bears from the US (exclusively) and a range of novelty items from Australian companies plus Halloween chocolates. Based on current sales I’d expect us to sell out of our range. As far as I know newsXpress is the only marketing group running a Halloween season in Australia. The real fun comes in a couple of weeks when everyone dresses up for the day.

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marketing

Supanews dumps franchise fee, chases existing newsagents

Further to my blog entry three days ago about the takeover/merger of the Supanews newsagent group by Pacific Equity Partners’ Angus & Robertson group, I note with interest the opening paragraphs of their press release:

In a move that will change the face of the Australian newsagency industry forever, newsagency chain Supanews has announced a joint venture with Pacific Equity Partners-owned A&R Whitcoulls Group Holdings Pty Limited (ARW Group).

“We understand that this may ruffle a few feathers with the 5,000 independent operators in Australia,” says Adrian Gaskin, General Manager of Supanews.

The release, as is usual with such things, is full of spin. What they don’t say is that immediately upon the takeover / merger, the Supanews model was turned on its ear. Whereas in the past they only operated as a company store / franchise group, from yesterday they started pursuing existing newsagents to join by offering “NO ROYALTY”. That is, no franchise fee. This is an odd move for the group. If the Supanews model was so great, why take such a dramatic departure from that model the same day you announce the takeover / merger?

Go to the Supanews website and see how they try and attract newsagents to join Supanews:

…by becoming part of Supanews you eliminate the risk of us opening a store in direct competition to you.

Yeah, fear is a good motivator. Sure their website promotes other benefits but this one? Why?

A stronger Supanews will be good for newsagents. It will galvanise newsagents to be more competitive. The involvement of A&R Whitcoulls demonstrates that the channel is no longer a cottage industry. It also provides evidence that suppliers will treat newsagents differently. – something the newsXpress group has been demonstrating for the last two years as it has grown from 31 stores in February 2005 to 95 stores in September 2006. It forces suppliers to look at the channel in a different light – to take newsagents more seriously. It will also force newsXpress and Nextra to become even tougher competitors – I’m not sure about Newspower since it does not have the same commercial structure as newsXpress and Nextra.

If the new Supanews takes off it could also spell problems for independent newsagents. Magazine distributors, for example, will still have the same volume of rats and mice titles to distribute – titles outside the top, say, 200 – a strong disciplined Supanews will demand that their stores not be overloaded, meaning that independents will receive more of these titles.

I expect newsagents to be skeptical about the U-turn announced by Supanews yesterday in their invitation to join the group. It will take more than some text on a website to erase memory of Supanews.

Disclosure: I am a shareholder in and Director of newsXpress, a competitor of Supanews.

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Newsagency challenges

Funny Bones is not funny

blogfunny.JPGI have had $8,000 in revenue taken from my newsagency by a ‘genius’ allocations clerk at the PBL owned Network Services. Here’s how: Partwork publications are a point of difference for newsagents – we are the only retail channel offering partworks and many newsagents embrace them wholeheartedly. Funny Bones is one of the most popular partwork series to come to Australia from the UK. This De Agostini publication has been a huge hit here. In fact, it has been too successful. As with all partworks we encouraged our customers to sign up for our putaway service – we keep each copy aside and send them an SMS message when the stock arrives. It’s a premium service without any additional cost.

We have firm orders for ten copies of Funny Bones and have sold out of each issue we have been sent. We have not received the last four issues and have called and emailed with little success in getting a response until yesterday when we were advised that some genius within Network Services decided that our stock would serve their needs better if they sent it elsewhere. This is despite us selling out and them knowing that we sell out each issue.

The Network decision to cancel supply to my shop means I have to cancel the orders for the ten committed customers. Some may stop shopping with us. Over the life of the publication this could cost us $8,000 in direct lost revenue plus lost add on sales. Add on sales amount to $10.00 to $20.00 worth of purchases each time a customer collects a partwork issue. This equals an estimated $20,000 in revenue is at risk as result of the decision to cut supply.

We have actively promoted Funny Bones in our shop since its launch, giving over prime real-estate in pursuit of long term customers. In return for our gift of labour and real-estate we have been abused and no one cares. We have taken this issue and other similar issues with partworks to the Australian distributor, Bissett Magazines, with no success. As I said to Bissett and Network yesterday:

How newsagents are treated over partworks makes me question the viability of being the ‘magazine specialist’. I am tired of getting done over. I am tired of dealing with incompetent people making decisions which hurt my business. I am tired of working hard to launch a new product only to have it taken elsewhere once the hard yards have been done (Alpha, Cosmos, Funny Bones etc). How would Coles or Woolworths react if Network and Bissett treated them in this way? They would demand compensation for sure.

Stupid. Stupid. Stupid.

I love partworks and partwork customers. It’s the suppliers and distributors who are killing this golden goose for newsagents.

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Newsagency challenges

Will real-estate do a wotif?

Wotif and similar sites have revolutionised making travel arrangements. They have eliminated middlemen (travel agents), cut costs and given us more options and responsibility. eBay has done something similar in the general classifieds space. I suspect that real-estate is next. Real-estate print and online advertising has, until recently, been controlled by real-estate agents. This makes it unreasonably expensive. My sense is that vendors are ready to take more control in pursuit of retaining more of the selling price. While there will always be a place for high service real-estate agents, I suspect they will be fewer in number in a two or three years than we see today.

Our Find It classified site provides vendors the ability to advertise direct. We have lowered the barrier. As our retail partners, newsagents will start spreading this message soon. All ads on Find It are currently free. Charges will apply from early in 2007 and even then we will be cheaper than Domain, Realestate.com.au and others.

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Online classifieds

A shrinking pie: the newspaper marketing campaign ripping off newsagents

blogpie.jpgThere is a newspaper promotion running in one state at the moment offering seven day home delivery for $1.00 a week for twenty weeks. I am told that this campaign is successfully switching customers from long standing direct with the newsagent relationship to a direct with the publisher relationship.

The customer saves around $7.00 a week and is very happy.

The newspaper publisher has a ‘new’ direct customer and is very happy even though they are now subsidising the customer to the tune of around $6.00 a week.

The newsagent delivers the same paper to the same house for around $1.00 a week less and is very unhappy.

The benefit for the publisher is that they now “own” the customer. This helps with print run planning and selling advertising space.

The newsagent has to accept the loss and provide a service as good as before and deal with a new master. Now, they will get a call from the publisher if there is any mistake with the delivery with such a call usually involving more stress than those made direct by customers.

Imagine how a newsagent of many years standing feels when one of their long term customers makes the switch saying that the publisher representative told them that nothing will change. A more truthful representative would have told the customer that the newsagent was going to lose close to 33% of their gross profit.

I appreciate the value of direct customer relationships to publishers. However, it is wrong that they cannibalise the long standing relationships newsagents have with home delivery customers. It is wrong that they offer promotions which effectively cut the gross profit newsagents make by 33%

The home delivery of newspapers is a premium service. In real terms, newsagents make at least 25% less today than they made four years ago. Publishers and customers cannot expect the quality of the service to remain the same if payments to newsagents continue to fall. A better alternative would be to price home delivery as the premium service it is. This makes more available for improving the service and surely this is a better outcome for all.

This current promotion ought to stop. If a publisher wants to do a deal then they need to carry the cost of the deal. To rip 33% of newsagent’s gross profit out of an existing relationship a grossly unfair treatment of a defenceless small business.

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Newspapers

New healthy eating/living magazine

blogheart.JPGPacific Magazine launched Heart Healthy Living magazine today further strengthening the health category. It’s great having a new title to refresh a category. Based on the success of Diabetic Living and other health titles I am expecting big things from Heart Healthy Living. The first issue looks great. In my own store we’ve seen some good numbers today already.

It’s time for us to reconsider where we display titles like Heart Healthy Living. Should it be in the health category, food or lifestyle? If could go in all three. Or, given the growth of healthy living titles do we reconsider magazine layout to reflect growing consumer interest? I suspect so.

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magazines

The hypocrisy of the National Breast Cancer Foundation

blogpink.jpgHaving turned its back on newsagents by doing an exclusive deal with ACP magazines and Woolworths to sell its popular Pink Ribbon magazine this year, the National Breast Cancer Foundation has gone cap in hand, through the News Ltd subsidiary, The Herald and Weekly Times, to ask newsagents to sell fund raising merchandise. Here’s part of the note newsagents received yesterday:

The Herald and Weekly Times and National Breast Cancer Foundation (NBCF) would like your help in raising much-needed funds for breast cancer research. We’re seeking your support in selling pink ribbons, pins and wristbands throughout the month of October.

Each pack contains; 25 ribbons ($2.00 each); 10 enamel pins ($5.00 each); 5 diamante pins ($10.00 each); 10 wristbands ($3.00 each)

Please note all products are GST exempt, due to this being a charitable fund raising cause.

As this is a charity, we are asking that newsagents support this initiative commission-free on sales of the ribbons and badges.

Some newsagents are refusing to be part of this fund raiser because of the decision by the NBCF to turn their back on years of support from newsagents for their Pink Ribbon magazine in pursuit of a questionable corporate deal with Woolworths.

The NBCF needs to decide if they wish to be half pregnant or not. Previously newsagents offered the magazine, these fund raiser products, greeting cards, branded stationery and other products to support the cause. Taking the magazine away rips at the core of a newsagency. It says that the NBCF considers newsagents irrelevant in the magazine space. It also confuses consumers. Already we have been turning people away in my shop. When we tell them it’s a Woolworths (Safeway) exclusive some say they won’t buy the magazine.

Given the rejection of my business by the NBCF I’ll let them find other outlets for their wrist bands and other products. There are other charities I’ll gladly support. Indeed we are raising funds in my shop at the moment for three. (To their credit The H&WT has provided newsagents with the ability to opt out of this fund raiser.)

The NBCF issues aside, most newsagents actively support between 15 and 30 over the counter fund raisers a year. By support I mean: counter space, labour and poster space – plus time at the end balancing the cash and covering for theft. We also donate to local schools, clubs and charities. Plus, many newsagents give in other ways.

Maybe it is churlish of me to refuse to participate in this fund raiser. The NBCF has handled this badly. They have brought this upon themselves. Besides, they have enough big business mates on their side. Their communication with newsagents has been poor. I wrote to them over a week ago about the Pink Ribbon issue and they have not yet responded.

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Newsagency challenges

Supanews take over by A&R Whitcoulls

A&R Whitcoulls Group Holdings Pty Limited (Angus & Robertson, Whitcoulls and Calendar Club) is to form a joint venture with the owners of Supanews which will purchase the business of Supanews. The new business, Supanews retail, will operate the Supanews retail stores and newsagent franchise group.

A&R Whitcoulls is owned by Pacfic Equity Partners.

This is a significant move by a successful corporate player into the newsagent space. I’ll be curious to watch as the impact of the takeover emerges. Supanews has caused considerable upset among newsagents in its pursuit of retail real-estate. There has been talk of disappointment by some franchisees. I know the Bayside Frankston shop switched from a franchisee operated business to corporate over the weekend.

Margin in newsagencies is tight and this makes the traditional franchise model challenging.

Update: (4/10) I have received advice that the takeover has not yet proceeded. An announcement is expected tomorrow.

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Newsagency challenges

The dumping of overseas crosswords

blog-crosswords.JPGNewsagents continue to be swamped by overseas crossword publications. We have an excellent range published in Australia and don’t need the 30, 40 or 50 titles of US and UK junk each month. These titles are expensive and represent a considerable drain on newsagent cash. Also, since many are small, they’re easy to steal. It is hard for newsagents to support local titles with these poorer performing titles demanding space. Newsagents seem to have little luck in cutting these overseas titles. Would consumer satisfaction be diminished if newsagents did not carry these titles? I suspect not.

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magazines

Ralph revitalises with beer and Holly Valance

blogralph.JPGWith Holly Valance on the cover, a free stubby holder and a free beer offer Ralph this month has everything going for it. ACP Magazines have given us some of the best point of sale material I have seen. I like these types of promotions because they given us a chance to show what we can do compared to a supermarket or 7-Eleven promoting the same title.

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magazines

7-Eleven to sell Lotto?

Several newsagents have contacted me today saying that there are reports in NSW newspapers saying that the NSW Government has announced that 7_Eleven is to trial selling lottery products. If this is true it is the actions of a government which cares little for small business and does not understand the fine balance of traffic to newsagencies. If this reported trial proceeds to full roll-out newsagencies will close as a result. Newsagents need to contact Grant McBride, the Minister for Gaming and Racing on mindgr@dgr.nsw.gov.au.

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Newsagency challenges

Weeklies coverage moves to Terri Irwin

blog-ni3.JPGThis week will be an interesting test for the pulling power of the Terri Irwin story. Crass as that sounds it is fact of life. As you can see New Idea has Terri on the cover. I’d expect Woman’s Day to do the same. The story has evolved and it will be interesting to see if it has the same sales success because, after all, that’s what it comes down to. Based on the week ending today I’d say the story does have legs. Our New Idea sales are up 33%. Woman’s Day I can’t tell as we were not successful in getting extra stock. Based on results earlier in the week I’d say if we had the stock we’d be up at least 20%. Women’s Weekly, also with a Steve Irwin cover, is selling very well – 25% ahead of this point in its usual monthly cycle.

There is no doubt that Australians feel for Terri and the family and want to know how she is doing. Newsagents hear that across the counter. The magazines provide some satisfaction for that curiosity.

We will continue to support Wildlife Warriors in-store and thereby provide a socially responsible context for our promotion of the magazines carrying the story. Thanks to the advance warning from New Idea we are abale to prepare today (Sunday) for the stock which will arrive tomorros.

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magazines

Magazines are killing this newsagency

I often write here that the magazine supply model is broken. Below are selected excerpts from an email from a newsagent explaining their specific situation:

We are reasonably new to the industry (2 years tomorrow) and are having cash flow issues already.

As you suggested we contacted each of the distributors and requested a supply allocation order.
We adjusted this file extensively and faxed it back, we have not had any reply from any of them.

I read on your blog that you cut the bottom 200 titles from your shop. I am interested in how you do this when I cant get the majors to accept my adjusted allocation supply model?
(Or whatever they want to call it).

One distributor has advised us that they haven’t APPROVED it yet?? (But it is our cash-flow???). Another distributor says they have done something for us but we don’t see it working. Another distributor is ignoring us.

Mark, we are trying to learn as quickly as we can and love the newsagency channel.
Can you offer any advice? Are we talking to the wrong trees? If we can’t get them to cut adult mags that we have sold 1 copy of in 2 years, how will we get them to accept a cut of the underperforming 200!

Or are we getting the run around because they assume we are new(ish) and they want us to stay in the dark?

The magazines are killing us and taking our cash so that some weeks we have to delay paying staff until we bank the following day!

… but whilst everyone sympathises with the oversupply issues of newsagents no-one is actually there for new newsagents to show them the ropes and who to talk to – how to get around the system .

This is a common email from a newsagent. It reeks of despair. Only newsagents can solve the problem. It is their cash, their real-estate and their labour at risk in supporting the magazine supply model. Magazine distributors have their own challenges as do publishers. They must look out for themselves. So should newsagents.

To the publishers who write and say that they cold not afford to publish their titles if newsagents did not maintain the current supply model, it’s not our problem. Newsagents cannot afford any longer to support small titles. real-estate is expensive and it is unreasonable to ask newsagent to invest in small and new titles as is the case now. Look at Cosmos, my newsagency invested hundreds of dollars of cash in its launch and now it’s more about the online presence. Launches of such fringe titles is an abuse of a magazine supply model which is broken.

To the major publishers – ACP Magazines, Pacific Magazines, FPC etc. I say – you’re losing out too as it is the small titles which drag labour, real-estate and cash from attention to your product.

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Newsagency challenges

Another bag for The Age

We’re giving away another carry bag with The Age today. It’s better quality and has a classier look than the previous bag give aways. It’s frustrating, though, when a customer says “no thanks, Starbucks gave me one with The Age on Thursday.” Sure enough, Starbucks was giving away the free carry bag Thursday with The Age and they still only charged 50 cents for the newspaper.

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Newspapers

A day without The Age

bogage4.JPG

We were short delivered our usual supply of The Age today. Despite a phone call seeking replacement stock just after 6am replacement stock has not been forthcoming. Now the folks at The Age say they have no record of our call. We have a witness at our end of the call being made. Still, that doesn’t help our customers.

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Newspapers

Weeklies sales spike

Data I am seeing indicates the the Terri Irwin cover stories on New Idea, Woman’s Day and Australian Women’s Weekly are continuing to drive sales. If other newsagencies are like mine New Idea will end the week stronger thanks to an appropriate bump in supply in anticipation of the spike – we’re up 30%.

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magazines

Newsagents ripped off – part 2

blog-melbliving.jpgMelbourne Living sells for $6.95. My cut is $1.73 for each copy I sell. I received 17 copies this week and require four pockets to display this stock at a cost of $12.00 per month. I have to pay for the 17 copies in four weeks. I am supposed to carry the title until February when I return unsold stock with a credit due to be given on my March 2007 statement.

I’ll be lucky to sell 5 copies. If I do what I am told I forecast that carrying Melbourne Living will cost me at least $50.00. NDD, the magazine distributor involved would have enough data from my business to determine a fairer scale out. Universal Magazines, the publishers, would also have sufficient data to know the cash-flow impact of their new title on unsuspecting newsagent.

The five month on sale period is a decision of the publisher and distributor. It is appalling behavior on their part expecting newsagents to fund their new title while it tries to find a market. Newsagents are unlikely to complain because this happens every week – smaller publishers and compliant magazine distributors conspiring to rip cash out of newsagencies who cannot afford it.

What should have happened with Melbourne Living? This and any title to be on my shelf for more than 30 days ought not be billed until within 30 days of coming off the shelf. This makes the publisher responsible for their print run and not me.

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magazines

Newsagents ripped off – part 1

Network Services supplied newsagents across the country with boxes and boxes of diaries this week. Newsagents have to pay for them by 21 October. Most diaries won’t sell until December. We return unsold stock in January and get a credit in February.

Network, a PBL company, has our cash to fund their diary print runs.

At the very least the diaries should have been scaled out next week giving us an extra 30 days to find the cash. At best we should be billed in December for payment in January. That’s what a true partner would do.

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magazines

What small business policy?

blog-ap22.JPG

This is the government owned Australia Post shop opposite my newsagency as photographed this morning. (I had to wait for them to open at 9am. My newsagency was open at 7am.) Not a postal product in sight. No wonder shoppers get confused between their business and my business.

The functions of Australia Post are laid out in the Australian Postal Corporation Act 1989. Like any Act, the devil is in interpretation. The Government and the well paid executives of Australia Post have demonstrated a flexibility in interpreting the Act which makes a mockery of Government small business policy.

The Act allows Australia Post to offer non postal products and services if they are incidental to their core functions. Is giving over 90% of your retail floor space to non postal product incidental? I think not. They do this behind the respected Australia Post brand – a brand burnt into our minds because of the postal service monopoly, not because of calendars, greeting cards, stationery and cheap China product. Their leveraging of the government owned brand into sales of items previously sold by small businesses like newsagencies makes a mockery of small business policy.

Here’s part of what I blogged earlier this week on this:

When farmers talk of the impact of droughts the government steps in with assistance. When auto makers talk of the impact of cheap imports the government steps in and helps. When newsagents talk of the impact of Australia Post the government ignores us.

Australia Post is our drought. For many years now it has been draining newsagencies of revenue. Many are close to death.

How many newsagencies need to close as a result of Australia Post competition before we see action?

What is the Government’s small business policy and where can I see it in action? Certainly not at a Government owned Post Shop.

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Australia Post

New Bulletin website

I like the new Bulletin website. It’s certainly a leap forward from what it replaces. Personally I’d like to see less intrusive advertising. The ad above the masthead from Tourism Australia is annoying. I’d also like to see them go further into comment and reader interaction – freeing their reporters and other contributors to go deeper in a less structured way into stories. The folks at The Guardian do this well with their comment is free site. There, you can see a new relationship emerging between reporter and reader. This is where mastheads like The Bulletin have a bright future. Unfortunately, I suspect it is only online.

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magazines

Telstra owned UBD lets newsagents down

blog-ubd.JPGWe thought we were special with the offer of a deal from the UBD street directory people (Telstra). Seems we’re not that special – Big W and Australia Post have the UBD street directories as well.

Big W must have a better price since they are selling for 25% less than us and Australia Post has a free DVD with theirs. We have a very nice coffee mug. The UBD actions with these different offers means confusion for consumers. Had I known about the Big W and Australia Post deals I would not have bought as many UBD directories as I did. Had we been the only store in by shopping centre with the deal we would have done better. As it is we’re stuck with several hundred.

Message to self – be more cynical when suppliers come to you with “amazing” deals.

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Newsagency challenges