TNG Shakes Up Magazine Retail Sales
The latest of TNG-initiated changes to retail sales cannot, by a long shot, be considered surprises to anyone—they’ve been proposed, and pondered, and rejected, and accepted, and tried, and tweaked, and tried again for years. Some publishers have already integrated them into their systems; some distributors and retailers already enjoy the benefit of these changes universally.
But, new as in mandated for all publishers, new as in the standard moving forward, and new as in announced by TNG and quickly echoed by Metro News and (likely) others to follow: advance payment for Retail Display Allowance (RDA) is to be deducted from the wholesaler invoice. Additionally, magazine sales scanned through the register will now be recognized as final sale. What does that mean to publishers that are just now being affected? There are several possible implications:
- Off-Invoice RDA (OIRDA). The 10% that has been applied to retailer sales as a post-sale credit will now be passed through as a discount off the wholesaler’s invoice. While most publishers are paying RDA on virtually all their sold copies, some will see short-term cash flow implications. Publishers for whom RDA is a significant line item debit will have to expect essentially double debits for a period of time (six months to a year), as RDA invoicing from past issues overlaps RDA invoicing from current or upcoming issues. This could have a noticeable impact on payments or cash flow, but once the old RDA has worked its way out of the system it will level out again, appearing only in the form of increased discount to the wholesalers.
- Scan-Based Trading (SBT). Rather than paying up front for inventory and getting credit for returns, wholesalers will now pay based on sales scanned through the register, and treat the point-of-sale (POS) tracking of these sales as final. Currently about 70% of magazine sales take place under the auspices of Scan-Based Trading. Consequences include:
- Any shrink (meaning copies that disappear from inventory but don’t show up as a scanned sale) will be the publisher’s responsibility, although the wholesalers will continue to audit sales to make sure that shrink is kept at a minimum.
- In terms of reporting, we expect to see final sales—or close-to-final sales—considerably sooner, with the bulk of unsolds showing up at the first or second week of off sale.
- Because most retailers do not scan by issue, those sales that straggle in after an issue’s off sale will be credited to the next issue. If this is a problem, TNG suggests rotating UPCs issue-to-issue; otherwise, sales of any issue will be credited to the issue that is currently on sale, under the assumption that all off-sale copies have been removed from the racks.
These changes are not necessarily bad, and could even be very good for our industry. They certainly have the potential of simplifying and streamlining the whole newsstand distribution process, and saving costs out of what has become a very cumbersome system. Regardless, they will be automatically applied to all product, for POS beginning in November, and for OIRDA beginning in January.
Linda Ruth, as president of PSCS Consulting (www.PSCSConsulting.com), offers communication companies worldwide the keys to magazine launches, search engine optimization and audience development online and at retail. She is a pioneer in the fields of Online Audience Optimization (OAO) and gamification for content publishers. Her books, "Internet Marketing for Magazine Publishers" ; "How to Market your Newsstand Magazine"; and "Secrets of SEO for Publishers" can be found on Amazon. Find her online at Google Plus, Magazine Dojo, LinkedIn, and Twitter @Linda_Ruth.