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How external products helped JP/Politikens Hus run a successful distribution service

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How external products helped JP/Politikens Hus run a successful distribution service

2021-12-21. In Denmark, publisher-owned distributors disseminate more than 99 percent of newspapers. With the impending merger of distribution companies Bladkompagniet and DAO, Danish publisher JP/Politikens Hus is set to become the majority shareholder in the merged entity.

Distribution is no easy business. Rising costs and troubles in staffing the operations had created challenges for several newspapers even before the pandemic.

JP/Politikens Hus has been successfully tackling these issues by tweaking their strategies, adding resources and identifying new revenue sources.

Tweaking core distribution

Publisher of leading Danish dailies Politiken and Jyllands-Posten, JPP’s core product is its newspapers and has built its distribution network distributing newspapers mainly.

“From 1980-2007, we built up the distribution network. And from the year 2007 we have had only one carrier to deliver at the same address,” said Hans Peter Nissen, head of Logistics at JPP, speaking at the recent WAN-IFRA World News Media Congress. The company also developed technology that made co-distribution possible throughout the country.

In 2020, JPP introduced another change: Delivery of retail single sales was included in its primary distribution network.

“It means that all the retail single sales were also now being delivered by our normal newspaper deliverers in cars and scooters,” Nissen said.

Making space for magazines

JPP, which distributed only newspapers from 1987 to 2001, added magazines to the fold in 2003.

“We saw that it was not possible to carry on distribution only with newspapers. It was going to be too expensive. So we added magazines,” said Nissen.

The company, however, distributed only those magazines with very high circulation numbers.

“Because high circulation magazines were nearly the same sort as newspapers,” Nissen explained. Thanks to this, in 2004 the company had about 4 percent of the market share of magazines.

Nissen said it was an easy win for them because postal rates in Denmark have been very high. “So they changed to our distribution service,” he said.

Bringing in external products

In 2012, JPP started distributing letters (advertising letters and daily mails).

“In the beginning we were only able to distribute letters of high circulation – where the letters are printed in the same sort as we need them for the distribution. So the carrier would have around 20 letters in the exact order he had to deliver them,” Nissen noted.

Parcels were added to the service in 2014.

It was a quite different and complicated business to do, but parcels command higher prices.

So, although the company had to spend more on manual sorting and computer systems, parcels brought them good revenue. From 3 million parcels in 2017, JPP’s numbers today have increased to 13 million.

Most recently, in 2021, JPP introduced high-price letters and home pickup.

Innovating with efficient delivery vehicles 

Not just products, JPP has also brought in several innovative features to ensure high quality distribution.

Until 2015, JPP’s carriers used to deliver products in their own cars, bicycles or scooters. But, as Nissen puts it, with new products things have to be done in a new way.

At DAO (in which JPP holds 50 percent share), distribution takes place on electric scooters and cycles and cars that run on biofuels. These efficient vehicles with high load capacity contribute to the company’s profitability.

“For our e-scooters, instead of a key we have a small chip. After we introduced that, no scooters were stolen anymore. It was a very smart move, and there is also GPS installed in the scooter,” Nissen said.

Another feature is an android based device that the driver logs into. Any deviation in distribution is recorded by the device and the customers are alerted.

In 2019, Bladkompagniet (in which JPP currently has 50 percent share) brought in automated sorting machines. This helped to avoid a lot of manual work and ensure more efficient distribution of all kinds of letters.

Re-focusing around needs

From newspapers to magazines to parcels to letters, JPP’s distribution business has been recalibrating its strategies and focus according to the need of the hour.

If in the initial years products with high circulation and low prices were the focus, recent years have seen the company also bringing on high priced products with low circulation.

In 2017, external products brought in 43 percent of JPP’s distribution revenue. By 2020 it grew to around 54 percent and the share of revenue brought in by newspaper distribution shrank to 46 percent.

“We have changed our focus. The idea now is to take external products in the distribution to reduce the price for our newspapers,” Nissen said.

“Our focus is on high price products now because it will give better quality in the distribution both for us and for the external customers,” he added.

Over the years, the cost of delivery has increased for JPP. From 2006 to 2001 the price went up by about 50 percent.

“But if we had done it only with newspapers and without the external products, then it would have been nearly double the price,” Nissen noted.

“Therefore, it is so important for us to have all these external products with us and we think it will continue in the coming years too,” he said.

Source – https://wan-ifra.org/2021/12/how-external-products-have-helped-jp-politiken-media-group-run-a-successful-distribution-service/

Written by – Elizabeth Shilpa

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