I remember years ago, going to a government meeting where the public servants stated their concerns that in international terms, many overseas lotteries had better returns and more massive payouts then Australian gambling offers and that Australian would slowly go online and they were apprehensive over the loss of revenue. Well, here the government is still worried and thinking of banning lottoland.

Now suddenly here lottoland which never seems to have cared for newsagents suddenly care. They have now made an offer of 20% of the profits to newsagents. What precisely that means in real terms, no one I have spoken to is sure. However considering that lottoland are looking at getting banned and losing much of Australian business, it probably would be a genuine offer, and that could be very attractive to many newsagents many who are not getting much margin now and to those that do not have lotto. I am sure just like we do with gift cards and telco products in our point of sale software, print a valid lotto ticket.

The long-term question remains of how effective will this ban be. What is to stop me as an Australian, going online and betting on a service like lottoland if the ban took effect? Australians are now big online gamblers, so the long-term problem of Australian lotto remains.

It is said that in a crisis a life raft is only supposed to get you from the sinking ship to safety, it is not intended to live in. Ten and even five years ago I would have said that home delivery of newspapers was in a crisis today it is on life support. Very little has been done, whether anything could have been done is a fascinating question, and the answer is probably. What could have helped was more automation as there is a lot of waste in the newsagency distribution system.

Anyway now submissions are being written up now to News Corp is saying from my reading here (link removed) that unless their members get more help, the newsagency state councils are no longer going to recommend their members continue distributing newspapers. To some extent, it does not matter to many of their members who have already given up on home deliveries. I am reasonably sure that News Corp will say the truth to these councils that there is little they can do.

Let me make a few observations

1) I have seen newsagencies decimated when they gave up mistakenly newspaper deliveries as many customers stopped coming. This is particularly true of those in strips.

2) No-one values a newsagency today by the number of newspapers it sells anymore if a newsagency is losing money on home deliveries this loss is subtracted from the newsagency value.

3) Home deliveries are dropping fast; newspaper deliveries should not be looked at as a long-term investment. The big factor here I think is that the big market of the over 65's is slowly dropping out of the newspaper market.

4) There is no excuse for inefficiencies, what there is now is still fairly substantial and can justify more automation. To a newspaper deliverer, Profit = Income - Cost. If the cost can be driven down, the profit goes up.

5) Increased prices which appear to be the councils preferred option to keep home deliveries profitable will drive more customers away quicker. In my experience, every time you do a price rise, it causes people to make a reassessment, and that is something no publisher of newspapers wants now.

With the recent announcement by Coles and Woolies that they are phasing out plastic bags, many of my clients could see this as an ideal time to access what they are going to do about their packaging too.

On one hand, by having bags it certainly encourages people to buy more, many people appreciate these bags. The other problem is that if they bring in their own bags, they are limited to how big their bags are. So I have had clients after getting rid of bags brought them back in the shop.

On the other hand, many in the public do not like it and in places like Canberra, they have already implemented bans, plus it costs. An article on the ABC that estimated the cost savings to Australian supermarkets of plastic bags was $171 million a year?

Here is an idea you may want to chew on, free bags if the customer purchases over a certain amount. It may encourage them to buy more. Easy to implement such a change in our point of sale system.

Anyway now is a good time for many of you to make a decision.

If you’re still manually controlling your loyalty program, you are wasting your time and resources.

Consider replacing it with our point of sale which is available free to our users. All customers have to do is display their VIP card, if they do not have their VIP card all they need to do is give you their name, phone number or email address and your system can track their purchases and issue them their rewards.

You will be surprised who uses them.

As from today, several well known pirate sites - The Pirate Bay, Torrentz, TorrentHound, IsoHunt and SolarMovies are being blocked in Australia.

Currently it is laughably easy to bypass these blocks as the ISPs are only doing the minimum but its early days.

What I have noticed is that these blocks, do not seem to be enforced on many business accounts. Which means that many people have discovered that using their business Internet, they have a free seedbox. All they need is a smartphone which most people have, the WIFI codes that most employees are given and a free torrent app.

This causes, however, several problems for the business.

1) Much of the bandwidth of their Internet is being used by these programs, and their Internet runs slow.

2) Then their plan limits are exceeded so they get extra charges or get put on slow.

3) And the big one, is they could get involved in a major legal problem.

The quickest way to see if your pos system is being used as a seedbox, which should catch most of them is to go to this site here.

If you come up, then I suggest you investigate. About 4% of my clients are finding something.

I find it very good, using it we caught an accountant who was doing a job here on behalf of one of our clients, downloading torrents from her laptop while she was working here.

A few of my clients today contacted me very excited over some fantastic news that the Queensland Government has offered to assist small to medium-size business with up to a $10,000 grant to them for $10,000, to assist them in their digital services needs. That was where we were to come it since our integrated point of sale with its digital marketing website and social media services seems to fit the guidelines for this grant, which then would allow them to take their online marketing efforts to the next level. As this grant can include in part their own labour charges and is EX GST with an expenditure of $8,000 they could get a $22,000 grant for a website. I said it sounds too good to be genuine and I told them you are probably listening too much to a piper. Still, I immediately took it up with our legal R&D; expert. The offer is true.

The big problem I see is in the fine print which states that approximately 200 applications will be approved each year, distributed over the three rounds. That means out of this roundabout 66 applications will be accepted. I have no idea how many intend to apply, but I am certain the number applying is going to be well over 66, and I am confident that many of those applications will be very strong.

The other issue I did not like is that the offer is so broad that many business proposals could apply, you can use the money on online marketing audit, plan and implementation. Search Engine Optimisation, Pay Per Click Advertising (Google AdWords in Search Advertising, Display Advertising YouTube Advertising or Shop Advertising), Social media management and marketing plans, optimised landing pages, creating mobile-specific pages, content creation and infographics, implementing an online payment system for your website and more. That is a very broad range of products nor is it really a lot of money for some of these activities, SEO alone costs about a $1,000 to $2,000 a month and rarely works in my experience. Google AdWords can be about the same.

The rest does not appear to be unreasonably hard to achieve.

Your business must have fewer than 20 employees now.
The company must have an Australian Business Number (ABN) and be registered for GST;
The business operations must have a strong Queensland connection.

Still I do feel that for many, it can be a very good offer, we certainly I think could help you make a strong case that would fulfil the criteria and if anyone of our clients in Queensland has an interest in having a shot at it, I am also sure we could together create a truly strong application.

However, if you do want to proceed, we must move now as your application must be in by 9 December 2016.

Amazon has announced that they are coming to Australia with physical shop and distribution centres in 2017 in every state. I am sure they are going to be strong competition. They already have an established retail base in Australia, which reading the comments at the moment on twitter are looking forward to Amazon coming. They expect soon to have access to more products that Amazon do not ship to Australia.

Once here Amazon intends like in England to expand into a whole range of products, including groceries. The farmers now are complaining about many of the margins Coles and Woolworth offer; I wonder what they are going to say when they see Amazon's margins? A friend who wrote a book, told me that they sell a lot, but they really cut her royalty payments down.

The fact is that Amazon with its huge buying power; its stress on on-line and first-rate delivery services will pose a unique challenge to the Australian retail business model. Will an Australian shop without an online POS Software presence be viable soon?

Here are some links, to read more.

Aldi and Woolworths to Amazon: BRING IT ON
Amazon is about to 'destroy the retail environment' in Australia, report says

In relation to the problems that occured recently with their stock files and the confusion that it generated with our clients, on behalf of our clients we complained both to VANA and Blueshyft.

VANA have assured us that they are aware of the problem and have addressed it.

Blueshyft replied too with the following email.

Hi Bernard,

Thank you for your email.

XChange-IT was supposed to have distributed the barcode files to the POS providers prior to our email to the network, which we believed they had, however we were informed after the email was sent that it actually hadn't happened yet.

We are immensely sorry for the miscommunication, and for the inconvenience caused.

Kind regards,

Zoe Archer
Operations Manager
1800 817 483
blueshyft.com.au
Blueshyft
Pier 8/9
Level 4, 23 Hickson Rd.
Millers Point, NSW 2000

We hope it will not happen again.

Yesterday many of you would have got the newsletter about Tatts Group FY15/16 Report for those that did not it's available here.

If you look at the FY16 Investor Presentation there, the relevant pages for retailers are pages 6 & 7. From that I created this table.

I double checked and the figures match the report.

Overall sales went up by 8.2%, clearly, online sales went up rapidly by $69 million but Bricks and motor outlets went up even more - $93 million. For retailers as the number of outlets went up slightly the average sales for their outlets went up over $22,000 or 5% to $473,559 an outlet, which is a terrific result for a mature industry in today's retail environment at the point of sale.

Clearly though many of these retailers would have concerns with digital, I still think this though is a long-term threat, here are some figures from the page.

On a graph, it looks like this, as you can see the growth currently is not that rapid and there does not appear to be that much of a relationship between the digital and the Bricks and motar customer.

Looking at this, I would say that the retailers still have more good years before being replaced by digital.

For those that have a mathematical interest, I did an S curve calculation to 2020 based on these figures and got about 25% of the market will be digital then.

I would not be surprised if it higher but I think it gives an idea.

People who sell books will probably think that Amazon is hypocritical by having a brick and mortar store.



From the pictures, it does look like a typical bookshop except, there is a lot more full face then spine-out.



What does look unique is the way they have linked in their website in the shop. They show on the shelf labels rating, user recommendations and reviews all that are useful information to someone buying particularly if they do not know much about the product. This is something that I think many retailers in many different industries could consider copying.



I think you will get some ideas looking through these photos which are available here.

 

The magazine distributors requested the ACCC that they be allowed to do a magazine distribution trial. This resulted in many responses from many interested parties. As a result, they decided to make a hearing. I was invited to attend. Where it was decided to allow the magazine companies to do trials on magazines. The Magazine Networks then engaged Boston Analytics to assess the results of their tests. This report of these trials is starting to be released. We received an advanced copy today as we have been closely involved probably more than anyone else, and I expect in a few days everyone interested will be able to get their own copy [[ here]].

Overall what will happen at present is in doubt, as it has greatly changed magazine distribution recently with the exit of Bauer Media, leaving Gordon & Gotch, which has taken over much. Gordon and Gotch never seemed greatly interested in this project, so what happens from this moment in time on this is unclear.

Overall, I would like to make some comments.

What the Magazine companies did was divide about 60 shops into three groups, the first group (A) Stores, they limited supply to those magazines that they thought could sell, and they gave additional layout and range advice. The second group (B), all they did was limited supply to those magazines that they thought could sell and the last group (C) they did nothing but made sure that they were similar shops, so they could compare the results.

What they found as a result of the trial.

Group A - Sales dropped 8%, and its return rate was 39.2%

Group B - Sales dropped 13%, and its return rate was 38.5%

Group C - Sales dropped 3%, and its return rate was 47% (these figures, I averaged)

Now before you think between A & B groups that there is a big difference, one shop in group A in the middle of, the trial gained a huge subagent, so increasing its sale of magazines by 58%. So I think it should have been removed, but it was not and if you remove this shop from the mix, I get Group A and B as having an almost identical result say about 11% drop.

To me, these figures do not look that good. Yes, there is an 18% drop in returns, which would save a shop much in time and work, but I think most would say that saving is not worth an 8% drop in sales.

It is interesting to read the comment at the end of the report by newsagents here which I think agrees with my conclusion.

Update: Although in what many involved in this project would consider bad faith and a blatant violation of trust, this document was recklessly published early by a competitor. You should not do things like this. In any case now the document, however, is available at the above address for viewing and discussion.

While in Germany, one place I had to go to was the pet shop in Duisburg called Zoo Zajac as it is according to Guinness World Records, the biggest pet shop in the world to get ideas for our software. So we drove five hours to get there, which is not unusual as many people go that far just to buy something there. Once I saw it, I could see. Why. I just went "Oh My God." The warehouse alone is bigger than the MCG. They call it a zoo, as it has more animals then most zoos. It has just about everything for animals, including animals like crickets, meerkats, dogs, cats and monkeys. It has something like 500,000 different types of fishes. It has 170 staff.

Just to walk around is a big job. This is not much of a problem to the owner Norbert as he drives around on a bike all day. I found talking to him; I had an unexpected problem as he only speaks German but fortunately my wife is a polyglot and speaks six languages one of which is German. So she translated for me.

I also meet his brother who was very friendly and fortunately speaks English, and we talked while he and my daughter fed the animals.

Overall pet shops have not done well in Germany in the past few years; they used to have 3,500 but now only about 2,000 exist. Although you would not see any economic trouble in this store, as it was full. It started 40 years ago as a very small shop. The whole philosophy now of the shop is to make it a destination store, as although they are big in Internet sales, they prefer direct sales partly as they get paid immediately as opposing to waiting two to three weeks to getting paid. for example when they feed the animals they make it a public demonstation as here.

I took a lot of notes, pictures and got quite a few ideas for our software.

Here are some pictures, and I hope you enjoy them.

Like everyone in the newsagency industry, I look forward to seeing the latest Audit Bureau of Circulation (ABC) figures although I do confess with less enthusiasm than before

It is split into two sections newspapers and magazines, of course, my main interest is in the newspapers where the same patterns I reported last time showed up again.

Print circulations of Australian newspapers sales decline has continued. Probably the worst hit is Fairfax.

I graphed the print circulation from 2010 to 2015 by title based on current circulation so the big circulations are on the left and they get smaller as you move to the right.

There is no real pattern, they are all down; the average is 30% down over the five years.

Magazines because they are lower in circulation, they tend to deviate more but the result is down.

Looking at the figures I cannot see any switch to be digital. So despite years of effort and large sums spent, neither newspapers nor magazines have significant numbers of digital subscribers as few are paying for what they can get for free on the net. So with newspapers, there is the added problem, as the average age of a reader for print is going up, the newspapers are looking at a demographic nightmare. What is keeping them going for now is print.

For newspapers, you can get further information here. Its got a nice graph on the bottom which is worth studying.

For magazines, click here

This morning Network Service announced that they would move all their retail distribution activities to Gordon and Gotch. As our systems can handle what will be much bigger return forms, but clearly it will be a major problem for some larger magazine retailers who do not use our system.

We are all now discussing the situation on how to best manage this changeover. Obviously, many patches will need to be made to automatically update your magazines to handle the new codes and return details, they are going to be big ones. We are going to have magazines delivered by Network that need to be updated before they can be returned to Gordan and Gotch.

Of course, it is still in the early in the process so how all of this is going to happen is yet to be fully discussed and decided. More details will be released closer to the transition dates.

Here are some relevant links that VANA have released, the one by Bauer I have highlighted as I think it is a must-read.

Network Services announcement

Gordon and Gotch announcement

Bauer Media FAQ

Gordon and Gotch FAQ

We had three magazine distribution service, then we had two and now we have one.

{All links were removed}

I strongly believe that every serious business and organisation today needs a web presence. The web has become the major means of communication between business and their clients.

One place you have to be in is Facebook as every day, 10 million Australians are active on Facebook. Many spend almost two hours a day on it.

And it is free.

If you are not there, I recommend you go to Facebook, see what a few similar businesses to yours are doing on Facebook now. Check the ones you like and take a few notes about what your business needs. Note the words you need to say.

Then take a good camera, someone associated with your shop must have such a camera or failing that use a top smartphone. Now give the shop a clean, tell everyone to get nicely dressed tomorrow and take heaps of digital photos of shop, you in the shop, the staff, the shop, the products and services. You will not be sorry if you take too many, only if you do not have enough. Now go through them and select the ten best.

Now find the pages of your suppliers, similar businesses, your own and some other pages that would interest your clients, check out what they do, the details required and note these down. Change it to what you need for your business.

With so many Australians already on Facebook, the odds are that someone associated with your business knows how to set up a Facebook page.

If you are stuck and are a client of ours, we offer a free service to help you.

Now go to Facebook and set up a page. In my experience, it takes people about an hour to set up. If you do not know what you are doing it’s a pretty full-on hour. If you make a big blunder, do not be worried as you can correct later.

Once this is done now push your page on your clients. Ask them to like your page. Put a sign up the front of the shop, “Like us on Facebook." Put a similar message on all your receipts and statements. Push the page to all your VIP members, your staff, etc.

Now every few days check out the pages you noted above. Share or cut and paste an interesting comment from one of these. Please if you do a cut and paste make sure you change it so it becomes an original piece. Furthermore, add every now and then something interesting from your store, for example, a new service you are offering, an award you won, a new stand, new items, etc. Doing this will probably take you about half an hour a week and while you are doing that you will, in addition, keep you abreast of current affairs in your marketplace.

As an added bonus, our clients can integrate this Facebook page in our point-of-sale system.

Now if you want something more like an integrated website available through our point-of-sale system, stay tuned as I will discuss how you can do this in my next article.

Many readers will be struck by how similar the new Woolworths reward program is to our standard loyalty program. It's no accident. What happened was that just before we designed the program, we went to a conference that primarily dealt with loyalty programs. As we listened to what these experts from some of the largest convenience stores in Europe and Australia, such as 7-11, Telstra and Optus, said, we took notes and later used their ideas to make our adaptation. Presumably, Woolworths listened to the same experts.

You can see how it works here, and it's exactly the same as ours.

You must have a card, and to get it, you must supply Woolworths with your personal details. This is because the value of the customer monitoring, email addresses, and information is considered to be worth 1%, and Woolworths is not giving that 1% up.

Then, when you purchase selected products, such as items marked with an orange ticket, your account collects Woolworth's dollars (points) on your card.

When your account reaches $10 in Woolworths dollars (points), you get $10 off your NEXT eligible purchase. Unlike some rewards programs, part payments are not accepted.

If you do the figures, it works out to for every $800 of purchases, their customer will get back about $10, or 1.25%, assuming they redeem it. In practice, many do not redeem it so reducing the cost somewhat.

The payout figure is not surprising, as 1% cost, as I stated, is about what most loyalty programs work on. Note that the Woolworths rewards program is not going; I am sure it will cost Woolworths 1%, as I can guess who will be forced to pay for it!

Here are some links with more information.
 

http://mumbrella.com.au/woolworths-faces-protracted-battle-to-maintain-…

http://mumbrella.com.au/woolworths-axe-qantas-frequent-flyer-points-rew…

The system is tested and proven and is available to all our clients in our software.

Looking at the latest report, digital has at the moment almost overtaken print. In some newspapers like the Sydney Morning Herald, it already has we are at 50/50 now. Compared to the same period last year, digital is approximately 10% up and print is 10% down. they are about equal. If this trend continues, how long do printed newspapers last?

You can see the numbers and discussion here.

Overall magazines are down about 6% which is better than expected.

Most of it in the weekly magazines where the fall is on the majors about 8%. You can find a discussion here.

The non-weeklies are all down with massive variations in circulations. You can see the figures in the ABC circulation report; I quoted earlier, and a discussion is available here.

30% of Hubbed has just been sold to Singapore Post for $4.3 million dollars.

Singapore Post is one of the largest in world and is well placed in Australia to expand. Among other things in Australia, it owns Courier Please, which is Australia’s leading metropolitan express parcel delivery service with nationwide operations in Brisbane, Gold Coast, Toowoomba, Sydney, Canberra, Central Coast/Newcastle, Melbourne, Bendigo, Ballarat, Geelong. Carrum Downs, and Adelaide.

This I am sure will mean quite a lot to the 680 newsagents who by way of Hubbed provides a parcel delivery service in every major city across Australia. Included in this announcement is an expansion in Hubbed e-commerce delivery service to Australian customers using Singapore Post plus a new product for parcel drop-offs and sale of delivery products. It will also mean an expansion of Hubbed's customer base as Singapore Post huge customer base will be entering the Hubbed network.
 

The MPA has announced here that its proposed tests will start next month with 20 shops has been approved by the ACCC. What they are going to be doing in these 20 shops is providing better and more restricted distribution and retail advice. I expect that it will be extended to another 20 shops soon after that only with the better and more limited distribution with no retail advice. The idea here being to compare how good the MPA retail advice actually is.

This does suggest to me that Alf Maccioni, CEO of the Australian Newsagents Federation, was right from the start with his comments of the reality of the situation with magazine distribution.

The ANF submitted to the consultation on Post Implementation Review (PIR) Tobacco Plain Packaging.

Their main claims are that it has had minimal significant public health benefits, that the economic impact on its member has been substantial, and that it is unfair that SMB should not have to carry most of the cost of this legislation. Although I will not comment on the last point, I feel the first two points are correct.

I data-mined tobacco sales from 2006 to 2014 and can find no evidence that plain packaging had any effect. It's a total blank. I agree with the ANF that the reduction in sales is mainly due to the higher unit costs of tobacco, although I would add that the drop in magazine sales is also having a significant effect on tobacco sales among their members.

I do not think this was a well-thought-out campaign by the government.

Here are some interesting links if you wish to check this out further:

http://www.theage.com.au/victoria/authorities-seize-15-million-of-illegal-tobacco-in-victorian-property-raid-20140504-zr4cg.html