The curse of the middleman

I'm a regular reader of Mark Fletcher's Newsagent Blog and Jackson Wells Morris' Corporate Engagement Blog. While neither have much in common with my business or each other, their commentary and general business lessons make both worth reading. So I was delighted when I found one referring to the other on Saturday.

I should declare an interest on the subject. For many years I was a paperboy delivering the Melbourne Age and Sun on my bike. In cranky middle age I stopped dealing with both my local Sydney newsagents because of their incompetence and dodgy billing practices.

All of these subjects are related. The problem for newsagents is they are middlemen. And the modern big business mantra of relentlessly shaving costs means they are the meat in a very thin, stingy and mean sandwich.

In my case, my old newsagent lost my business when they started charging a 5% credit card payment fee. This in itself not a problem if you've been warned, but trying to sneak it past you in the bill, refusing to discuss it and lying about the cost of credit cards (guys, you're not the only people who have a merchant agreement). They decided that $5.00 surcharge was more important than a $100 a month account that had been with them for eleven years.

So I tried to take my business to the nearest newsagent, while closer they aren't quite as convenient as the old place. We hadn't bought anything through them since we dropped our newspaper deliveries because of regularly late and often incomplete deliveries. They refused to set up an account and left me feeling embarrassed and humiliated.

Mark has complained about the margins for newspaper deliveries, phone cards recharges and the lousy treatment at the hands of the magazine distributors. Here in New South Wales, we see the government slashing fees for public transport tickets and big business cutting distribution costs by using newsagents as fee-free alternatives.

The common denominator in all of these issues are that margins, fees and commissions are determined by large organisations. When these outfits find themselves under pressure to cut costs or increase profits, the easiest course is to cut the payments to their middlemen. That's the newsagents in these cases.

Increasingly I'm avoiding newsagents. The main reason is I find service indifferent and the queues of people buying things like lottery tickets, phone recharges and lord knows what else silly so I tend to buy my newspapers and magazines from service stations and supermarkets. Funny enough, the queues of people buying stuff that should be sold by the local newsagent or K-Mart is the reason I avoid Australia Post as well.

As Mark correctly points out, the changes to the newspaper industry mean great challenges to the local newsagent. The problem for most newsagents is they are trapped in low yield, low turnover, high overhead industry segments. In turn, this means their service will decline.

Until they start standing up to the magazine distributors, newsagent publishers, phone companies and brain damaged governments they're going to continue being ripped off. The stupid thing is if newsagents are allowed to decline, governments and big business will find their most economical distribution network gone.

I guess though I'm being old fashioned. Expecting long term thinking from the big end of town is like expecting to be able to buy stamps quickly and easily at your local post office.