I think all of us retailers, myself included, have done a very poor job of articulating our many concerns with the efforts around Comichub and DC Comics’ Lunar/UCS distribution. So I’m going to attempt a better and more concise response to those here, in hopes that it brings the main underlying issues to the forefront.
Before diving into specific, it bears mentioning that underlying all of the concerns it is the current ongoing pandemic. Were these ideas or actions to be brought forward under normal business conditions, I don’t think you would see the relatively significant and biting pushback that has occurred. The fact that business is anything but normal right now, mixed with the potential that these changes would usher in very new challenges in a time of severe adjustment is the root cause of most frustration, I believe.
First off, let me deal with Comichub. Most retail stores that I have spoken to about this topic have little fear of digital. We have coexisted for a significant enough time with digital that we know what it’s reach is, and what effect it has on us. With digital in the marketplace we have continued to exist. Much research has shown that there is little (yes some, but very little) overlap in those who get digital vs those who buy physical. The main underlying flaws that retailers circulate around ComicHub’s digital first system were two-fold:
1) The idea of fulfilling purchases with physical media puts all burden on the LCS that you order through. It’s not that we won’t (or haven’t) take on burden (ordering two months ahead, offering a free pull service, being the only one paying the guaranteed money, etc). Additionally, without knowledge of how the publishers were going to release product as we dig out from a total industry shutdown, we had no idea how large a volume of books we would be taking on.
2) The cost for retailers in doing this was relatively high, considering we would get the same margin of profit from the publisher, and have more work to do. To use the Comichub software there is a monthly fee, then on top of it a 3% fee for each book sold that goes to Comichub. No one is saying that is an incorrect way of doing business – but in a pandemic when your sales are down as it is, that would mean you would have to sell 51 comics to break even – not make money, break even. You wouldn’t see a realizable profit until you sold book 101, and even then your profit return is so low it wasn’t worth it. Plus, Lunar/UCS. Again, this is two-fold, and mostly rooted in the timing of it.
Everyone that I know in comics has long said there needs to be competition for Diamond, we do not disagree with that. Competition drives you to do better – why should someone pick you if you have an inferior product? However, one lone publisher going out to do this does not a competitive distributor make.Aside from the challenge of a pandemic, DC went and picked the two largest competitors to every comic store to do it – never open solicited.
Additionally, they attempted or were complicit in the attempt to hide the fact that the two new distributors are the largest two direct to customer retailers by using new names at the same addresses. This first and foremost causes concern over standard discounts. DCBS the volume discounter has a small margin to work from (I should know, I work off that same margin, minus 2-5% as we are growing to get to their size).
Will DCBS now get their books for, say, 10% or 15% less than they did before? What’s to stop them from offering books at 35% of cover price? No one can compete, and sure that’s a win for some customers, but a much bigger loss for others when retailers disappear because 1/4 of their regulars switched, and now they have gone from making just enough to breaking even. Also, any distributor worth their salt has some form of ordering system. Diamond has one that allows us to track subscriptions and customer info … now if Lunar or UCS do that they can have access directly to my customers? Hmm – do you think your home owners insurance company wants to share your information with a competitor?
For those who tuned in at the time, or have watched Steve Geppi’s Q&A on the Comic Book News Youtube channel last week, you heard Geppi say that he has no desire to ship direct to customers – the one thing his new competition is BUILT on. So again, the timing of this coinciding with a global pandemic, and relatively nationwide shutdown of the entire product chain make this a terrible time to experiment in this industry. A multi distributor model is not a bad thing, and in fact is encouraged. However experimentation like that is best done during normal business operations… and potentially with more than one publisher.
That’s my take. Interested in hearing yours, so please share your perspectives in the comments below.