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.
