Australian magazine industry has been beset by publishing problems as the main contractor, First Fleet, struggles to handle the volume of magazines put through the system each week.

The distribution system so vital to the health of the Australian magazine industry and run by ACP (PBL) and Gordon and Gotch (PMP and Pacific Publications (Seven Network) is tottering and under growing pressure.

The main contractor in NSW and Victoria, First Fleet, has proved to unable to fully handle the volume of the millions of magazines put through the system each week by the various companies.

ACP, and in particular Network Sysetms, its magazine distribution and subscription arm, plus rivals Gordon and Gotch and Pacific Publications, are now facing up to the fact that if First Fleet has any more problems, the entire system could grind to a halt.

This will only backfire on the magazine companies, especially ACP (Network) and Gordon and Gotch and Pacific which thought they were so clever in signing First Fleet to a low ball offer last year that has produced cost savings that are so illusory when compared to the problems created at all levels of the system.

Every magazine in the ACP and Pacific Publications stable has had delivery problems in NSW and Victoria since the middle of the year when First Fleet took over the contract

Some newsagents have not been getting copies of volume sellers such as Woman’s Day, New Idea, Australian Women’s Weekly, New Weekly, TV Week, Ralph and The Picture, The Bulletin and so on.

The subscription system, especially that run by Network through the First Fleet system has failed to achieve the required cost savings and efficiencies, while sending magazines sent through Australia Post has proven to be, on the whole, a more reliable method.

(The Network delivery program for subscription copies was started to try and lower costs for ACP by cutting back on the amount of money spent with Australia Post. There’s also the complication that some magazines, such as editions of Harpers Bazaar and The Australian Women’s Weekly are heavy and incur higher postage rates went sent through Australia Post. ACP currently offers newsagents more than $2 a copy to handle subscriber copies of Harpers, for example).

Given the problems with home delivery, it’s no wonder ACP has reportedly shed 40,000 subscribers in the past year across all its magazines (subscriptions form around 10%, on average, of the circulations of ACP magazines). Magazines in the Men’s area at ACP such as Wheels, have also not been getting through to subscribers.

This is why the Network group has recently restructured and brought the Network Services Delivery Program back into the Network structure.

Here’s the announcement posted on the ACP intranet recently:

As part of our ongoing growth and structural changes NSDP will now move into Group Operations. Daniel Tisi will report directly to General Manager Group operations, Alan Sun.

Jonathan Champion and Andrew Randall will still be responsible for new business and client relationships at a senior level.

This structural change is minor but brings Daniel Tisi and his team closer to the team that underpin the program and service levels. I would like to take this moment to congratulate Daniel and his team on continually moving the program forward and maintaining those service levels.

All these problems make a mockery of the claims in this ACP-Network release promoted recently in a media newsletter.

It was headed:

Network officially launches home delivery of magazines by newsagents

Network Services has announced the official launch of the Network Services Delivery Program (NSDP). This program provides an alternative delivery service of subscription magazines and other products through the newsagent channel.

The strength of the NSDP lies in the utilisation of existing infrastructure, based on newsagents’ retail sites and delivery rounds to distribute products. The exact location of a subscriber and their relevant NSDP agent is pinpointed and matched through sophisticated mapping software. The technology infrastructure then brings together customer address, product, and quantity details to produce a distribution plan for the delivery agent.

The process ensures customers receive their products in the best possible condition and in an appropriate time frame. A robust reporting structure tracks the product at each stage, right to the subscriber’s door.

Phillip Parsons, Managing Director of Network Services says “The program has been in development for several years and was not possible without a strong investment from ACP and newsagents in setting up the delivery platform. We now have a platform that competes vigorously with Australia Post and Logistics businesses across Australia and provides a strong service-based alternative.”

The NSDP commenced delivery in May 2003, and has grown to the point where it now delivers products on behalf of some of Australia’s major publishers. A special thank you to ACP Publishing, Wealth Creator, Harlequin Mills & Boon, Inside Film, Mayne Publishing and Thorpe Bowker who have made an active and valuable contribution in supporting the program. New business will be attracted through the ongoing success of the NSDP.

Source: Network release

That is as far as anything from reality, especially in NSW. The network subscription system through newsagents has whole slabs of Sydney and other major cities where newsagents DO NOT want the business, forcing network to use Australia Post or third party contractors to try and do the job.

The way the problems are being reported from newsagents, the home delivery service of subscriptions through newsagents is hardly a success.

Many newsagents are receiving other agent’s subscriptions, or none at all.

This is on top of retail deliveries, especially on Monday which are proving to be short copies of major selling magazines, or none at all.

Mondays has become an especially problematic day for ACP, Gordon and Gotch, First Fleet, Network and Pacific Publications (not to mention all the third party magazines distributed by both companies, especially Network and ACP.

Woman’s Day, New Idea, NW, TV Week, are among the big sellers distributed that day, plus a host of smaller magazines (actually its Sunday). Close to two million magazines have to be distributed that day, across Australia, with the majority of those in the two biggest markets, NSW and Victoria.

Distribution of ACP magazines is further complicated once a month, on the last Wednesday, when around a million copies of The Australian Women’s Weekly are for distribution. This adds pressure to the already strained system in Victoria and NSW and has led to arguments at Park Street between AWW editors and managers and Network people about hold ups and slow sales.

Sources in First Fleet say the person who won the contract has gone on stress leave and is no longer working full time and the remaining managers are grappling with the problem. The company is losing tens of thousands of dollars a week on the contract and the new German-made packaging machine is still having teething problems and has been having those since being installed in May.

Although some 1st Fleet drivers have complained that the pallets of magazines from network are coming to 1st fleet wrongly mixed up, badly labelled, and shrink-wrapped, meaning greater confusion for re-sorting and distribution (and much higher costs).

Gordon and Gotch have changed managers while the First Fleet manager in charge of the Sydney distribution has moved sideways.

Warehousing, packing, delivery are all experiencing delays, non-delivery or late drops into the system.

And while ACP and Gordon and Gotch are happy with the cost savings, the loss of magazine reliability and sales delays will start eating into circulation and revenues if the problems are not reversed soon.

First fleet has employed a courier company that has already had problems supplying parts of the Network system in Sydney, simply to correct the daily delivery problems. Subscribers of a wide range of magazines from many publishers are complaining about repeated non-delivery of their magazines simply because their magazines have been lost in the system.

Network and Gordon and Gotch seem to be making a very basic error of mixing parcels of magazines of very different sizes into single deliveries, meaning drivers are under pressure to do the sorting on the run, adding to their time and cost, especially when they have little experience the very detailed nature of the magazine delivery system.

The bigger parcels are magazines for retail sales, the smaller ones are the magazines for home delivery.

In truth subscriptions do not give you currency of issue, just a cost saving and a variable delivery time, unless they come through Australia Post.

It is not just a pack, drive and drop system. Magazines have to be put into specific boxes at newsagents for security and quality reasons. On numerous occasions that has not been done, leading to theft and loss through rain damage.

Major outlets like the big retailing chains know their biggest problem is the ‘out of stocks’ on their shelves. It is why they are spending billions to cut logistics costs, improve efficiencies because an out of stock is a lost sale.

The problems with the current magazine delivery systems in NSW and Victoria are beyond their control, but they do not like the ‘out of stocks’ appearing on their magazine racks simply between Network and Gordon Gotch currently oversee a spluttering delivery program.