I was asked how did the magazine distributors go in 2011 compared to 2010. Good question and this is my answer.
The first point is that in the magazine industry, because of the relative lower cost of a magazine production compare to the fixed costs involved in publishing a magazine plus advertising revenue it is much better to take a chance of making a sale then to lose a sale. This is true for newsagents too. It is better to supply a subagent with a magazine that might sell, then chance a lost sale.
So what the magazine distributor wants to see is that you sold as many as you could. They can see that if you return one of each magazine issued. In theory this works out to an oversupply of about 35%.
In practice, there is the difficultly in estimating sales. Furthermore, what happens often is a big bunch of magazines arrives in a magazine distributor' warehouse. They are doing nothing in the warehouse except taking room, which will soon be needed for more magazines. They need to be sent out to anyone who will take them. This is why the actual oversupply is close to 100%.
Over the years, POS Solutions has come up with two measurements that we think are the best to examine the magazine market. The first is sell thru rate. This is what sells compared to what they send you. In 2010 and 2011, the figures are about the same. The second is GMROP (Gross margin return on purchases) which is how much profit percent did a newsagent make for his purchases of magazines. Again in 2010 and 2011, they are about the same.
So the short answer is that it was almost exactly the same in 2010 as 2011.
We then compared GG with Network both in 2010 to 2011, again there was effectively no change. So basically they are as good as each other.
I reported here in 2010, that I thought the magazine distributors did a terrible job in that year. Well, they did the same job in 2011.
There are two ways of looking at this, 2011 was not an easy year for printed magazines. Many changes took place both structurally the move online and internally with the continuing problems of RDS. It could be argued that to do as well in 2011 was a good effort. The other argument would be that 2010 was badly done. Every year has its challenges in business one needs always to improve and in 2011, they did not improve. You decide.
