Drink Me or Eat Me?

The philosophy at MacGuffin is that any comic single over a year old (and less than say 25) that has been reprinted as part of a collection is dead money. Even if it hasn't been reprinted it is pretty much dead money. We are big proponents of comics as entertainment rather than collectible and in that context the back issue has a fairly select market. Ten years ago I was scouring back issue bins to put together the early run of Starman or Waid's Flash (didn't get very far on the latter) because that was the only way I was going to be able to read the story. Today most of those issues are collected in a much more convenient format if one is interested primarily in the story. There is definitely a market for people who prefer singles, but it is not a market where we see much potential for growth and is therefore not the market we choose to cater to.

Hence, no real back issues. What we are committed to, though, is keeping available recent singles that have yet to be reprinted in a more convenient format. In order to do so, however, we have to be able to guess roughly how long we will need to keep these issues available before a collection (be it paperback or hardcover) hits the shelves. For Marvel and DC this has become fairly easy since they tend to collect roughly every six issues of a title and we try to keep roughly the same number of previous issues on the shelf. Even with some of the smaller publishers it's fairly easy to gauge when a collection will be released, but a significant chunk of their output are limited series and we simply keep the singles available until the trade is released.

The problem becomes, how many copies do we need to preorder to have these issues available until the trade? And more importantly, how do we simultaneously adjust for the increased traffic we're seeing as the community realizes we're here? The end result being that we generally order too many copies of each issue, leaving us with more than can fit on the shelves. And what do we do once issues have been collected in a more convenient format? Comics sitting on the shelves or in our storage room are wasted capital that, quite frankly, we need to keep the business running. So, outside of keeping some copies available as outlined above, we've developed a threefold system to liquidate that inventory. First, we offer those issues to other retailers who do specialize in back issues. This is not as a means of making a profit, instead it is simply a way to convert the inventory into liquid assets that can then be used either to purchase more inventory (generally of the evergreen variety) or to pay operating costs. Option number two is to convert the inventory into advertising materials. We're big fans of guerilla marketing and there is almost nothing more useful in guerilla marketing than offering free product. The important part, though, is that the free product is offered to new consumers as a means of drawing them to the store (or the industry in general).

The final option is simply a variation on the idea of converting extra copies into advertising. We're setting up what we're probably going to call a sampler box. The idea being, try a single at 50-75% off of cover price, hopefully something that you had considered in the past but passed on for whatever reason. At a significantly reduced price, hopefully that title or issue now gets a chance. As a sales tactic, it is a form of advertising something new to existing customers. As an inventory solution, it again converts dead money into some form of liquid asset, even if it's at a loss to us. We feel it is much more critical to have access to our capital than to tie that money up in back issues in hopes that maybe some day we'll make money off of them. In the meantime there are about 4,000 more trades and graphic novels on our list of SKUs to add to our inventory that we believe have a much higher sales potential.

The one drawback of the sampler box, or any discounting scheme, is the potential to significantly devalue that merchandise and teach our customers that they will save money by waiting a couple of months until something ends up in the discount pile (similar to how Marvel and DC seem to now regret teaching consumers to wait for the trade). As such, we're being very carefully about how we'll use the these samplers. The majority of singles offered will be either the beginning of new storylines or issues that we feel will be particularly effective at hooking new readers.

Early in our development, so much of our success will be based on cash flow and our biggest ally will be liquid assets. As such, it is critical that we recognize dead product as quickly as possible and move to replace it or simply liquidate it. Eating too much stale inventory will only end up with us shrinking away into oblivion.


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