India’s thriving print market depends on robust distribution network


Let’s continue the discussion of factors that explain the robust health of print in India, a market where the category has registered annual revenue growth of more than 15% over the past decade. In my last blog, we looked at low cover prices (of typically US$0.08 or less) and their role in keeping newspapers really easy to adopt in the face of increasing competition from free news sources like TV and digital.

Today I’d like to discuss the second of the three factors I have identified: a system of direct distribution by which over 98% of all Indian newspapers are home-delivered.

The scale of the operation that makes this possible is mind-boggling — an army of over 300,000 vendors and beat boys deliver some 50 million copies of newspapers morning after morning in over 5,000 cities and towns spread across the length and breadth of the sub-continent.

The low dependence on cash-sale counters (a medium which demands active reader volition each morning) and the regular delivery of the product at home is to my mind a central factor in the newspaper’s continued success in India.

Once a newspaper comes home regularly, it has a subtle way of getting into one’s life and routine. Before one knows it, one needs the daily read just to enjoy a morning cup of coffee! Moreover, if a newspaper comes home anyway, even a net-savvy youngster tends to start flirting with the product (starting perhaps with the sports sections or the lifestyle supplements) and without ever consciously making a choice, gets into the habit of reading newspapers.

While the plentiful availability of low-wage manpower has historically made direct distribution feasible in India, the system is facing inordinate pressures today. With employment options for beat boys multiplying and a general rise in wages, there is obviously pressure to increase vendor remuneration. At the same time, with most newspapers committed to keeping cover prices as low as possible, there is an inherent limitation in the absolute vendor margins available.

This limitation is further compounded by two factors — the high salvage price for old newsprint, or “raddi,” because of which the vendor’s landing price needs to be more than a certain threshold lest he start buying additional copies just for resale in the raddi market; and because of ABC rules that cap the margin for bona fide copies at 35% of cover price.

Circulation managers increasingly have to think of innovative ways of keeping prices low while improving vendor remuneration and keeping the copies raddi-proof. A way the inherent conflict can be managed is to ensure that low-cost (and potentially raddi-prone) copies are supplied only against identified readers along with a rigorous system of controls that ensures delivery to them. Given the scale of operation involved, this is obviously easier said than done.

Apart from monetary rewards, newspaper companies need to find ways to enhance the social and emotive equity of the job as a means of attracting new vendors and beat boys. Just because vendors are not employees, there is no reason to treat them as “outsiders.” Reward and recognition schemes that go beyond sales targets and social security benefits, like medical insurance and scholarships, will all go a long way towards recognising the value of this critical resource. While some good work is being done in this area, I believe a lot more needs to happen.

Because we simply have to ensure that the huge and highly efficient direct-distribution system that India is blessed with remains robust in the years to come.

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