Pandemic Publishing Roundtable: E-Commerce is coming to the Newsstand. Jerry Lynch of MBR.org Gives an Update

By Linda Ruth (Crossposted at BoSacks.com)

One topic that remains of consuming interest to all of the members of the Publisher’s Roundtable (Post-Pandemic, as we fervently hope)—Joe Berger, Bo Sacks, Sherin Pierce, Samir Husni, Gemma Peckham, and me—is the issue of developing a workable e-commerce solution for publishers wanting to participate in the click-to-curb model that retailers and their customers are increasingly adapting to.

In a 2020 Roundtable, we learned from Jerry Lynch that the MBR , along with its member publishers, is working hard to make that goal a reality. Jerry recently joined us to give us an update on their progress. 

Sherin: Long before COVID the Old Farmer’s Almanac was committed to working with retailers on their e-commerce platforms, and we did develop some programs, although not in as universal a sense as we would like. The changing shopping patterns that came with COVID make this issue an urgent one for all of us. The retailers are developing and implementing their e-commerce platforms, but to a very great extent magazines are not a part of them. 

Jerry: Our goal is to make sure that magazines are able to participate in these retailer e-commerce solutions. Our focus is the click-and-collect model, where magazines will be distributed right out of the retailers’ stores, as opposed to from a centralized distribution location. The first step is to develop or identify a platform that facilitates it, and the second is retailers having to connect to the platform. We’re making progress on both sides of that equation. We spent the last 5 months working through the mechanics of the process with a small group of titles, comprising about 60 UPCs in total. It requires getting the titles up on the platform and having them change the issues on a regular basis so that the images are current. It’s a complicated process and it took some time. 

Existing platforms such as Syndigo, which MBR is using, are built for traditional product. We don’t fit the mold. Most products are more static. It’s a plus that we turn over, we stay fresh, but it makes it hard to shoehorn frequency magazines into the system. Yet we have gotten to the point where we’re set up to do it for monthlies. Over the last few weeks, we successfully delivered titles via the Syndigo platform at a northeast retailer. This included changing out cover images. We have some fine tuning to do but Weeklies will be next step.  Another hurdle is that retailers will be fulfilling their customer’s orders from inventory, and in a scan-based-trading environment, the retailers typically don’t actually have a record of their inventory. But these are challenges we must meet, and obstacles we must overcome. By 2022, over 30% of retailer sales will be from e-commerce. We’re going to want to be part of that. 

Sherin: Right. If we can’t find a way to be part of it, magazines will be left behind. 

Jerry: To make it happen, we as an industry need to convince ourselves this is a big opportunity, and one that’s worth the investment.

Linda: What do you see for the rollout? 

Jerry: We’ll start with a small group of magazines that can demonstrate success to the retailer. From there, we grow. We actually have items in E-comm  We have such a wide array of titles, but our space at retail has been eroding. If we can replace the loss of mainline space with an online presence, in a way consumers want to engage, that will be tremendous. The opportunities are huge. But it’s not just getting the magazines included on the retailers’ e-commerce sites. They also have to be discoverable. So how can we make them easy to find? 

Joe: This question comes into play both online and in the physical store itself. My experience is, if we say a magazine is in a store and someone can’t find it, nine times out of ten it’s there and they’ve overlooked it. We need to come up with a response to “it’s not there.” 

Sherin: We have a “Where to Buy” function on our site. It works well for retail, and could be also adapted for the e-commerce portion. 

Joe: Smaller titles won’t be in every store in a chain. If a chain’s click-to-curb function isn’t individualized on a by-store basis, this will be something we’ll have to solve.

Jerry: Yes, and as magazines increasingly participate in e-commerce, there will be more opportunities for sell-out situations in the stores. Our industry’s participation is about increasing our opportunity to broaden the selection, and to broaden our engagement with consumers. We have to make sure it’s a satisfying experience–that when the consumer goes to the store, having ordered online, or created a list on-line,the product is there. Also, think about when product is delivered. An issue could hit the store on Friday, Saturday, or up till Tuesday. Our approach is to say Tuesday. 

Bo: It makes sense: under-promise, over-deliver. 

From top left clockwise: Jerry Lynch of MBR.org, Joe Berger, Bo Sacks, Sherin Pierce, Linda Ruth

Sherin: What titles are participating in the test? 

Jerry: They include Bauer, National Geographic, Trusted Media, Penny Press, Hearst, Centennial—it’s a pretty good mix.  

Sherin: Are any retailers easier to work with, and can stand as an example of how it can be done successfully? 

Jerry: Overall we’re finding that they are eager to work with the category, but most are somewhat daunted by the particular challenges we present. 

Joe: What other projects is the MBR working on? 

Jerry: We’re starting in on category advocacy. Our target is to educate the upper management in the retailer community about the value of magazines. We’ve lost space, and the loss of space resulted in the loss of sale, which in turn results in the further loss of space. Trying to stop that snowball will require effort, it will require new research, it will require an investment on the part of our industry. Our productivity has gone up—that is, we’re putting more product through less space. And some of our benefits, for example our offering the ease of scan-based-trading to our retail partners, aren’t quantified in ways that show up on the retailers’ spreadsheets. We’re not just transactional; we bring people into the stores, we show them what to buy; there are so many benefits to the category. It’s up to us to tell that story. 

Bo: We’ve always been our own worst enemy. We’re an industry of marketing geniuses who can’t market our industry. 

Joe: That benefit-based business model needs to be sold not only to retailers, but to publishers as well. Many are turning away from the newsstand. 

Jerry: And that’s something else we can do through our communication with our publishers. Over the course of the year, we plan to do more webinars, and we’re also looking into the possibility of a physical event. People want to get back together. We’re focusing on getting the right content in the right format.

Editor’s note: Want to learn more about MBR? Go to mymbr.org

Pandemic Publishing Roundtable: One Source Magazine Wholesale – Front End Merchandising With a Twist

Article by Linda Ruth

Last week, at the Publishing Pandemic Roundtable—Bo Sacks, Gemma Peckham, Joe Berger, Samir Husni, Sherin Pierce, and me— spent our hour with Gregg Mason of One Source, the distributor to major Natural Food specialty retailers, discussing the unique nature of the One Source checkout program, the changes that the pandemic has brought, and what we might anticipate for 2021. 

Joe: Can you give us some background on One Source and your role in the company? 

Gregg: One Source is a traditional direct distributor, in that it orders its product from publishers and ships to one location for pick and pack. We service primarily the natural food segment, with close to 2000 retailers nationwide. Our largest chain is Whole Foods, with 500 stores, followed by Sprouts with 365 locations. We also service a small sports retail segment.  One Source started small when the chains were small and grew along with them.  Our approach to magazine merchandising is unique—we don’t have mainlines. We are front-end focused with pockets at the checkout-only, and with non-logo’d pockets. Without logos, it allows dynamic movement of magazines which caters to the impulse buy of shoppers. We can sell more of what sells and the fixture presentation changes often.    When our retailers wanted a magazine program and looked at what traditional grocers had, they wanted something different, something fluid and dynamic. Something that would appeal to both new and returning customers; something that had the ability to drive high efficiencies. This fluid checkout was the solution. 

Bo: Does the fluidity you exercise with different titles in the pockets create a better sell through?

Gregg: Having the titles move around drives greater sales and sell through as they do stay in store but get shifted. Older product moves down, newer product comes in at the top of the rack. Titles with enough product at release for two pockets consolidate down to one over time. In this way we can extend shelf life for high-selling magazines. Our best-selling regular-frequency titles are all either bi-monthlies or quarterlies, we’re able to give them their full on-sale period.

Joe: Traditional retail stores don’t always follow their so-called “fixed” planograms; you can spend a lot of money participating and find you’re not in the program you paid for. In the One Source program you have opportunity to show if you’re capable of performing; though, on the other hand, these efficiencies can regulate a title out in the end. 

Gregg: Yes, it’s somewhat Darwinian; we look for not only high sell through but high sales per store. As draws come down, it’s hard to maintain the volume needed to stay in the stores, which can be frustrating to publishers. On the other hand, we don’t charge for the up-front placement; so if a title can perform, it will do well. For example, city titles can be the highest sellers in their home markets; so we created a city magazine placement at the front end.   Recently the efficiency rates have come down somewhat with the shift to high-priced, low-frequency bookazines. It’s amazing how the migration from regular frequency magazines to the bookazine model has dominated the business direction. With high-frequency mags, a normal order regulation system works; but with bookazines, different topics on same bipad can have widely different sales. For every single bookazine we order, we create an individual distribution for it, from the ground up.  

The Pandemic Publishing Roundtable from top left: Linda Ruth, Joe Berger, Gregg Mason (of One Source Distributing), Bo Sacks, Sherin Pierce, Gemma Peckham. Missing: Samir Husni.

Joe: Isn’t that considered bipad packing? 

Gregg: It would be in certain circumstances. What I’m referring to is a loose overarching editorial focus with different subjects under one brand. It’s literally a full-time job, managing these releases; but it’s necessary to garner volume sales.   

Joe: What changes did you see as a result of the pandemic? 

Gregg: We were lucky; our retailers stayed open. Sales were hit hard in the spring; since then it’s been a climb and partial recovery—creeping up, flattening out several times over. People have been gradually returning to more normal patterns. Our largest category is food and cooking; and those titles did well during the pandemic. We all cooked a lot more this year and turned to titles that can help. And publishers stuck with us. The children’s category, almost non-existent before the pandemic, took off like gangbusters. We found that the product couldn’t be too educational; it had to have a fun presentation.  We partnered with a publisher who collaborated with PBS kid shows—the product was just educational enough, just fun enough. Also the Highlights bookazines were hugely successful.  Shelter was a pleasant surprise. Domino took off, along with other shelter titles, primarily lower frequency titles and bookazines.  One area that has continued to lag are the city titles. They have not come back yet. Our stores are firstly suburban, secondly urban, and the urban stores are slower coming back. The commuting stores that cater to the people who work in the area have yet to come back; the residential area stores have.  

Joe: How are the indies and smaller chain stores doing? 

Gregg: We service Fresh Market and Natural Grocers, 160 stores each, they carry narrow edit, mostly just food, cooking, and health. Because they’re primarily suburban, they came back pretty well. And the independents have very loyal customer bases, so they also held up well. 

Sherin: Can you tell us a little more about Sprouts, what sells well? 

Gregg: They are located overwhelmingly in California and throughout the southwest. Their shoppers tend to be more price-sensitive, although certain higher-priced titles do very well, such as Willow and Sage at $14.95. Sprouts also tends to do very well with the vegetarian and Vegan titles. 

Sherin: What about getting their magazines on drop-down menus for online shopping? 

Gregg: We’re exploring and looking to move in that direction. 

Joe: MBR has started an initiative where they are talking to retailers about including magazines with electronic orders. You should be in that discussion. They’ve signed an agreement with an electronic platform, all the wholesalers should be at the table with this. 

Bo: Home delivery is not going away. We’ve retrained the consumer on how to shop, and that’s going to continue. Magazines need to be involved in this system. 

Gregg: Agreed, grocery was a last bastion of retail where people went to the store. Now many more people are getting delivery, and that won’t go away. And yet, although sales haven’t returned to where they were, they’re better than we expected, one year later. But you can’t make up for lost foot traffic.  

Joe: How do we get people back into the stores, or encourage them to find and buy the magazines? 

Gregg: We encourage our publishers to promote on their sites and social media platforms, to let them know we have their product, that it is available. In the stores, our biggest challenges are maintaining our pockets and keeping them open. The product that blocks the checkout are often at lower price points, lower profit. The migration to bookazines has helped show the financial impact of magazines, and what they bring to the retailer. 

Sherin: The Old Farmer’s Almanac has listings online of where to buy; we have robust PR when we go on sale; and we provide floor displays to appeal to consumers. 

Joe: What are you looking forward to in 2021? 

Gregg: We’re hoping to avoid a repetition of 2020’s peaks and valleys—and that the distribution of the vaccine will get people back in the stores. We’re prepared for an uptick in the city stores.   We’re poised to respond to changes as quickly as we can.

It’s (Not Quite) The End of The World As We Know It

If you are reading this post during the third week of December, Kable Distribution Services, Inc., a company with more than 100 years of history in the printing, publishing, magazine and book distribution industries will still exist in some fashion. It still has employees, clients (although they are rapidly going elsewhere), customers and a working web site and data base. But that won’t last for too much longer. The last set publications they invoiced to magazine wholesalers was earlier this month and when the calendar turns and 2016 begins, Kable Distribution Services will no longer exist. It will not be one the national distributors of magazines to the North American newsstand market.

The newsstand world as magazine publishers, wholesalers and national distributors knew it ended a long time ago. It ended when cable TV providers began publishing their own free TV listings to their customers and when newspaper publishers offered detailed television supplements in their Sunday papers.

The was end accelerated when President Reagan’s Meese Commission published their terribly flawed and highly toxic “report” on pornography and many retailers panicked and kicked adult “sophisticate” magazines out of their stores. Technology invaded readers turf with even more channels, personal computers, VHS and DVDs. Then the sales of the “Seven Sisters,” the bread and butter of women’s check-out titles began to shrink.

And it crashed and then quickly evolved into a new set of power relationships when national retailers decided that they should be the ones to call the tune about who delivers to their stores, what sort of service they should get and how much discount they should receive. A tough business that nonetheless was built on familiarity and custom met late 20th century capitalism.

So the beginning of the end started several years before REM recorded the song that begins this post. Did anyone notice? Or where we too taken with a long slow walk past the graveyard of dead magazines, wholesalers, national distributors and retailers.

My consulting colleague Linda Ruth has a detailed and very readable explanation for how Kable was walked off the plank in last weeks’  Publishing Executive. Suffice it to say, the reaction from TNG to Kable proposing to recognize and use their fullillment division to open the Hudson Group airport wholesale operation was surprising and yet not surprising. Their decision to stop carrying the Kable line of magazines was not surprising according to some because of the four major US based wholesalers, Kable was the smallest. It was surprising because it was so final. No more Kable. Would TNG have had the same reaction had Time Retail decided to provide pick and pack services? That’s a good question to ponder over beers after work.

This always has been a tough business.

As Linda expertly puts it, “The loss of Hudson Retail can’t add to TNG’s health, and if TNG sneezes, we all catch cold.” And we all want a healthy, happy and profitable TNG. Yet I believe they are in an interesting place. The industry wide acceptance of POS (Pay On Scan) based reporting and “Off Invoice RDA” (ORIDA) essentially means that any company with a pick and pack warehouse and access to UPS, Fed Ex and USPS, and a steady supply of magazines can now enter the business and service a retailer.

So the question I hear from many of my colleagues on the publishing side, the national distributor side and the wholesaler side is, “Who’s next?”

Good question.

While you ponder that, consider this:

There is no doubt that one of the reasons we see lower newsstand sales these days is because there are other competitors for our audiences time. Netflix or Entertainment Weekly? The latest episode of The Bachelorette or Us Weekly? A round of Age of Empires or an hour with Hi-Fructose? Cosmos with Neil deGrasse Tyson or an hour with National Geographic? What will the audience choose?

I can’t help but wonder if the endless round of retailers shifting back and forth between competing wholesalers has hurt sales. If you have a print order of 75,000 copies, it’s entirely possible that one “Distribution Center may handle 20% or more of your print order. How do you review, manage and adjust that efficiently?  Does anyone intimately understand anymore what will sell in a Hy-Vee store in the western suburbs of Des Moines, IA? What are the buying patterns of brides-to-be in Orange County today?

I’m not foolish enough to rail against these changes. I just can’t help but wonder if we have willingly inflicted much of this pain upon ourselves.

The critics who declaim against the “waste” and “backwardness” of today’s newsstand distribution industry have little idea how different today’s consolidated business is from the way it was ten or twenty or even thirty years ago. Some may still call magazine wholesalers “agencies”. But it is habbit, not reality. Publisher contracts may still finalize an issue at 120 days off sale, and that’s a little ridiculous in light of POS, but that too is subject to change.

The new “normal” we accepted when the year turned and we started 2015 is about to change again. Get ready because this will be interesting. I think the end result could be better for everyone. If we want it to be that way and are willing to work for it.

Finally, a word to my friends, colleagues and partners at Kable: Thank you. I have enjoyed working with you. What you did while you worked at Kable was meaningful and important to our industry. I appreciated everything you did to help me and the publishers I work for. Good luck!