How to outsmart the distribution system - Small Magazine Workship

Folio: The Magazine for Magazine Management, Oct 15, 1993 by Joseph E. Daniel

For smaller magazines, there are more efficient and profitable ways to reach readers than traditional methods.

If you were looking for a copy of Buzzworm in the Eastern United States, you'd be more likely to find it at Origins Green Store in Manhattan, East End Natural Foods in Pittsburgh, or High Country Outfitters in Atlanta than on any of the hundreds of newsstands in those cities. Although there is hardly a newsstand in the West that doesn't carry us, east of the Mississippi we've had to rely more on alternative, direct-to-retail distribution to achieve the same penetration.

Why this regionality exists is puzzling, but in traveling around the United States, I've noticed it with other national magazines--particularly smaller ones. Because of subject matter, demographic demand or shipping restrictions, many publications have mosaic-like distribution throughout the country. You'll find these titles everywhere in some cities and nowhere in others.

Usually, this is because the magazine lacks a national distribution contract with a large distributor, a deal that has become harder and harder to acquire as the competition for newsstand space grows. At Buzzworm, we suffer from that very handicap--and for the very reasons likely to afflict other small magazines. First, our name. I've found it very difficult to interest a large national distributor in a title with such a unique moniker. Second, our sell-through policy. For obvious environmental and financial reasons (we don't like throwing away the majority of the magazines we distribute), we try to maintain a 50 percent or better sell-through on all single-copy sales. Because the national average on consumer magazine sell-through is closer to 30 percent, we have a problem. And last, we lack competition. Without a defined niche (three or four competing national titles), it's hard for a large distributor to know where to put us on the newsstand.

You may be able to remedy these problems for your magazine if you're willing to change a few things--like your name, conscience, budget and how you position your title. I have entertained all of those possibilities. For small-magazine publishers who have no intention of changing identity, however, there is a relatively simple alternative for increasing distribution and profitability.

It's direct-to-retail sales: sending a dozen or so copies of every issue directly to individual retailers throughout the country. These are not newsstand retailers, but alternative outlets that have a direct interest in your subject, but may never have sold magazines before. Many publishers, large and small, are taking this approach seriously as the single-copy sales environment worsens. Here's how to do it:

Identify your market. Every magazine has some markets where it can sell direct to retail. Some opportunities are less obvious than others, however. If you sell a fly-fishing magazine, for example, then fly and tackle shops are a great outlet. But what about local boat shops or marinas or convenience stores in tourist areas where fishermen buy supplies? Or what about upscale men's clothing stores that have a subtle outdoor theme? At Buzzworm, we market strongly to three different niches: "green" stores, natural food stores and outdoor-products shops.

Prospect with direct mail. Trade shows and telemarketing work well for finding direct-to-retail prospects, but the best way I've found to generate maximum leads for the lowest price is the double postcard. Use one side to explain the deal, and the other for a business reply sign-up form. Our first mailing of this type went to 8,000 prospects, and we received about a 5 percent response. We've found that a follow-up telephone call about a week after the mailing helps increase that response rate significantly.

Make the deal too good to refuse. To attract retail outlets, particularly ones that have never before sold magazines, you need to make the deal a no-brainer. We offer the following terms: on a minimum order of 10 copies, we give full credit on unsold copies returned within six months of cover date; retailers keep 60 percent of the cover price; we bill after shipping; we pay all shipping costs. Who can say no?

Concentrate on profitability. One of the great things about direct-to-retail programs is that they generally give you a much higher sell-through, and it is fairly easy to make them profitable. Based on the terms outlined above, we have to sell at least six copies to each retailer to break even. Because we average a 70 percent sell-through with most of our outlets, the program is worthwhile. Once you have your program up and running, and your retailers have had a chance to see how well the magazine sells, begin replacing those outlets that don't sell at a profitable level. Work with retailers to maximize sales for both of you.

Resell the audience. Beyond the advantages of increased circulation and a viable revenue source, a good direct-to-retail program can reward you with a highly targeted audience. This is worth something to your advertisers, and should be marketed accordingly. Look for opportunities to parlay your exposure in retail outlets into attractive promotions and merchandising programs. Whenever possible, sell your magazine in the same places that your advertisers sell their products. This commitment to their market will not go unnoticed.