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How to Start a Magazine Fulfillment Agency
General Facts about the Magazine Subscription Agency
According to First Research
- About 1,000 companies in the US publish magazines, journals, and tabloids, with combined annual revenue of about $40 billion.
- Large companies include PRIMEDIA, Meredith, and the magazine divisions of integrated media companies like Time Warner and The Washington Post Company.
- While the total number of magazines published in the US is greater than 10,000, only about 2,000 have significant circulation.
- Demand for magazines is driven largely by growth in consumer income.
- General interest magazines account for about 60 percent of industry revenue, trade publicationsfor 15 percent.
Magazine Subscription Business Model
You may be wondering what kind of money you can make as a magazine subscription agent. Well, as always, I like to talk about the money right up at the start of the page for you to get an idea of what you are getting yourself into.
I like the "Show Me the Money!" attitude here.
In the Magazine Subscription Agency, you make money by selling magazines - obviously. This business is a volume based business because the average profit margin on a magazine subscription will range from $5-15. There are some subscriptions where you earn much less, and others where you earn quite a bit more. But the average is around $5-15 per subscription sold.
The business works in this way:
Your magazine subscription clearinghouse and fulfillment agency will give you a subrate and a remit rate. This is what the difference of the two are:
- Subrate: This is similar to the suggested retail price where you need to sell the magazines at a certain price. The price is usually set by the magazine publisher. Your clearinghouse will recommend you and/or threaten you with an audit to sell at this rate. You also have an interest to sell at this rate to maintain your profit levels consistent and reasonable. Of course, if you do decide to sell at a discount to get more sales, it is possible as the clearinghouse rarely will audit you. As you may know the subrates are very close to the rates you see annual magazine subscriptions sell for. They will be around $15-20 for a popular magazine subscription.
- Remit Rate: The remit rate is the rate at which you will have to pay the clearinghouse to actually get the subscription in place. Usually the remit rates are very low amounts. Remit rates for a popular magazine will range from $0.25 -$4.00 for the entire year of subscription. This is the amount you will have to pay the clearinghouse to get the subscription fulfilled for the customer.
Here is an actual sample of what the price chart will look like. (This is only one row out of the hundreds of rows of subscription available).
- Product: Allure
- Issues: 12
- Years: 2
- Subrate: $16.00
- Remit: $5.41
- Cover: $35.40
In this example above, you will sell your customer an annual subscription of Allure for $16.00. You will collect the money and tell them that the subscription will be fulfilled in 4-10 weeks. And that's it for the customer side.
Now your next step is to go to the clearinghouse and submit the order for your customer. In this case, you will need to remit $5.41 to the clearinghouse to get the subscription fulfilled. The difference between the two amounts is your profit margin. In this case, you made $10.59 ($16-$5.41). The submission process can be completed online, and the process is also very simple. As long as you obtained enough information from the customer (address, phone number, name, what magazine, number of years, and the payment) you are good to go. Processing an order should not take you more than 5 minutes to do once you get used to the system.
The "cover" listed in the above example indicate the price for an annual subscription if the customer bought it cover price each month.
The "years" indicate the maximum amount of years of subscription you can fulfill the customer for. By getting a two or three year contract today, you will lock down the price, and have prepaid for your subscription for that given amount of time.
In the above example, if the customer decided to get a two year contract instead, you would have collected $32.00 ($16 x 2) and remit $10.82 ($5.41 x 2). And your profit would have also doubled to $21.18 for the sale.
The "issues" indicate how many issues per year the publisher produces in a year.
So it's as simple as that. There's usually no start up costs involved. You may need to make a small deposit to the clearing house ($50) to indicate to them that you are serious. The $50 will be used for your remit payments as you start selling magazines for the clearing house.
Most of the clearinghouses will also not require any minimums, so you do not need to worry about that as well. Just sign the contract, and you should be on your way to taking care of business as a magazine subscription agent.
Where can you sell the magazines?
You can basically sell them almost anywhere. They do have some restrictions on online sales and eBay sales because there have been so much abuse in that arena. People will sell on eBay at remit prices, and that really messes up the ecosystem for the whole business. It becomes difficult for others who are serious players to make sales to its customer base.
Other than the limitations you will encounter selling online and particularly on eBay, you can really sell magazines anywhere. If you are an organization, you can use it as a fundraiser. Or if you have kids, maybe they can go on a route each week for you. That'll earn you and your child some income. Of course, you can also do the traditional direct marketing, selling, and marketing methods to get sales.
For example, one clever thing that my university did was to include a one page, threefold brochure when we purchased textbooks. That was a pretty effective way to get a lot of customers all at once.
Go out and market your product and make good money doing it! You can also read my marketing page too. Good luck!
How to Start a Magazine Subscription Agency
In the following few sections, we talked about the business model and how much money you can make in this business. If you liked what we went over, it is now time to talk about actually getting you into business as a magazine subscription agent.
Clearinghouse and Fulfillment Agency
There are many clearinghouses and fulfillment agency you can use, but we particularly like this company.
This is a company based in Florida that we really have no affiliation with. We are just recommending them because they are a great clearing house and fulfillment agency. The great thing about this clearing house is that they are fully online and automated. So once you set up an account with them, all you need to do is access their online site, and process orders that way. Plain and simple.
They will not rip you off for anything, and if you are a bit reluctant to use them before you go out to your customers, order some magazines for yourself. You'll be your own first customer, and try out the service for yourself. If you like it, continue on to become a successful subscription agent.
If for any reason, you do not want to go with them, here are some other clearing house and fulfillment agency listings. The couple of them below are fulfillment agency that Amazon.com uses.
- Synapse Group, Inc.
- Four/Five High Ridge Park
- Stamford, CT 06905
- Main Number: (203) 595-8255
- Magazine Express
- 5724 Highway 280 E
- Birmingham, AL 35242
- P&B Services
- 3644 Cargo Rd
- Vandalia OH 45377
- Phone: 937-890-2176
- Fax: 937-454-1033
- Magazine Express
- Tim Farrell
- Phone: (201) 816-0700
- Parent company of Magazine Express, Inc.
- EBSCO Information Services
- P.O. Box 1943
- Birmingham, AL USA 35201-1943
- Phone: (205) 991-6600
- Fax: (205) 995-1518
- EBSCO Publishing
- 10 Estes St.
- P.O. Box 682
- Ipswich, MA 01938-0682
- Phone: (978) 356-6500/(800) 653-2726
- Fax: (978) 356-6565
- EBSCO Book Services
- Phone: (800) 815-9627
- My Clearinghouse.com
- Phone Number 718-360-1999
- Fax Number 718-228-7213
I'm going to be honest and tell you that I haven't used anyone other than Subscription Agency. The contact information above is something I found on the Internet. I am hoping if you don't like the agency I recommended , you can try the others for yourself. Also all of these agencies do have a website. I just didn't post it here because it looked really spammy. So I hope you can do a Google search for them.
Although you don't need much legal help to get you started in this business, one thing you will need is a Seller's Permit. In California, you get this at the nearest Board of Equalization. I'm not exactly sure where you get a Seller's Permit in other States. You should contact your State's Department that handles sales tax to get your Seller's Permit.
Using Affiliate Marketing Websites
There is also another way to enter into the magazine subscription agency business. This method may yield you with lower profits, but it may be a good way to test out the waters. This method involves joining an affiliate market site, like Commission Junction. As long as you register for a blog on Blogger or have a website, they will approve you with an account.
Commission Junction (http://www.cj.com/)
Once you successfully register on their site, you can look for partner companies that you want to sell for. As a magazine subscription agent, go to the magazine section to find a few partners. You should be able to find partners that operate a magazine subscription agency like yourself. You can partner with them if you want to test out the waters first. They will pay you anywhere between 10-30% or $1-5 per sale. It is much lower than doing it yourself.
It is also recommended that you search for individual publishers as well. Subscriptions to such titles as the Wall Street Journal or USA Today may not be available from your clearinghouse. They are however available through Commission Junction for a commission. It's a good idea to partner with these individual publishers in order for you to increase the number and the quality of subscriptions you can offer.
Also, as a word of caution, when applying for a partner company to affiliate with on Commission Junction, make sure you already have some kind of website set up. Use a blog to set something up that's related to the magazine industry. Some partner affiliates actually do evaluate your website to see if you will be a good partner for them or not. To avoid getting declined, it's good to set something up really quick before applying for a partner to affiliate with.
Go to Blogger (http://www.blogger.com) or other similar sites to set up a site for yourself. If you don't know how to blog, you'll need to learn. I'm sure if you were able to purchase this book, there will be no problem in you setting up a blog. They are super simple to use.