nickshanagher

Ben Thompson's Stratechery site is a constant source of inspiration. Last week he was tackling the development of Amazon and speculating that it could sell lots of products at a loss by adopting a Costco model. "Consider Costco: last year the wholesale retailer had net income of $2.3 billion on sales of $114 billion to its over 81 million members; the total sum of membership fees was $2.5 billion," he wrote. "In other words, Costco’s 11% gross margin didn’t even quite cover the cost of running the business; the difference, along with all of the profit, came from a “tax” levied on Costco customers." For retailers in the UK unhappy with paying a "tax" to news wholesalers to get their newspapers and magazines, this makes uncomfortable reading. The UK's regulators, now the competition commission, have gamed the system so two companies can make a profit out of "carriage service charges" for wholesaling newspapers and magazines in exclu...

Exasperated, Paisley retailer Des Barr this week went out and shopped for 230 copies of the Daily Mail and then posted them at his own expense to Kevin Beatty, group managing director of the company that publishes the newspaper. His challenge to Mr Beatty was a simple one - see how long it takes you to put 230 posters into these papers on a weekday morning before you home deliver the copies. Mr Barr's story illustrates well the frustration that news retailers have with the newspaper supply chain. It shows how publishers can act like feudal landlords when it comes to working with newsagents - increasing at will the rent they extract from the goodwill and investment of small businesses. Mr Barr has built a home news delivery business based on exceptional service. He has canvassed local people and won their newspaper orders. Ironically, he is full of praise for Associated Newspapers, which Mr Beatty leads. It has pumped millions into supporting delivered newspaper sales, Mr...

Adrian Smith, the former WHSmith News executive who has chaired the Press Distribution Forum in the UK, is a passionate promoter of the strengths of the newspaper and magazine supply chain in the UK. In his introduction to last week's launch of the Press Distribution Charter, Mr Smith says the intention is to "help retailers to serve their customers". The charter has 80 clauses and a complaints mechanism, which builds on the previous ISSA regime. However, while well intentioned the charter is always likely to fall short as far as retailers are concerned. The reasons for this are set out in an unrelated column by FT writer John Kay, who chose this week to discuss the weaknesses of regulation. In 1887 the US decided to regulate its railroads at the request of farmers and merchants. However, Mr Kay quotes the president of the Union Pacific Railroad who supported regulation as saying: "What is desired is something having a good sound, but quite harmless, which will...