We received a tweet last night which posed the following question:

Just what IS the @mag_nation business model? Nobody is buying anything – they’re sitting in comfortable chairs reading for free. Thanks, tho

We get this question all the time. Why do we let people browse and sit around reading magazines? People are appreciative of the fact that we allow it, but many wonder if it is good business sense. Those of you who know us well will know that we do more than just “allow” it. We actively encourage it and are known for it. Our motto, written up in our stores says:

Everything in this store can be touched, felt and browsed… except for our staff.

Stencil Art Message - Work in Progress

Are we a bunch of nice but misguided idiots or cunningly smart? I think we are a blend – nice and smart, as opposed to the other blend of misguided and cunning! Here is our logic.

First, let me confide to you that most of the retail experts we spoke to before we launched our business thought we were crazy. Newsagents have been around forever and the “we are not a library” mentality is well known. The traditional thinking is that this approach leads to a higher conversion rate. In other words, a greater percentage of people entering your store are likely to purchase.

Let me ask you – would you ever purchase a pair of jeans without trying them on? The answer for most people is no. So why should it be any different for a magazine? Most retailers know that encouraging customers to pick up, touch and interact with their products increase the likelihood of their purchase. But many of you will point out that a magazine is not a pair of jeans. A magazine can be consumed in-store which supposedly means it won’t get purchased.

We know our conversion rate, and it is lower than that of the standard newsagent. That said, we are not really comparing apples with apples. People go into newsagents for newspapers and lotto which pushes up their conversion rate. There is no other magazine only type retailer, which makes comparisons difficult.

Here is how we think about our business. For every 100 people who walk past our doors, a certain percentage enter our store. This is our entry rate. For every 100 who enter, a certain percentage buy something. This is our conversion rate. Does our conversion rate suffer because of our browse policy? Of course it does. Lots of people come in and don’t buy from us. However, our entry rate is significantly higher as a result. It is one of our points of difference. Our no pressure approach is what defines us. It makes us a destination. This means more people come in and they come in more often. We might have fewer people as a percentage buying off us, but the total number is higher because more people come in. To the person who tweeted us, this is our business model.

Also, our retailing philosophy encourages our customers to pick up different mags that they might not have seen before. The try factor at mag nation is much higher than other stores. It exposes you to new mags, many of which are niche and collectable. While some of the mainstream magazines can be consumed in one setting, so many of the mags we sell are titles that people want to take away with them. Our model is biased towards these types of magazines.

So, this is the “smart” behind what we are trying to do, or at least we think so anyway. Ultimately however, we simply tried to create a place that we would love to hang out in. If you enjoy your experience with us, you hopefully tell others about it. Not many other magazine retailers get spoken about in this way.

I blogged day before yesterday about how we have not managed to get the same brand cut through in New Zealand as we have in Australia. The responses were passionate and informative. The beautiful thing about blogging is that you can get some instant feedback.

The crux of the feedback we received was:

•    We New Zealanders get the feeling that you are more Oz focused as more events and attention seems to be in Australia

•    You guys are amateurs – you need to get more slick, stop playing to the converts and hire marketing expertise to win over new customers

•    You have only been around a short time… be patient. You can’t expect brand awareness overnight when you don’t do any advertising or promotional activities.

There is a lot for us to take out of this feedback. The intent of the post was to get thoughts on how to better engage you. We certainly have some clearer perspectives. Yet, the fundamental question underlying the post still remains unanswered for us.

We have only been around for a few years. But the same goes for Australia. We haven’t done any advertising. But the same goes for Australia. Yet, the Australian media has warmed to us, writing unsolicited articles in all the major papers and many widely read magazines. We never expected this, and do not lament that we haven’t had the same coverage in NZ. It is simply interesting that this is the case.

In the same vein, we haven’t done anything to push subscriptions in NZ. Again, the same can be said for Australia. We get more coverage in Sydney where we don’t even have a store than we do in Auckland where we have 3. What we were trying to understand is why the Australian media and certain communities have taken to us and in turn, helped build our brand awareness, while in NZ, even after we brought on professional PR help, we got nowhere near the same coverage. We have the largest papers in Australia calling us to do an article about a potential Sydney store opening that hasn’t even happened yet, while our rescuing an iconic store location in Ponsonby, Auckland barely created any media mentions.

Before everyone starts lambasting me, I am not saying there is anything wrong with NZ. I am simply saying that with the same amount of activity and effort, we have been more successful in Oz, and we want to improve in NZ – the market in which we started.

We have tried radio segments and radio advertising in NZ. We have not done this in Australia. It is true that more mag nation events take place in Melbourne than Auckland, but it is not as if we haven’t held a launch party for T-World: The journal of T-shirt Culture, a party for Threaded, and a bunch of other events. It is just that not as many people turn up. Perhaps because not as many people know about them as we don’t have the same brand cut through. And here we are back to the start again.

The other comment made was that we are amateurs. Yep, we are. People tend to think that mag nation is a big multi-national company. It is me and my uncle. Do you think we can afford marketing folk? I write the blog entries and think about marketing at 2am. You will then say that we can’t expect “love” and the same level of brand support in NZ as in Australia if we aren’t willing to invest in it. Again, I am in no position to disagree, other than to ponder on why Melbourne in particular has taken to us in spite of us being amateur.

In fact, you could argue that it us being amateur that is our biggest selling point. We are not slick. We don’t have faceless marketing folk writing copy from their offices. Most of our loyal customers would revolt if we ever became like this – it is our rawness, honesty and sense of fun that tends to draw people in. This means that the two founders actually talk to customers, respond to your tweets, lift boxes and occasionally stand behind the counter. We are not one of the large multi-nationals with their robotic newsletters and lack of personal care factor. We scour the Earth to bring in that one niche mag that we think NZ will love. We are not marketers. We are passionate about magazines and bringing them to you. We don’t ever want to be thought of as a large corporate. A large corporate would never let me post this blog entry. Its inviting way too much public trouble.

All the comments made on the previous blog post are reasonable, informative and helpful – we want your feedback. Yet they ignore that with the same approach, we have done better in Australia than in New Zealand. Perhaps the difference boils down to one factor… Elizabeth St. Our Melbourne flagship store is large – it has 3 levels of the most amazing range along with stationery, t-shirts and books. It has a striking physical appearance, with room for comfy seating, coffee and free wi-fi. And it has won us numerous awards, such as Most Innovative Retailer (2007) and Best Young Business (2008).

Our Queen St and Ponsonby stores in Auckland do not have this due simply to physical constraints. Is this driving the wedge in our brand awareness between the two countries? Is it that the Elizabeth St store gives us a story over and beyond the great magazines ,while in NZ, we only get to rely on our range?

There is undoubtedly a larger cool factor and greater customer engagement with mag nation in Australia than in New Zealand. I wish I knew how to change that given the physical constraints within our Auckland stores. You can rest assured that we are trying.

The mag nation business started in New Zealand. My uncle and aunt had a store on Queen St in Auckland that retailed predominantly magazines, but also sold Lotto, smokes and other newsagent like products. From those humble beginnings, we developed our concept for global magazine domination.

We are both an Australian and a New Zealand business. One founder lives in Melbourne, the other in Auckland.

Despite having been in NZ for a longer period, most of our “love” comes from Australia. We have far greater brand awareness and our attempts to appeal to the “urban savvy” have been much more successful in Australia than in New Zealand.

Given the size difference, this is surprising. Also, New Zealanders love when local home grown starts to make it on the world stage. Australia is hardly the world, but from New Zealand’s point of view, it is a big market.

Also, the competition is much higher in Australia. New Zealand doesn’t have a newsagent network like Australia has, and when it comes to a good range of air-freighted magazine titles, we have a virtual monopoly in Auckland. No one in NZ has the niche publisher relationships that we have.

So why are we finding it harder to get brand cut through in New Zealand than in Australia? Don‘t tell us that New Zealand doesn’t have urban savvy because we don’t believe it for a second. Both Auckland and Wellington have a thriving creative community and the NZ fashion industry is also alive and well. New Zealand’s population reads more magazines per capita than any other country.

Perhaps New Zealand doesn’t have the same urban shopping culture as Australia. Where are the cool retail destinations in NZ? Melbourne has Greville, Acland, Brunswick, Smith, and Chapel. And the CBD ain’t bad either. Sydney has fewer urban strips, but it still has a few, with Oxford St and King St being examples. Auckland has High St in the CBD but it is quite boutiquey, while Newmarket, K Road and Ponsonby all have their charm, but not much in the way of constant foot traffic. Lambton Quay in Wellington is very busy, but could it be described as cool?

Is this our problem? The lack of a NZ urban shopping culture? Or is our brand strategy right for Aus but wrong for NZ? Why is it that we get such support in Australia from our target markets, but significantly less from the same types of people in New Zealand? And why is that online subscriptions favour Australia in a ratio of around 10:1?

We would love some thoughts from any New Zealanders out there. But then again, if our suspicions are correct, none of you are even reading this and we will remain ignorant of how to better engage you.