Originally created 03/19/00

Company sells magazines on the Internet

MINNEAPOLIS -- Dan Beaver doesn't pull any punches when he talks about his growing business. He says he will change the way America -- and perhaps the world -- buys magazines.

Beaver went online with MegaMags.com on Sept. 1, selling single issues of magazines from throughout the United States and several foreign countries.

The site now has more than 8,000 titles and expects to have 10,000 titles -- 30,000 if you count back issues -- by early fall. That will include about 1,200 foreign titles.

This is a man who's looking to become the Amazon.com in his niche.

"We really believe that magazines can do what books have done," Beaver said. "Now we literally can carry everything."

The mass market magazines are there. So are Modern Ferret, Bus World, South American Explorer, Aboriginal Voices, El Andar, Black Enterprise, American Cheerleader, Cake Craft, Los Cabos, Bearfoot and Mountainfreak.

A vacationer heading for Las Vegas can get a preview by ordering Las Vegas Life, Las Vegas Magazine, Las Vegas Style, Here is Las Vegas, Nevada Woman or Nevada. Other travelers may want to see Blue Ridge Country, California Wild, Cape Cod Life, Georgia on My Mind, Lake Superior or Tucson Gourmet.

Readers who choose Timothy McSweeney's Windfall Republic will get "basically whatever is on Timothy McSweeney's mind," Beaver said.

Beaver knows the magazine business well. He was in charge of magazine buying for Barnes & Noble Inc. for eight years and launched Web Guide magazine in 1997. Beaver sold Web Guide in January 1999 and began building the MegaMags Web site a year ago.

"This is easily a half-million dollar site, figuring man hours and capital costs," Beaver said. But there was minimal cash outlay because Beaver and his associates did the work themselves. "It's mostly our sweat, scanning magazines," he said.

It takes two to four minutes for Beaver or an employee to scan each magazine cover onto the site. The process has to be repeated with each new issue. The goal is to include a brief description of each magazine, but not a complete table of contents.

Customers can search by magazine title or within categories such as art, business, computers, ethnic, food/wine, hobbies and travel. Also available are Sunday editions of major newspapers from around the country.

There are value pack specials that include a group of magazines on a similar topic, such as holiday crafts or running, sold at a discount.

Items are added to the shopping cart with a click of the mouse. Orders are retrieved by the supply warehouse, which is under contract to pull the magazines, pack and ship the order.

The average sale is $18.50, or 3.5 copies, Beaver said.

MegaMags, based in Minneapolis, makes its money by buying magazines at a discount and selling them for the cover price. The distributor gets a service fee. Publishers do not pay to have their titles shown on the site.

"MegaMags.com, with its emphasis on unique and hard-to-find titles, is a perfect outlet for our company," said Dave Buescher, president of International Periodical Distributors, a major Dallas-based newsstand supplier that has a contract with MegaMags.

IPD, with annual sales of $250 million and about 4,000 titles, is the largest direct distributor of magazines in the United States. Two IPD subsidiaries, Primary News and Austin News Services, and Eastern News, a New York-based distributor, supply other titles for MegaMags.

MegaMags carries more titles than any other retailer, Buescher said. "Barnes & Noble might carry 3,000 of the magazines at some stores. No one carries them all. The regionals, for instance, you're really only going to find a Florida magazine in Florida. MegaMags is making these available to everybody."

Buescher said the Web store is a new form of competition for brick-and-mortar outlets.

"I look at it as a retailer, period," he said. "I service Barnes & Noble, Borders, Crown, all of them. This is a major newsstand. It doesn't have that storefront, but I see it as a much bigger storefront in many ways."

MegaMags also can serve as an extension of a bookstore or other retail store, Beaver said. He is negotiating with some major bookstores to offer MegaMags' magazine selections under their branding.

Beaver also envisions working with hardware stores or building supply stores, for example, to offer a selection of home improvement magazines at an in-store kiosk or the store's own Web site, with the orders going through MegaMags. The company also plans to add magazine subscriptions.

As MegaMags expands its business, it is adding three more employees to the bring the total workforce to 10 and also is working on redesigning its Web site.

"We're looking to put a lot of money into the system, which is going to keep us from turning a profit for quite some time," Beaver said. The company, which so far has attracted customers through word-of-mouth, now is beginning aggressive marketing and expects to launch the redesigned Web site by June, Beaver said.

Magazines represent about 8 percent of the book market and online book sales are estimated at more than $29 billion, Beaver said. While magazine subscriptions are readily available on the Web, there has been little effort to sell single copies electronically, he said.

MegaMags' main competition is magsnow.com, which stocks about 8,000 issues of 2,500 titles. Booksamillion.com says it carries about 2,500 titles. Both are owned by wholesalers who use the Web sites as an outlet for their own magazines, Buescher said.

Buescher, who has been a magazine distributor for 20 years, says he is still amazed at the number of new magazines that seem come out almost every day.

Magazine Publishers of America, the industry association for the consumer magazine business, said in 1998 alone 476 new magazines were introduced, nearly 10 a week.

"Somebody cared enough to do Bus World," added Beaver, who ran across that magazine in a newsstand in Oceanside, Calif. "It was fun to find them a way to sell it. Anyone can do this, but we're the ones who are doing it."

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