Wholesale Concern

The results of an incredibly informal poll recently indicated to me that MacGuffin is either on the right track in our approach to the industry or we've shot completely off the rails. This poll showed that we are in the extreme minority in our use of book wholesalers like Baker & Taylor and Ingram as a significant inventory resource.

It's not that using book wholesalers is particularly uncommon among comic shops (though fewer than half probably have anything other than a Diamond account). What I was somewhat astounded to see is that a large majority of comic shops (at least as represented in this poll) use book wholesalers for less than 10% of their graphic novel and trade inventory. Not total inventory, just for their graphic novel and trade inventory. That means that they're buying non-returnable from Diamond and presumably Cold Cut for over 90% of their trades and graphic novels. As a comparison, just under 20% of our TOTAL inventory and almost a third of our graphic novels are purchased from book wholesalers and distributors. Clearly we're way out of proportion with much of the industry.

The half empty reason for this is that we're carrying too much of the wrong product and forfeiting too much margin for returnability. To address the issue of whether we're stocking the wrong product first requires a look at product mix, availability and margin.

I've talked before about the importance of variety at MacGuffin. I've seen the argument (in fact, Marvel makes it all the time when explaining why so many X-Men and Spider-man titles and why those get the biggest marketing push) that focusing product mix on what you know sells rather than taking chances is the smartest way to maximize profits. Which is, of course, completely stupid. Imagine if DC and Karen Berger hadn't taken a chance on publishing a decidedly non-superhero book by Neil Gaiman. I'd be out one of my best sellers that's for sure. That's not to say that stores should ignore what sells, but it is important not just to the philosophy of the store but also to our financial health and growth to carry a wide product mix. In the last week we have sold the following trades/graphic novels: Alias, Age of Apocalypse, Archie Americana, Forgotten Realms, Hellboy, an entire set of Naruto, Books of Magic, North Country, The Plot, Watchmen, Losers, Boondocks, Cry Yourself to Sleep, an entire set of Alan Moore's Swamp Thing, ALIEEEN, and Sandman: Endless Nights among many, many others. Just typing that list brought a smile to my face. But how I'm supposed to use a list like that to winnow out those books that don't sell I don't know. Now, if I've ordered a book and it sits on the shelf for a year without moving, that's another story altogether. Even so, when it is finally purchased, that doesn't mean that it's automatically not reordered. Our sales growth indicates that it helps that we don't carry just what other people/stores/companies tell us will sell. Instead, it helps that we take chances to find new product that will fit well within our market. Our product mix becomes particularly important when the issues of availability and margin are considered.

I've talked before (here and here) about how Diamond simply does not stock Understanding Comics. Completely ridiculous, but there you have it. If we want to stock it, we have no choice but to go to another distribution channel. There are occasions when it is available from Cold Cut, but not often and even then the best terms possible are 45% non-returnable with 90% free shipping. Meanwhile both Baker & Taylor and Ingram have it in stock at 40% returnable and free shipping. This is a bestselling title that we feel is important to have available as many days of the year as possible. For example, an employee at another area comic shop (roughly 25 minutes away) had heard about us and decided to stop in. After looking around the store for a few minutes he about exploded when he discovered Understanding Comics in our recommended section. He'd been looking for it for quite awhile but could never find a shop that had it and couldn't believe we had it in stock. After another ten minutes or so he left with two other graphic novels, one of which was also unavailable from Diamond. Anything that we believe will sell but that we can't get from Diamond (which often includes material from their brokered publishers that Diamond is simply out of stock on, i.e. Planetary: The Fourth Man up until about 2 weeks ago) will still find it's way onto our shelves. As I've said on may occasions regarding suppliers: availability trumps all.

Then again, Understanding Comics probably wouldn't sell particularly well for Diamond if they did carry it, since they'd almost certainly be offering it at a 40% discount non-returnable. Why is this you ask? I'm not privy to the specific mechanics of the system, but traditional book publishers like Hyperion, Pantheon and Ballantine as well as comic/graphic novel publishers that are distributed primarily via the book trade (i.e. Drawn & Quarterly and First Second) are limited to 40% in their Diamond discount. This is one reason that Flight's shift from Image to Ballantine will likely mean that it does fewer unit sales (if not necessarily fewer dollar sales) via the Direct Market than the first two volumes. Then again, the title will also likely find more exposure in bookstores than it had when published by Image.

Then there is the issue of reorder fees. For every publisher distributed by Diamond through the Direct Market with the exception of the four brokered publishers, Diamond charges a 3% reorder fee as some form of penalty for not taking a deeper initial inventory position on that publisher's titles (in reality Diamond charge this fee for every reorder, but the four brokered publishers pick up that fee themselves because they understand how much it helps their orders). So, were we to order Maus from Diamond, we would pay 60% of retail ($8.40) if ordered through our monthly Previews order (which is nearly impossible since it is offered only roughly once a year through Previews) or 63% of retail ($8.82) if ordered as a reorder. Both of those prices are plus shipping, which generally works out to about 2% of retail. Meanwhile, if I order Maus from Baker & Taylor it costs 60% of retail ($8.40) with free shipping. Toss in returnability (which plays just about zero factor in the case of Maus because it's both important for us to carry and sells well enough to be worth the shelf space) and there is less than zero reason to order Maus from Diamond unless everywhere else is sold out. This is true of essentially every book published or distributed by a traditional book publisher, whether it's Persepolis, Black Hole or the new volume of Flight.

Where this gets a bit trickier is the nebulous 45% Diamond discount where such publishers as Fantagraphics, AIT/PlanterLar and Scholastic's Graphix imprint (i.e. Bone and Babysitter's Club) reside.



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