Home' The Channel Magazine : National Newsagent February 2012 Contents National Newsagent February 2012 19
however these will need to be acquired by
separate entities owned by that operator.
The role of a Distribution Agent would be
to distribute newspapers via home delivery,
to NSRs, subagents and direct accounts.
The role of a NSR would be to provide an
enhanced, specialist retail service through
the established retail channel.
In order to acquire a Distribution Agent
license, operators would be required to
meet the Distribution Agent criteria. The
criteria will effectively shift the market
and rationalise the distribution network.
In order to meet the criteria, Distribution
Agents must deliver a minimum number of
newspapers each day, and operate from an
approved distribution warehouse.
Similarly, NSRs will be required to
meet the NSR criteria in order to acquire
a license. The criteria seeks to raise
the standard of retailing, provide more
products and services for customers,
more avenues for customers to purchase
products and services (online, telephone
and face to face), and for NSR's to share
the customer service function currently
provided by News Ltd and Fairfax.
Service charter and standards
A Service Charter would provide the
minimum services standards for each group
and address key issues such as opening
times, services that must be provided,
response times, delivery and redelivery
times and a range of other issues.
The licensing criteria are expected
to significantly rationalise the network
through market forces. Operators who
would undertake both functions would be
able to choose which licenses they wish
to apply for. In terms of distribution, the
choices available include merging with
other operators in neighbouring territories
to meet the new criteria, selling their
territory to neighbouring territories,
purchasing neighbouring territories, or
staying the same (some will already meet
A crucial element to a new system
would be the development of a technology
platform that could provide an integrated
system for publishers, Distribution Agents
and NSRs to enter, access and share
customer data in real time. It will enable
NSRs to act as the customer face, provide
data to Distribution Agents to enable
fulfilment and provide News Ltd with
information about its customers in real
time. Once implemented, this is likely to
result in significant savings for News Ltd
Revised remuneration structure
The proposed model necessitates
that aspects of the current remuneration
structure be reviewed to ensure that
services are fairly costed and remunerated,
ensuring profitability for publishers, NSRs
and distributors. For NSRs, an increased
remuneration pool is needed, with a
minimum of 25% and the ability to earn
more based on compliance and KPIs.
For home delivery, an increased
remuneration pool is required. Importantly,
a new method is required to calculate the
cost of delivery to ensure remuneration
reflects the resources required to deliver in
each location. Additionally, different areas
should be remunerated based on different
calculation methods, to ensure that distance
and time are accurately accounted for.
In order to shift the market to any
new model, it was recommended that
contract security be provided through the
formal extension of contracts and the
communication of a secure plan going
forward. These two actions are seen as
crucial to remobilising the market so that it
can transition to the new model.
To enable a smooth transition to any
new model, it is recommended that
a Transitional Advisory Committee be
established, consisting of major publishers
and VANA representatives for Retailers and
Distributors, to implement the changes.
The Distribution Agent criteria would
rationalise the distribution market, provide
for greater efficiencies, provide long term
viability and provide significant savings
for News Ltd and Fairfax through a more
efficient distribution system. It would
also allow market forces to shift territory
boundaries to operate at optimal efficiency.
Additionally, News Ltd and Fairfax will not
be dependent on retailers for delivery.
The NSR framework reinvigorates
the retail channel by providing dedicated
retailing, increased services and providing
customers with more options.
The newspaper landscape is like quicksand,
constantly changing and threatening to
swallow consumer demand. To create a
sustainable model that will work for all states
in all circumstances is a massive task.
WHAT 'S HAPENING
AROUND THE COUNTRY?
Newsagents in every state are moving
to readjust their distribution models. In
South Australia, supposedly the state in
which models are tested, no 'new model'
has emerged. In Western Australia West
Australian Newspapers (WAN) is looking
to introduce 'migration' of customers. In
Queensland, West News has established
a service for publishers and in Victoria
consolidation of rounds is forging ahead.
The merger model
A number of specialist distributors
are already established in Victoria and a
new 'merger' model, Titan Distribution
Holdings (TDH), has commenced
operations for the Laverton, Point Cook
and Altona Meadows areas. This expansion
comes after the distribution areas of
Avondale Heights and East Keilor merged
with Titan Distribution in April 2010.
Currently, Titan Distribution now
comprises 160 subagents, 50 schools,
around 15,000 newspapers daily escalating
to 20,000 papers on the weekend. Titan
Distribution is believed to be the largest
distributor in Melbourne, having navigated
through a 'merger' model as opposed to
other distributors who have expanded by
way of acquisitions.
Newsagent Ken Wilson established Titan
Distribution as a merger vehicle to expand
the business seeking economies of scale
in what is a very tight margined business.
Current owners of the group comprise
the areas of South Sunshine, Altona
North, Werribee Plaza, Centreway East
Keilor, Avondale Heights and Laverton.
Williamstown will join TDH late March.
Around the middle of last year TDH
invited all distributors to its offices for
an open day to discuss the future of
"We invited only distribution agents, not
to exclude other newsagents, but it was
the first time that like-minded distribution
agents could talk about their business
model without fear or favour.
Working with VANA, TDH contributed
to discussions on a new model being
discussed by News Limited and Fairfax.
Ken Wilson explained that over the
last quarter they have stepped up the
business plan to ensure the running
of TDH continued without a hitch. TDH
will shift territory
operate at optimal
"Our plan for the
future is based on
economies of scale"
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