HOME NEWS DELIVERY

 

The potential profitability of most retail business is, at least in part, constrained by the size of the premises and the space available to hold stock and display goods for sale.  Home News Delivery (which, importantly, also includes delivery to businesses of all types) can remove these traditional confines and expand the potential of the news and magazine business considerably.  In fact some news retailers, commonly known as roundsmen, have no retail premises at all and concentrate entirely on delivering newspapers and magazines to homes and businesses.

Before deciding on whether to commence a delivery business in your area, there are a number of factors to take into account:

  • Are you able to receive newspapers from your news wholesaler sufficiently early in a morning to prepare your rounds for delivery?
  • Are you prepared to work unsociable hours early in a morning?
  • Is there potential for such a service in your area and is consumer demand already being satisfied by other competitors?  (Talking to your news wholesaler and publisher representatives could help with this.  Further, if the signs are positive that demand exists, NFRN Homelink (see below) can help with leaflets for local area marketing or tele-Canvassing)
  • Depending on whether you intend using juvenile or adult delivery labour, what are the recruitment prospects like in your area?

 

Above all, the financial viability of providing a home news delivery service is paramount.

A TREMENDOUS ASSET FOR YOUR BUSINESS

If the opportunity exists to provide a viable service, there is no doubt that Home News Delivery can be a tremendous asset to the business, adding valuable stability from the sale of newspapers and magazines that are, virtually, pre-sold.  Whilst there are more than 53,000 outlets available for consumers to make casual purchases of newspapers and magazines, consumers tend to remain loyal to their home news delivery retailer and may well add additional magazines to their daily newspaper delivery that generates additional income from the service. 

 

However, whilst providing a home and business delivery service for newspapers and magazines might seem a good idea at the outset, there is no point in providing this facility for your customers unless it is profitable to your business.  In other words, will the income you receive on the retail margin from sales, coupled with the delivery charge that you make from each customer, outweigh the costs of providing the service?

ADD EXTRA CUSTOMERS WITH NFRN HOMELINK

NFRN Homelink is a service that is free to all Home News Delivery retailers and is responsible for providing both outbound (tele-canvassing) and inbound (newspaper adverts) to advertise and canvass for new home delivery orders from consumers. This can help to generate new home delivery customers for both new start-up businesses as well as existing retailers.  However, whilst NFRN Homelink is receiving universal acclaim from retailers who have benefited from additional customers, there is a need to give members a cautionary warning about applying an appropriate delivery charge for the service they provide.

 

Whilst adding extra customers to your Home News Delivery rounds potentially makes each round more economic to operate, this is only true if the cost of delivery that you charge to customers AT LEAST covers the cost of the service you are providing.  If not, then extra customers could mean that you are adding to your losses rather than to your profits.

MAKE SURE YOU CHARGE THE RIGHT AMOUNT

With this is mind, one of the disturbing facts to emerge from the NFRN Homelink project is the hopelessly low charge that some members make for delivery; in some cases less than 80p per week.  At that rate, it is difficult to imagine than any retailer can be operating their delivery service at a profit, and, more likely they are making a considerable loss.  Not only is this bad business practice, it may well be slowly killing their business.

 

Geography, (rural or urban), employing juveniles or adults, and a wide range of other factors mean that there is no such thing as an average delivery business or an average delivery charge.  So there are no hard and fast rules on what you should be charging and it is illegal for the Federation to make a recommendation to you on what you should charge.  However, as a guide, if you are charging less than, say, £1.50 per week for a 7 day delivery then we suggest that you take an urgent look at your costs and charges to make sure that your home news delivery service is not a profit drain on your business.

 

Download the electronic home news delivery calculation aid (last updated June 2007), provided courtesy of the Daily Mail.  Check it against your costs and charges and it will tell you whether you are making a profit or loss on this business. (Note. Microsoft Excel is needed to use the HND Tool)

To do this calculation manually, think carefully about all the costs you incur in providing the home news delivery service, for instance: 

  • A proportion of your time, or staff time, spent marking up delivery rounds.
  • A proportion of your IT costs if you operate a computerised rounds system – don’t forget to include a proportion of the dilapidation cost of the system itself along with the peripheral costs such as printer cartridges, paper etc
  • If you operate a manual system, the cost of replacement materials.
  • Home news deliverers employment costs, including recruitment costs when you need to advertise for new staff
  • The cost of leaflets and other marketing materials when you canvass for home delivery in your area
  • News bags and trolleys, if used
  • Bad debts from customers who don’t pay their bills

 

The above is a non-exhaustive list of some of the major cost items associated with providing a home delivery service, but there may be others, such as motor transport costs, depending on the type of delivery service you operate. 

 

Add all these costs together on an annual basis and then calculate what you are collecting annually from your customers through your delivery charge.  Subtract one figure from the other and this will tell you how much profit or loss you are making.  If you are making a loss, it will also tell you how much you need to increase your delivery charges by to achieve a break-even figure.

 

What you charge, and how much profit you want to make out of providing a Home Delivery service is a matter for you.  Competition from other Home Delivery services provided in your area is an obvious factor that you need to take into account and you will need to strike a balance between profitability and beating the competition.

 

Beating the competition, however, is never just about price.  As many experienced newsagents will tell you, customers seldom complain about price so long as the service they receive is perceived to be reliable and professional.

 

To register with NFRN Homelink, or to find out more about how NFRN Homelink can help your home news delivery business, telephone 0870 160 8552

 

Alternatively, please click here to contact us by email.

 

IF YOU ARE IN DOUBT ABOUT WHETHER YOUR DELIVERY SERVICE IS MAKING A PROFIT OR LOSS.  TODAY IS A GOOD DAY TO FIND OUT!      

 

Click on the document names below to download a relevant file:

 

 

 

NFRN Homelink
Bringing the news home

 

Home News Delivery is a unique strength of the independent news retailer and with more and more free newspapers, declining counter sales of papers and the continuing erosion of business by the multiples it is a strategically very important opportunity that provides us with a clear competitive edge over the multiples. In the highly competitive world in which we now operate making the most of our strengths is vital to our future success.

 

It is for this reason that the NFRN developed the Homelink scheme to promote and build the market. Since its launch in 2005, Homelink has grown to be an industry award-winning initiative that has been very effective in stimulating the market and has a result put millions of pounds worth of business into independent news retailers businesses.

 

In the period since its launch, Homelink has generated well over 100,000 new home news delivery customers for news retailers with an estimated value of at least £15,000,000. This equates to all participating news retailers having, on average, gained 12 new home news delivery customers each. Homelink

 

Outbound calls to potential home news delivery customers are the main driver of this outstanding achievement and at the beginning of this year, the newspaper publishers, who back the Homelink scheme, committed to an eventual target of 100,000 outbound calls a week. In a typical week we are now achieving some 21,000 calls and generating about 2,700 customer orders for home news delivery. We are on target to reach the 100,000 level of calls (which has involved a doubling of the call centre capacity not just in personnel terms but also in space and hi-tech telecoms and computer equipment) and it is easy to calculate the potential volume of customer orders that will be generated once this figure is reached.

 

Consumer awareness of Homelink is also increasing with its exposure in the many advertisements run by publishers and the leaflets distributed by participating members, so we expect to see an increase in the amount of business generated by inbound calls to Homelink by the customer. All the publishers now have web links straight through to Homelink and this provides the potential home news delivery customer with another easy and convenient way to use the Homelink service.

 

Homelink has already demonstrated its ability to stimulate the market for home delivery of newspapers, a market that many felt was in inevitable decline, but the potential of the scheme does not need to stop there and we are already implementing tests canvassing magazine orders. The trial which features only nine weekly titles at this stage is producing encouraging results with orders running at the rate of about 250 a week.

 

In his report to National Council, Peter Wagg, Chairman of Homelink said: “It is no exaggeration to say that in just 18 months NFRN Homelink has revolutionised and revitalised home news delivery. I hope we have demonstrated that whilst Homelink’s achievements to date are remarkable there is much more to come”.

 

Home news delivery is an opportunity that members should take very seriously so if you already offer the service but would like to expand your business or if you want to start a home news delivery business, Homelink can definitely help you.

 

For more information please call0870 160 8552. Alternatively, please click here to contact us by email.