Is this for real? DC Cuts Ties with Diamond Comic Distributors 5 5

[theCapraAegagrus]

12 hours ago, JJ-4 said:

I agree.  It also makes you wonder just how poorly Diamond was run as a business, poor reputation and not able to be profitable as a monopoly?  I think they were either run by a complete idi0t or Diamond was just able to squeeze huge amounts of profit out of the system that lined the pockets of the owners.  If they go out of business, good riddance.

The ole ID-10-T error...

[Prince Namor]

11 hours ago, Bookery said:

Because Diamond isn't a monopoly on entertainment... comics are one of the lowest-in-demand forms of entertainment there is.  If I literally owned every Big Little Book on the planet, and began selling them... how rich do you think I'd become?  To be a successful monopoly, you have to have something everybody wants.  Which is why Diamond isn't a monopoly, or they'd have been broken up by now.  When Diamond began, video games were in their infancy.  New release movies were on VHS and cost $79.00 if you wanted to own one.  There was no streaming.  There were no cellular phones.  There was no such thing as social media.  As I've stated before, when I began my primary customer base was young military men... and they loved comics, science-fiction, and technology.  As technological entertainment improved, however, they began to only crave the technology.  How is that Diamond's fault?  It's nobody's fault... it's just the passing of time and the changing of interests.

In the early '90s, I sold $500 per week in used science-fiction paperbacks.  Before I got out of them last year, we were down to $20-$30 per week in sales.  In the '90s we sold $1000/wk. in non-sports cards.  Our market is literally $0 now.  Not one customer for them.  We used to sell $1000/wk. in manga.  Current local market -- $0.  Geppi is literally trying to keep the comics market alive, probably against all better judgement in an Ahab can't-win situation to stave off the collapse as long as possible.  Maybe he's doing it right, and maybe not.  But you say "good riddance" to Diamond (without any alternative in mind)... but I suspect DC/AT&T in their own time-delayed way is saying good riddance to "you", the comic book buyer.  After all, AT&T didn't get where they are favoring paper products over digital technology... there's no way they're going to start now.

Chuckles makes a interesting point in today's newsletter:

"...Suffice it to say, however, when you have a distribution company that has all of its costs pegged to a given level of volume, and then you lose (One Hundred Million) of that volume, changes have to be made. Either discounts have to go down, fees have to go up, or overhead costs and/or staff have to be reduced. Diamond may have to resort to some combination of all of the above. None of this bodes well for the embattled small retailers who form the core of the Direct Market."

He also noted that this couldn't have come at a worse time for 2000+ retailers, many of whom were on already shaky ground leading up to be being shut down for two months... 

Edited June 9, 2020 by Hieronymus Bosch

[Prince Namor]

7 hours ago, dupont2005 said:

It’s definitely the second

Steve Geppi has certainly maintained a wealthy living throughout his life, but Diamond Distribution as a business was always seen as being on shaky financial ground, and NOT the profitable landslide that most people assume a monopoly would be. They work on very small profit margins with large overheads in an expensive area of the country to operate.

I miss that Geppi museum though.

[Robot Man]

11 hours ago, Myowncollector said:

Good stuff. I hope comic shops stick around. I like them. Although I don't provide them much support. No desire to pay full price on anything no matter how good the service is. I just want to dig through some boxes and pick up everything you have vastly underpriced. Get some $1 who knows spec books. If something is cheaper online that is where I will get it. Same price then I will get it from the shop and pay cash to save them the 3% but usually find them to be priced sky high. I must be in the minority though or they would all be out of business. I don't know who buys from mile high but somebody must. 

Everybody likes a deal and likes a score. I do it all the times with comics as well as vintage toys, advertising, sports items and antiques. I buy from numerous sources. 

But, with that approach, comic stores and your usual sources are doomed. I weigh out my scores by paying up a little more on occasion just to keep my sources healthy and in business. 

I have even, on occasion, paid a little more than asking price when a good seller screws up. It has come back to me in spades over time. I get people looking for me and offering it to me first under the table. 

Without them, those scores will soon dry up and then where will you be?

[dupont2005]

9 hours ago, ExNihilo said:

Not in the industry, but growing up, I was basically taught that the difference in price between retail and the provider of goods was about 50%.  That's not a factual rule, but a generalization (it could be more, it could be less).  I see avocados straight from farmers for like 7/$1, but those same avocado's are like 1/$2 at the store.  But I digress.  The point I'm trying to make is that DCBS is able to beat every shops price by 40% due to economies of scale.  While local shops are selling maybe 30-100 of a particular title, DCBS is selling in the thousands because their business model is national.  The cost of overhead is averaged out over thousands of customers while local stores are probably spending more per customer.  This is likely seen in the difference in freight costs, rent, wages, etc.

I can’t get online and order one avocado directly from the farm. I wouldn’t compare DCBS to a farm either. They’re still just a retailer of comics like any other 

[dupont2005]

4 hours ago, Hieronymus Bosch said:

Steve Geppi has certainly maintained a wealthy living throughout his life, but Diamond Distribution as a business was always seen as being on shaky financial ground, and NOT the profitable landslide that most people assume a monopoly would be. They work on very small profit margins with large overheads in an expensive area of the country to operate.

I miss that Geppi museum though.

Your business can be completely in the red and still compensate executives very generously

[MrBedrock]

5 hours ago, Hieronymus Bosch said:

Chuckles makes a interesting point in today's newsletter:

"...Suffice it to say, however, when you have a distribution company that has all of its costs pegged to a given level of volume, and then you lose (One Hundred Million) of that volume, changes have to be made. Either discounts have to go down, fees have to go up, or overhead costs and/or staff have to be reduced. Diamond may have to resort to some combination of all of the above. None of this bodes well for the embattled small retailers who form the core of the Direct Market."

He also noted that this couldn't have come at a worse time for 2000+ retailers, many of whom were on already shaky ground leading up to be being shut down for two months... 

Spin is a wonderful thing, so let's spin this around entirely. Diamind relies on 3000+ accounts to make their money. DC relies on 30 or so accounts to make 80% of their money. So almost 3000 accounts look at DC as just another publisher, or don't look at them at all. DC is looking for ways to more accurately make their message heard to the retailers who actively support their product. To me it makes perfect sense to change the model of delivery and messaging. 

[Bookery]

This is probably old news (announced in March), but since my Games manager was furloughed along with the rest of the staff for 2 months, I've just been made aware that Asmodee Games is breaking with Alliance/Diamond beginning July 1.  According to him, their group of products accounts for 50% of our Alliance order.  We usually have a larger weekly bill from Alliance than we do with Diamond.  Of course, we're told that having all of these accounts will save us money, but at the same time they announced this they hiked prices on their releases an average of 10%.  A lot of games have now crossed that magic $49 line and moved into $56 or more.  I'm guessing Diamond's days are severely numbered, and I'd expect an announcement soon from Marvel that they are jumping ship.

[Bookery]

ICV2 article posted last night --

https://icv2.com/articles/columns/view/45875/is-comic-shop-apocalypse-hand-hope-vs-fear

 

[kimik]

58 minutes ago, Bookery said:

This is probably old news (announced in March), but since my Games manager was furloughed along with the rest of the staff for 2 months, I've just been made aware that Asmodee Games is breaking with Alliance/Diamond beginning July 1.  According to him, their group of products accounts for 50% of our Alliance order.  We usually have a larger weekly bill from Alliance than we do with Diamond.  Of course, we're told that having all of these accounts will save us money, but at the same time they announced this they hiked prices on their releases an average of 10%.  A lot of games have now crossed that magic $49 line and moved into $56 or more.  I'm guessing Diamond's days are severely numbered, and I'd expect an announcement soon from Marvel that they are jumping ship.

Marvel has been looking at alternative distribution as well from what I have heard. DC just moved first. Diamond must have been in trouble for a bit, as per the rumors. I can see why if they let other stores run up debts like Mile High did. 

Edited June 9, 2020 by kimik

[kimik]

40 minutes ago, Bookery said:

ICV2 article posted last night --

https://icv2.com/articles/columns/view/45875/is-comic-shop-apocalypse-hand-hope-vs-fear

 

The article sums it up - stores need to evolve in the way they do business. The three I know of that are doing well during COVID locally have good websites, provide great service and either rely on TPBs/GNs or back issues more than files. They also sell books via weekly FB Live auctions, on eBay and through auction sites if needed. They use multiple distribution channels to sell product and are thriving. Weekly single issues are a nice add on. None of the three do gaming.

[Robot Man]

MANY businesses both large and small are falling like dominoes right now. You mostly hear the big familiar names on the news. But the small ones without any corporate backing are probably dropping quicker. What is to blame? Covid-19 is certainly at the top of the list. The civil unrest in the past few weeks just when business were starting to come out of the shutdown are also a big factor. I just believe that our economy was on the verge before this. This, poor management and business style is just putting them over the hill. That and now millions are out of work and can barely pay their bills let alone afford "luxuries".

I have 3 comic stores in my area. None do gaming or even carry back issues. Lots of newstand comics, TBs, toys, action figures T-Shirts and supplies. Two of them seem to be hanging in before this DC thing. The other one ONLY sold new comics and opened in January. I figured he was doomed anyway but don't know.

I hate to see these shops go the way of record stores, video stores and book stores but if they don't expand their business on line, I see their future bleak.

I haven't bought new comics in years. Too expensive for the quality and just not enough storage space. I buy a few here and there but I'm over it. I still like to go into a comic shop anywhere I am. I always try to buy something just to support them. I would be very sad if they were to disapear...

 

[BitterOldMan]

2 hours ago, Bookery said:

This is probably old news (announced in March), but since my Games manager was furloughed along with the rest of the staff for 2 months, I've just been made aware that Asmodee Games is breaking with Alliance/Diamond beginning July 1.  According to him, their group of products accounts for 50% of our Alliance order.  We usually have a larger weekly bill from Alliance than we do with Diamond.  Of course, we're told that having all of these accounts will save us money, but at the same time they announced this they hiked prices on their releases an average of 10%.  A lot of games have now crossed that magic $49 line and moved into $56 or more.  I'm guessing Diamond's days are severely numbered, and I'd expect an announcement soon from Marvel that they are jumping ship.

I agree that Marvel will be leaving the Diamond distribution network soon.  I would carefully view the monthly Diamond Previews catalog and preorder  comics and other comic book related material from my LCS.  For a fairly long time, both Marvel and DC produced their own monthly catalogs outside of Previews, just waiting for the opportunity to cut ties.

[ExNihilo]

4 hours ago, dupont2005 said:

I can’t get online and order one avocado directly from the farm. I wouldn’t compare DCBS to a farm either. They’re still just a retailer of comics like any other 

You misunderstand my example.  The point I'm trying to make is that the actual breakeven price for the producer is much less than the eventual retail price.  The producer makes a cut selling to a distributor who takes a small cut selling to a retailer who takes a cut from the eventual end consumer.  In the end, none of that denies the fact that the reason DCBS is able to sell at a discount goes back to economies of scale and their ability to reach a much broader market.

[dupont2005]

10 minutes ago, ExNihilo said:

You misunderstand my example.  The point I'm trying to make is that the actual breakeven price for the producer is much less than the eventual retail price.  The producer makes a cut selling to a distributor who takes a small cut selling to a retailer who takes a cut from the eventual end consumer.  In the end, none of that denies the fact that the reason DCBS is able to sell at a discount goes back to economies of scale and their ability to reach a much broader market.

There was and is nothing stopping any Diamond vendor from setting up a similar online outlet 

[Bookery]

2 hours ago, dupont2005 said:

There was and is nothing stopping any Diamond vendor from setting up a similar online outlet 

Of course there is.  I have 2 customers for small-press Shmall Comix.  Diamond will sell me 2 copies as part of my overall order.  I get 53% off.  Shmall produces just this title.  It is not worth my time (or Shmall's) to set up a direct account with them to order 2 copies.  The shipping would be more than the issues are worth.  And if they did set up my account for this, they sure aren't going to sell them to me at 53% off.  Shmall can sell 1000 copies and ship and mail them to 500 different shops around the country.  Or they can accept a bigger discount and ship 1000 copies to Diamond at one time.  It's wholesale 101.  If Diamond goes, and no other consolidated distributor takes their place, then that will be the end of a lot of small press publishers.  

[Myowncollector]

9 hours ago, Robot Man said:

Without them, those scores will soon dry up and then where will you be?

I will be just fine. I mainly get entire collections. I do enjoy the hunt of digging through some long boxes. I am a fan of small businesses and have fond memories of comic shops. Wish I could time travel back to the days of guides and catalogs. I am into old comics. New toys and shirts, gn tpb don't interest me. I think $4 is too much for a comic. In a year it will be $1. Then marvel and dc ruin them for me anyways, something is good and I enjoy it and they switch writers and artists. Or $2.99 draw the line. Cross overs. 

I can see a lot of all comic shops closing in near future. People have said it, they know shops doing good but because they are selling online. At some point it won't make sense for them to have a brick and mortar. It's nice to have more opportunities to buy collections and have a place to sell things and not have to pack and ship them. But not having to deal with payroll, taxes, rent, insurance is also nice. 

[ExNihilo]

4 hours ago, dupont2005 said:

There was and is nothing stopping any Diamond vendor from setting up a similar online outlet 

I'm not entirely sure what this has to do with the original response I had to your question regarding the profitability of DCBS vs an LCS.

That being said, since this is a thread about Diamond, if a competitor has enough financial backing to ramp up to a point of financial viability, then there's nothing stopping them from setting up shop alongside Diamond.  At that point it's a matter of how deep are your pockets and how long can you sustain yourself in an attempt to take market share away from Diamond because you would undoubtedly have to provide a better deal to the publishers and the shops to pull business away from an established distributor who's start-up costs have long been amortized and are no longer a concern.  There are other factors of course (as we see playing out here) which seems to be DC's absence of faith in Diamond's ability to function amidst a growing financial struggle.

 

[dupont2005]

2 hours ago, ExNihilo said:

I'm not entirely sure what this has to do with the original response I had to your question regarding the profitability of DCBS vs an LCS.

That being said, since this is a thread about Diamond, if a competitor has enough financial backing to ramp up to a point of financial viability, then there's nothing stopping them from setting up shop alongside Diamond.  At that point it's a matter of how deep are your pockets and how long can you sustain yourself in an attempt to take market share away from Diamond because you would undoubtedly have to provide a better deal to the publishers and the shops to pull business away from an established distributor who's start-up costs have long been amortized and are no longer a concern.  There are other factors of course (as we see playing out here) which seems to be DC's absence of faith in Diamond's ability to function amidst a growing financial struggle.

 

Is DCBS set up alongside Diamond or are they a Diamond account?

[dupont2005]

3 hours ago, Bookery said:

Of course there is.  I have 2 customers for small-press Shmall Comix.  Diamond will sell me 2 copies as part of my overall order.  I get 53% off.  Shmall produces just this title.  It is not worth my time (or Shmall's) to set up a direct account with them to order 2 copies.  The shipping would be more than the issues are worth.  And if they did set up my account for this, they sure aren't going to sell them to me at 53% off.  Shmall can sell 1000 copies and ship and mail them to 500 different shops around the country.  Or they can accept a bigger discount and ship 1000 copies to Diamond at one time.  It's wholesale 101.  If Diamond goes, and no other consolidated distributor takes their place, then that will be the end of a lot of small press publishers.  

If Diamond can only survive as a 100% monopoly then it’s not anyone’s fault but their own if they fail when they lose an account that according to one retailer here makes up little more than 10% of their orders. 
 

in most industries it’s the manufacturers and retailers trying to look out for the consumer. In comics it seems we as retailers are supposed to look out for the publisher and retailer.