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Your Friendly Neighborhood Comic Shop: Here's How the Comic Industry Works

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Rain Partier

Postby LOLtron » Wed Jul 10, 2013 8:44 am

Your Friendly Neighborhood Comic Shop: Here's How the Comic Industry Works

Retailer Matt Johnson discusses the ins and out of comic retailing in a new column.

Matt Johnson is the owner of Cup o' Kryptonite, a Des Moines comic book store and coffee shop. 

I have needed to write this up for some time.

Most everyone who buys comics or speaks about them in the media or who even has a passing interest in them has NO idea how the comic book industry ACTUALLY works.  Most understand that there is a publisher, a distributor and a retailer (unless you are stealing them on-line) in the mix somewhere.  Most understand how the flow happens as it pertains to how the writer gets the idea to the artist and the art to the publisher and that comic becomes a thing you read.  However, it is the very specific process after the publisher has this art that most do NOT understand.  No, comics do not just materialize in your hold box or appear on the rack every Wednesday.

First things first – you need to know a little about the distributor and a system called the Direct Market.  Started in the 1970’s, the system came from shops and groups buying in bulk direct from the publishers at a hefty discount and got their books slightly earlier than drugstores and newsstands.  The whole system would eventually be weaned down to one single distributor in the 1990s that holds exclusive contracts to sell comics on behalf of most of the comic’s industry.  This would be Diamond Comic Distributors.

Diamond offers shops a tiered discount system based on a shop’s purchases.  If you order over a certain amount of inventory from a publisher, you get a discount ranging up to 45%.  Now, that might sound like a lot until you factor the cost of running a brick and mortar shop (rent, employees, your utility bill, repayment of a loan, extremely bad shipping costs and the dozens of other costs) and then you realize how small that discount can be.

Diamond takes initial orders from retailers up to two months before the book comes out.  This is so publishers can have enough lead time to set print runs.  For example, the July Previews catalog is for books and merchandise that will not hit stands until at least September. 

Two notes on these initial orders.  Yes, all of these initial orders come from the same Yellow Pages looking Previews Catalogs you see in shops.  That is all the information we have to go off of to put in our initial orders.  It can be brutally tough to figure out how many of a brand new title to order when all you have is a picture of the cover and a few lines describing the book.  The other thing to point out is the immensely disproportionate emphasis a front of the catalog book gets.  If you are a retailer and ordering DC or ordering the independent publisher in the back, which do you think gets more time and effort put into their order?  Of course there are a lot of problems here and nearly all the major issues in the industry come from this ordering system and this distributor.  I won’t go into all of them, but… you can already, I’m sure, guess at many.

This is where the system used to end.  You would order two months out and you would get your books when the publisher printed them.  Then a lawsuit created a slight help to the retailer.

After issues with lateness began to plague the industry, a suit was filed and Diamond helped to create a cutoff ordering system.  The Final Order Commitment system was created to help retailers better facilitate the ebbs and flows of customers adding and dropping books or publishers not keeping their end of the deal and publishing on time. 

The FOC system allows, for the most part, a book to be adjusted up or down twenty three days or roughly three weeks before it arrives in shops.  Now, you need to understand nearly ALL comics that are purchased by the retailer are theirs to own forever.  So, when a book is not bought, that is 100% lost income.  There are NO returns (DC still maintains a terms of sale that allows for very minimal returns on books they have switched creators on after a certain point.  Perhaps less than 1% of their books are returned for credit.)

The educated guessing game comes in when you put in your FOC (or initial order for publishers that do not participate in the FOC system.)  How many of comic X will we sell?  Do we want any of Comic X on the shelf for the walk in customers?  Will every walk in be in on the first week of a book's release? The second?  Is there a reason to want extra copies left after an initial period of time?  Is there an incentive for me to order more?  Is there a variant and if I add extra copies to my order for Comic X will the variants sale actually make me more money than the extra issues?

Frustration really starts to set in when you see a company, like Marvel, double ship books.  We aren’t ordering with the most current data, we're still ordering based on an issue out.  So, say Comic X drops off in quality or creators leave and  the book is double shipped, you can’t get your orders cut down and you lost double what you would have before.  

Now for a few other little comic issues.  The distributor is a monopoly (well, not in the eyes of the Federal government), but in all intents and purposes, if you want comics before secondary shipments arrive (usually a full month) you HAVE to order through Diamond.  Don’t like how they do business, you can't go across the street to company B.  There is no company B in comics distribution.  Also, if you want to order something from a publisher directly, say Dark Horse, they are not allowed to sell to you, unless it goes through Diamond first.  Part of the exclusive “deal” they signed.

Diamond is the beginning and the end of the problems, for the most part.  There is an awful lot of history leading up to the current troubles and issues in this industry and the publishers shoulder the blame for the product, but for the most part I point my finger at Diamond for many of the overall issues plaguing shops.  Diamond also never takes leadership, on behalf of the  “best interests of those shops,” which is needed.  They must take stands against things like 3D covers, but they stay mute.  Who cares when they make money, right?  Make all the covers 3D and charge $20 a copy, as long as Diamond makes money.

They are a giant corporation, run like a giant corporation; terrible customer service, caring only about the bottom line and moves with a snail’s pace when it comes to change.  But they are our crutch to bear.

Here is the deal and the main thing to consider the next time you go into a shop.  It isn’t all about you.  You are just one very small cog in the giant industry that is comics.  However, your actions have consequences and can affect change.  Know that when you buy or don’t buy a book, money is either made or lost.  From the little shop to the big publishers owned by trillion dollar entertainment companies.  How you buy that book is very important.

Hold lists or a pull system is the life blood of any comic shop.  Initial orders are the best way for a shop to know what and how many to order.  When you drop a book and don’t give the shop owner enough time to get it off their orders; that costs them money.  Most can deal with one here and one there, but when bunches come in all at once, there are serious losses to be shouldered.

Shopping off the wall may seem like fun, but it isn’t for the shop owner.  Know the guessing if you want or don’t want a specific issue in any given month causes many a graying of hairs.

Comics are a business.  You may think they are all fun and games.  Of course, right?  We are here to amuse you and have a gay old time, but it isn’t the case.  Yes, you leaving with a smile on your face is what we want, but in reality we want to make money, to provide for our families, put a roof over our heads and a shirt on our back.

I’m sorry to be a killjoy (not just a really good title from Dark Horse) but some things need to be said.  I could go on and hopefully will in the months to come, there is a lot more to get off my chest.

Written or Contributed by Matt Johnson

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S.F. Jude Terror


Postby S.F. Jude Terror » Wed Jul 10, 2013 9:41 am

Down with Diamond!
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Faster Pussycat

Postby SirPhillipSydney » Wed Jul 10, 2013 11:18 am

A big shout out to MY comic shop! Well said Matt!!
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Postby mrorangesoda » Wed Jul 10, 2013 11:49 am

I didn't know FOC came out of a lawsuit. Interesting.
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Danny DiBiasio


Postby Danny DiBiasio » Wed Jul 10, 2013 11:54 am

Cool article! Can you elaborate on double shipping? I don't really get what you mean.

The Old Doctor

Postby The Old Doctor » Wed Jul 10, 2013 11:54 am

Given that Diamond's founder was a thief in the 60s and caused problems for Neal Adams and others as a result...
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Postby mrorangesoda » Wed Jul 10, 2013 12:02 pm

FBtron wrote:Cool article! Can you elaborate on double shipping? I don't really get what you mean.

Marvel has been putting out two issues of certain titles in a month (This month I think both Daredevil and Young Avengers are double shipping in July). His and other retailers problem with the set up is if people suddenly start abandoning Daredevil in droves with issue #28, he can't adjust his orders for issue #29 because the Final Order Cutoff for that issue is before issue #28's release- so ordering is difficult. If everyone loves all the books always, double shipping is great, but the world is rarely ideal.
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Jeff Moss


Postby Jeff Moss » Fri Jul 12, 2013 9:48 am

Very well said! I've been echoing this in my own shop practically since we opened. Small shops like mine barely even make the radar in the "machine" and it's the worst feeling in the world when I have to look at a customer and say "sorry, I can't do anything about it... it's just how the industry works." The system is broken and it's not going to change until people understand it and demand it.
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Garofani Spruzzo

Rain Partier

Postby Garofani Spruzzo » Fri Jul 12, 2013 9:58 am

It's well-written, but...

You can't really expect Diamond to "take a stand" against things you mention like 3D covers because you acknowledge those incentives make Diamond a lot of money. I will refer you to your second-to-last paragraph: "Comics are a reality we want to make money, to provide for our families, put a roof over our heads and a shirt on our back." That goes for Diamond as well as your LCS, I'm afraid! Diamond isn't the culprit here, Marvel and DC corporate are.

(Make no mistake, I agree that Diamond is a mess that could use competition!)
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A Quagmire

Postby MyGfsDog » Fri Jul 12, 2013 7:31 pm

This is a great article. I was greatly disappointed to learn that Fantagraphics recently signed an exclusive contract with Diamond recently. I always saw them as the indie hold out, but I guess they had to cave. I feel that Diamond is...pretty horrible. They are the primary reason why I have not made the jump into self publishing yet. There are ways around them nowadays with the internet and selling directly to customers, but this of course hurts shops. Which no comic reader wants to do. I wish that someone could start up another successful distribution company, but I feel that the moment has passed what with Diamonds contracts with it's publishers and all.

Just curious - does your shop ever order from some of the online indie distributors?

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