Comic Book Stores – The ‘Joy’ of New Comic Book Day Every Week – Part 2 of a Series

Ah, the joy of new comic book day each week. All comic book stores have a weekly new comic book day. As far as I know and can remember, that day is Wednesday every week. That is the day that the shipment of new comics arrives from Diamond Distributing and people rush to their local comic book store in order to pick up the new comics. Several years ago Diamond started to offer the option of getting the shipment on Tuesdays so that stores would be able to check in the order and sort the comics into customer pull boxes and be all ready on Wednesday to sell to their joyous customers. Over the years I have heard some variations where stores will actually close for a few hours in order to check in the weekly order and sort it into customer boxes. Roger and my friend Bob have told me stories of customers so eager to get their new comics that the customers show up on Wednesday, and prior to the order being sorted, would open up the UPS boxes of the order and rummage through them looking for their comics in front of Roger or Bob, not wanting to wait the few hours it would take to sort through the whole order. As you can imagine, this would upset a number of store owners and resulted in them closing for a few hours to properly check in and sort the whole order or getting the order on Tuesdays so they could do the checking in and sorting after hours on Tuesday evening without customers rummaging through everything.

Under the business model I discussed in Part 1, the dream is that everyone, customers, would come into the store each week and pick up everything that was waiting for them. The best part, when this did happen, is that the store would collect the money for the weekly Diamond invoice prior to the payment being due since Diamond typically gives NET 7 day terms.

The problem is that at times, especially during recessions, many stores will not even have 50% of the order picked up prior to the following Wednesday, which is when the next shipment arrives from Diamond and the prior Wednesday order’s invoice was due. Since the margin, at best, now a days, is around 50%, when less than 50% of the order is picked up by customers, the store now has to get money from other sources in order to be able to pay the weekly invoice, or worse, simply can’t pay the weekly invoice.

As far as I can tell from over the years, Diamond will allow a store to go about three weeks behind on paying the weekly invoice before the store will get put on back debt for the old invoices and COD for any future shipments. Back Debt is the store has to sign a note with Diamond, at 18% interest, and pay off the old invoices over the course of a number of months, like around 6 to 9 months. The COD is that any future shipments have to have a COD (Cash on Delivery tag) with UPS so the store has to give the UPS driver a money order or cashiers check for the shipment before they can get the order.

As a side note, some stores get so bad off that when they get put on COD they don’t have the cash to get a money order or cashiers check. What some stores discovered over time is that if they are on good terms with their UPS driver is that since only one box of the order has a COD tag, the UPS driver can drop off the other boxes to the store. This allows the store to get all of the boxes for the new week’s shipment except for the one with the COD tag. The hope for the store is that the store will sell enough from the new shipment that they then will be able to get enough cash so they can pay for the COD tag and get that box off of the truck also, and be ok with Diamond. The problem when a store does this is that sometimes the store, even with most of the new shipment, can’t raise the cash before the end of the day on Friday. At that point if the box with the COD tag is still on the UPS truck, it gets returned to Diamond. Now, this is where the real problem starts. Since only the box with the COD tag got returned to Diamond, Diamond knows that the store got the other boxes and has not paid for anything. In this situation, Diamond will now break the weekly shipment down into the individual boxes and put a COD on each and every box for what is in that box. This causes all kinds of extra costs to the store since a COD tag use to be around $10 or so, so even a small store with only four boxes per week, that is having trouble paying for the new shipments, now has an additional $40 per week that it has to come up with. Over the course of half a year that would be another $1,000 that the store really can not afford and makes things worse for a store that is already doing not too well.

My estimates are that at any one time in recent years, about 25% to 33% of all of the comic book stores are on back debt and COD with Diamond. This is kind shocking since I am not aware of any other industry that this kind of problems with payment would be considered typical and on going and ‘just how the business is’ but it seems that on average it has been getting worse and worse for the typical comic book store over the decades.

Hopefully, these trends will stabilize over time and maybe even reverse a little so comic book store owners and their customers can continue to enjoy their comics for decades to come.

Good Luck and Take Care,

Louis J. Desy Jr.

Friday, February 22, 2019

Comic Book Stores – The Business Model – Part 1 of a Series

Over a number of the past years I have followed the general business of what I would call the ‘comic book store business model’. Initially, around 2007 or 2008 or so, I started sending some of my friends reports about comic book and game store closings and openings. One of these friends owned a game store, another friend owned a comic book store and the third friend use to own a comic book store but closed it around 2000 and moved all of his inventory into a warehouse space and sold online only afterwards. My hope was that there was something that I could do or find to help all of them with sales in their businesses. I also talked over the years with a few other people that owned comic books stores;
a friend who owned a comic book store from 1985 to 2003, another friend owned a store until a few years ago and moved into a combination warehouse/retail space but is recently starting to liquidate in February 2019.

The, what I would call, the comic book business model is very interesting and worked well for a number of years. The typical comic book store would get customers who would want to sign up for subscriptions on what they wanted every month for comics. In return for ordering subscriptions almost every store would offer and give these customers a 10% discount off the retail price. As the comics arrived every Wednesday at the comic book store, New Comic Book Day, customers would come into the store and pick up everything they had ordered. These comics where usually held in a pull box/slot for them. Some stores would call these held comic for customers a subscribers list or subscribers, other stores would call these held comics for customers a pull box. In any case, the idea was that customers would come into the store every week and pick up all of their comics that had arrived, plus, hopefully, buy a few more things that the store stocked while they were there in the store.

According to what I have been told by my friends over the years, if all went well, the gross margin to the store from Diamond Distributing for the comics was usually in the range of 50% or so. Diamond would give stores net 7 day terms on the weekly invoice, so the store could sell enough of the weekly shipment and pay the weekly invoice before the end of the seven days. My friend Roger Anderson, who use to run the Musicquest comic book store in Worcester, MA; reported that in the good times for a comic book store that typically the store would have enough money to pay the weekly invoice from Diamond before the end of the day on Friday each week. After that all of the sales over the weekend was profit to the store for the week. When one think about this, that is very good, especially since most customers probably work during the week and only would be available if they made an extra effort to get to the store during the week so normally one could expect most comic book sales to be over the weekend, especially Saturday.

This business model of customers signing up for subscriptions in exchange for a 10% discount and then going to the store to pick up their orders every week should be a ‘dream’ business model. The store knows exactly what the customers want since they ordered what they wanted from looking through Previews. (Previews is a catalog put out by Diamond Distributing every month that lists all of the products available for ordering. So what a comic book store does is order at least one copy of Previews every month and when customers come into the store they can look through it while there and tell the store what they want to order.) The business model should be very good since the store would get the comics in on Wednesday and have seven days to pay the weekly invoice. This gives the store an opportunity to collect the money from the customers without having to put out any of its own money. The whole business model is cash flow positive, the store should collect its revenue days before it has to pay for the inventory.

The problem with this business model is that many customers over estimate what they really want or can afford to pay for, plus some comic book store owners over order under the belief or hope that if they like something that their customers will also like it and buy it. The problem with customers over ordering is that now the store gets stuck with inventory that it has to pay for but that is not going to get sold. I have also noticed the problem every economic downturn that a number of customers who lose their jobs and they are unable to keep up with their subscriptions and end up having to cancel all of their subscriptions. This leaves the comic book store stuck with the orders that continue to stream into the store over a number of months. (If one is ever in this situation and you need to cancel your subscriptions, please do so as soon as possible, otherwise it hurts the store more when you can’t pick up the comics which they have to pay for.) The other problem I noticed over time is that sometimes customers move away and never tell the store where they have a subscription to cancel the subscription, leaving the store stuck with comics that they now can’t sell and will continue to get for a number of months because they had no idea the customer moved away.

Other problems with this business model is that over time the gross margin from Diamond Distributing to the comic book stores has declined over time. Back in the good times, the margins were typically around 50% and in some large stores could get as high as 55%; i.e. $1,000 worth of comics at retail would cost the store $500 from Diamond at a 50% margin or even as low as $450 at a 55% margin. Today, the gross margin for many stores is down to 45% to 40% margins. On some items the margin may be as low as 35%. While that may sound like a good amount, it is usually very hard to make any money, especially if the store gives a 10% discount for customers that order comics through subscriptions plus the fact that for most stores overall revenue has declined over the years. A combination of declining revenue along with declining gross margin percentages make it hard to make any money, resulting in the string of comic book stores that have closed over the years.

Another problem with the gross margins over time is that years ago the gross margin was based on the total retail amount of the shipment for that week to the store but in recent years Diamond changed this to a rolling 12 month average. The problem with this change is that if a store had a low or soft month during the year, it would effect margins for months to come until the average improved. Sometimes these soft months in the year might not be the fault whatsoever of the store because of delays or changes in production schedules. While in theory most comics are published on a set schedule and have set release dates, it is not unheard of for schedules to slip at times or new series delayed for a number of weeks or even months for whatever reason. That will leave the store with less sales since the items will not be in the stores when they were expected and responsible customers who only order what they are sure they can afford will have allocated some of their hard earned money on something that will never arrive. Once in a while some products simply get canceled with no word or explanation as to why they were cancelled, leaving customers with unfilled demand for the product.

While it is not as easy to make money in the comic book business as it use to be, if one can get a store to the point that it is at least breaking even it can be a very enjoyable industry to be in and allows one to form a community of fans interested in comics. Many people will still miss their old favorite comic book store if it was one of the many unlucky ones over the past several years that ended up closing, but hopefully the stores that remain will be able to stay in business for years to come.

Good Luck and Take Care,

Louis J. Desy Jr.

Thursday, February 21, 2019

W.B. – A Good Friend – 21st anniversary of the passing away of Robert Shearer on February 15, 1998

Today, Friday, 15, 2019 is the 21st anniversary of Robert Shearer, otherwise known as W.B., which was short for ‘Weird Bob’, passing away on February 15, 1998.

I only met or saw WB a few times, mainly at the Total Confusion convention held in the Worcester, MA area during the 1980s/1990s. The times I did see him he was already wheel chair bound all the time due to his health problems but he still was able to attend and everyone was glad he was there. I distinctly remember for years after WB passed away that members of his group continued to have him be part of the RPG games they played by having WB appear as a NPC in the module for the players to meet. I thought this was great since it showed that even though WB was gone, he had not been forgotten.

In later years, once I was friends with Roger Anderson, I found out that Roger had made and taken care of the funeral arrangements for WB. Apparently, for whatever reason, WB had no family or relatives left to do those thing for him so Roger took care of these things for WB. Fortunately, Roger was around and took care of all of that for WB.

I do not have the background story on how Roger and WB meet, and will ask around to find out if anyone knows, but I expect it was through Roger’s comic book store, Musicquest, and Roger’s RPG groups that Roger and WB became friends.

Every year Roger would go out to visit his family cemetery plots at the Worcester County Memorial Park in Paxton, MA on Memorial Day. Roger would go out in the late afternoon on Memorial Day, after he had closed up for the day for selling flowers and comics. On a number of those trips in the 2000s I went with Roger and his family to the cemetery. Along with visiting his family plots, Roger always went to WB’s cemetery plot, which was just a few hundred feet from the rest of the family plots. Roger’s father-in-law was a few hundred feet towards the other side of the cemetery. Since Roger passed away November 2012 I have continued to go out with his family on Memorial Day weekend and always make sure to visit WB’s plot and leave some flowers each year, just like Roger use to do.

Today, Roger, WB, Roger’s family and Roger’s father-in-law, are all now out at the Worcester County Memorial Park and within a three or four hundred feet of each other. Roger’s father in law is up on a small rise towards the east side. Roger’s family is sort of in the middle a few hundred feet from his father in law, then Roger is about one hundred feet to the west, and WB is near the west edge about 100 feet from where Roger has been laid to rest. Even though it has been a little more than 8 years from Roger passing away, I still find it somewhat of a shock that it now falls to me to be the one to make sure that flowers are left for WB each Memorial Day.

Since Roger was the only one to take of the arrangements for WB back in 1998, and it looked like Roger was the only one to bring flowers each year to WB’s plot, I expect that except for me there would be no one else visiting WB’s plot if I did not go each year and make sure things were done. hopefully, maybe a few of WB’s old RPG group can be found and a few other people can be assembled for visits each year.

I sometimes go out to the plots a few times per year but consider those ‘extra’ and not mandatory visits, where as the Memorial Day weekend I consider a mandatory visit that must be done each year, no matter what is going on.

I am glad to be able to do such important work and show that people have not forgotten about WB even though he has been gone now for 21 years and would have been 70 years old today. While WB is gone, he has not been forgotten and will be remembered.

Good Luck and Take Care,

Louis J. Desy Jr.

Deal To End The Partial Government Shutdown Reached

            President Trump, in a live announcement broadcast from the White House around 2:20pm today, announced an end to the partial government shutdown that has gone on for the past 35 days. The deal is that a bill will be signed to open all of the government for the next three weeks, and pay all back pay, while more negotiations take place on the budget and ‘border security’. The expectation is that some part of the final deal will involved a border barrier in some areas as part of funding for the department of Homeland Security border package.

            President Trump claimed that he never asked for or wanted a total barrier from the Pacific to Atlantic oceans, but some supporters may have thought that was what “Build the Wall” campaign slogan meant and expected. It is possible that Trump’s political base may insist on such a barrier going forward and make it harder to complete any deal in the future that does not result in such a full sea to sea border barrier.

            While not much in the way of specific details were provided in the announcement, at least some kind of deal has been made to keep negotiating , open all parts of the government, and pay all government workers while a final deal is negotiated.

            President Trump did say that if nothing was done about a border barrier then there could be another shutdown when the current partial funding ran out in three weeks on February 15.

            Hopefully, there will not be another one of these government shutdowns and all parties can work together to keep the government operating as it should be.

Good Luck and Take Care,

Louis J. Desy Jr.

Friday, January 25, 2019

Day 21 of the Government Shutdown

How did we get into this situation, where on the 21st day of a partial government shutdown, the congressional constitutional power of the ‘purse strings’, appears to be being run and in control of the executive branch under President Trump?

The current partial government shutdown is the result of The House of Representatives passing a continuing resolution legislative bill on December 22, 2018 to fund part of the government without the $5.7 billion requested by the administration, under President Trump, for a border wall or border barrier with Mexico. (Apparently, border barrier sounds a lot nicer than the phrase border wall.) Since then no progress has been made on passing the funding and the effected parts of the government are still shutdown with only essential personal working, for no pay. It is bad enough that 800,000 government workers are not getting paid; it is worse that about 420,000 of those have been deemed essential and have to work without pay.

This is about to become the longest government shutdown due to a no funding bill. At the moment it looks like no progress is being made towards a resolution of the situation. While there was a meeting a few days ago with House Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer and President Trump on Wednesday, January 9, 2019; the meeting apparently lasted only a few minutes and ended with President Trump walking out of the meeting after being told by the other two that there would be no deal on a border wall. Of course, if a proper budget had been passed along with debt ceiling increase at the start of the fiscal year, then we would not be in this situation.

The possible outcomes are, assuming there is a resolution to the situation and it does not drag on indefinitely are:

1: Congress gives in to President Trump and passes a funding bill that includes the $5.7 billion in funding for a border wall. At the moment it does not look like this will happen because of the fact it would make the Democrat party look very bad politically. This is a big problem for the Democrat party, especially with since it was only just last week that the Democrat party took control of the House of Representatives.  To end up giving in to President Trump and passing funding for a border wall after vowing not to would make it look like the party was unable to get anything done.

2: Congress passes a funding bill with enough of a majority that they are able to override any veto by President Trump. In order to do this, both houses of the 116th Congress would need to pass such a funding bill by two thirds or more; meaning that it would require all of the Democrats plus independents plus get a number of the Republicans in each house to go along with the funding bill. This means that 54 Republicans in the House of Representatives and 20 Republicans in the Senate would need to vote with the Democrats to override any potential President Trump veto.

At the moment, between the two options, I see the only possibility of any funding passing is that the Democrat party decides to fold and pass the $5.7 billion in funding. For whatever reason, there appears to be absolutely no progress on any front with the pressure on individual congressional representatives growing every day. This is the case, especially with today being another day that a number of government workers were not paid plus all of the other problems and fall out from the partial shutdown.

I think it would be best for the Democrat party is they agree to fund the $5.7 billion in exchange for something of equal political value in order to resolve this situation and get all parts of the government open and working again.

One thought that does occur to me is that if a proper budget had been passed before the start of the current fiscal year on October 1, 2018 along with any needed debt ceiling increase, that we would not find ourselves in this situation.

Hopefully, before another week passes and the effected 800,000 government workers miss another paycheck, there will be a resolution and everything will be back to normal.

Good Luck and Take Care,

Louis J. Desy Jr.

Friday, January 11, 2019

Universal Basic Income – How it can come about and what it will be? Part 1 of a series

Recently I have been reading AI Superpowers (2018) by Kai-Fu Lee. While reading this work there is considerable discussion as to what happens to people and work as AI systems and/or robotics take over large parts of the work that people do now. While the estimates are all over the place as to what jobs and how many jobs are at risk, there is the concern that as computers, AI and robotics improve in the coming years that there will be a large displacement of people as jobs simply disappear for humans. While in the past these things happened, where one set of jobs disappeared, it was always accompanied by a new set of jobs being created that needed to be done with the overall net effect of the workforce ending better off after a while.

The concern is that a combined AI and robotics could result in the demand for work by people overall dropping over time as more and more of the workforce becomes computerized and not as many people are needed to do the same amount of work.

One thought that does occur to me is the recent discussions about Universal Basic Income, sometimes referred to as UBI, could help with this situation. As far as I understand the thinking, the idea is that everyone would be given some level of basic income every month to do as they wished with it. The criticism of such efforts is that at the moment no government entity can really afford such plans on a large scale, plus it is not clear what the benefit of doing such a thing would be for anyone, especially if the government entity making the payments has to borrow to make them meaning that eventually such payments would have to come to an end as said government entity was no longer able to tax and borrow to continue the payments. In order to properly do a UBI system, government entities would need to be funding such payments out of current tax revenue and probably really need to pay off most or all of any outstanding government entity borrowings.

My hope is that there is a path forward where once robotics and AI reach the point where the firms using such a workforce would be able to make the tax payments necessary to start UBI programs that were sustainable. At some point if the UBI amounts were large enough, which I believe is possible decades from now, people would be able to chose if they wanted to work or not or do whatever they felt like doing, without worrying about how they were going to make enough money to live on. I hope to shortly write a book about this and how I see we could transition from the current system to one where most of the workforce was computer AI or robotics and how UBI would allow people their part in the system.

While some people in a UBI system might simply do nothing all day, there are other people that even if they didn’t have to work, would still want to work and create things. There are also some things that even with a full computerized AI or robotics workforce may still be too hard for such systems and needs a person to do the work.

As an example of something that I think would take a long time and maybe never be able to be done in a cost efficient manner by robots is something simple like cleaning up the trash that is all over the place. Today, while driving to my friends business from my Worcester apartment to The Citadel in Groton, CT, along I-290 and then I-395, I noticed that just about every single foot of highway has some kind of trash on it! All 70 miles or so of my trip had trash on the side of the road. From my car I could see sparkles of plastic, glass, bottles, pieces of paper, plastic bags and all kinds of assorted trash. While I can see a robot doing that kind of clean up, I can’t see that it would be anywhere near cost effective and would really need a person to do that kind of work. While some people may think of picking up trash as not glamorous work, it is something that will need to be done at some point if we are to keep pollution out of the ecological system and the water supply.

Last night my friend Bob sent me a link about a group with special ship and boom who are cleaning up some of the floating trash collections that are in the Pacific Ocean:

The article mentions the group hopes to clean up half of one of the two trash groups that has formed in the Pacific Ocean within five years. If they can do that I would consider it to be incredible. The group is Ocean Cleanup and the device is Ocean Cleanup System 001. I noted that it looks like no government seems involved in the effort which I find strange considering the amount of money all of the various government agencies spend every year. To me It seems like some agency would be interested in such an effort and doing what they could to assist. From looking at the web suite, it looks like they have one prototype of their system working and a staff of around 80 people.  My expectation is that the entire organization is operating on something like less then ten million USD per year, which makes me wonder why no government organization is not participating in the effort? (i.e. Wouldn’t it be worth it for some agency like the EPA to fund this effort in order to clean up the plastic trash that has collected in the worlds’ oceans? )

Apparently, there are two large areas of trash that have collected in the Pacific and probably another one in the Atlantic Ocean. I remember one account from one of the people that did a crossing of the Atlantic Ocean in a rowboat or maybe bathtub (that crossing was like a publicity event) talking about how he ran into trash and pollution in the middle of the Atlantic in places that were hundreds of miles from land; places that I would have normally expected to be clean and pristine, not filled with trash floating all over the place.

Hopefully, as computer AI and robotics are implemented more and more into the workforce, UBI for people displaced by such technologies will follow and turn what could have been a disaster for people into one of a utopia where a person’s minimal material needs are taken care of. While such an effort and transition will take decades of work, it is something that should be worked towards and achievable over the coming decades.

Good Luck and Take Care,

Louis J. Desy Jr. – Thursday, January 03, 2019