Comic Book Stores (and Game Stores) – The Problems of Inventory Buildup and Low Goss Margins – Part 5 of a Series

Recently, I have noticed that comic book stores seem to have somewhat lower gross margins than they use to have in the past. In the past, the typical gross margin for items was on the order of 50% but recently I have seen some items being sold with margins as low as 15%. While 15% may ‘sound’ ok to anyone not running a store, it becomes almost impossible to keep a retail store open on margins that low.

While there was always a problem of inventory build up for all stores when the owner made a mistake on what they thought would sell and orders things that no one wanted, the low gross margins adds to this problem. As an example; in a podcast episode of ‘My Comic Shop History’ they recount how they thought the Ape series of comics would be a good seller so the store orders 150 copies. As it turned out, no one wanted it at all, and none of the copies sold. While an extreme case, it shows how hard it is to get ordering exactly right, and how bad things can go when that happens. While there is not much one can do about problems like that; since how can anyone always be right about all ordering, there is the additional problem of gross margins going down over time. The result of this seems to be that a lot of the reported profit (for those stores that are reporting any profit) from a store is getting ‘stuck’ in inventory; inventory that will not sell at any price and ends up sitting in stores for years or even decades.

One example of an item where there were lots of inventory all over the place, and this was a very successful item, was the 1976 pinup poster of Farrah Fawcett. I remember the first time I saw that poster in years was as part of the background on the TV sitcom, “The 70s Show”. I remember thinking, “wow, I can’t believe they (show creators) were able to find something like that”. I thought there was no way it could be an original from those original print runs and had to be a copy of the poster created special (printed up) just for their use within the show. As it turns out, there are still lots of these posters still around and the price is only around for $15 to $20 per poster. As an example of how many of these posters are still around, one ebay seller listed a few hundred of these posters for sale recently, still in the original shipping tubes with a note that they got them from a failed distributor. My impression is that there still thousands of these poster from the 1970s print runs of them. Another interesting fact surrounding this poster is that the company that originally put this poster out, Pro Arts Inc, went bankrupt. This happened even though they sold something like several million of these posters along with their other posters. My impression is that for some reason they printed millions of extra of these posters that did not sell, which are still turning up in inventories of various distributors and shops as they liquidate after all of these years. Pro Arts Inc itself has a somewhat interesting history since they had some kind of lawsuit on another poster and won, but spent more on legal fees than they won, and eventually went bankrupt with the two owners’ homes as part of the bankruptcy. There was also a book written by one of the owners where he basically accuses everyone, including judges, of ‘being in on the fix’ to take the company apart. I have not been able to find a copy of that book in any form but expect it will be an interesting read of how the company failed even though they put out what was the best selling poster of all time.

Now, comics and games are not the only thins that this problem happens to, but it is an industry where there are stores all over the place in the same industry, across the county, and we see this inventory buildup everywhere. Stuff does not sell, and seems to sit there forever, taking up space and costing money in rent, inventory taxes, etc to keep stored. Plus the money, or profit, of the store is tied up in these items, which may never sell.

While better ordering can fix part of this problem, it is impossible for any store to just order what will sell, since inevitable that owners will order things that will not sell and get stuck with them.

What would help this problem is if the gross margin on items was better, something like on the items of 10% or 20% improvement. That would help all stores so that even though items may not sell, at least the store will make more on what does and it will help to cover the losses on the inevitable mistakes made on ordering.

Good Luck and Take Care,

Louis J. Desy Jr. – Sunday, October 06, 2019

LouisDesyjr@gmail.com

Steve Wentzell – A Good Friend

Today, August 05, 2019, is the third anniversary of Steve Wentzell passing away. It is hard to believe that it has been three years since he passed away. I remember one time that I mentioned to him that I was a fan of the Avalon Hill Game Rail Barron. A few months later I was over his house and Steve presented me with a copy of the game that he had bought at a yard sale. I was glad he had found a copy and started to ask how much he wanted for it, but he told me that it was a gift for me. I was always glad that he had been able to find a copy of that game for me and do miss going over to talk with him from time to time about the comic and game industry, especially since Steve ran a comic store from 1985 to 2003 in Milford, MA.

Steve was a friend of Roger Anderson and both were part of a long running role playing group in the Worcester, with Roger passing away November 09, 2012. With both of them now gone a large part of the memory or history of that group was now gone.

Good Luck and Take Care,

Louis J. Desy Jr. – August 05, 2019

LouisDesyJr@gmail.com

Is GAMA/Origins Game Fair becoming a modern day dystopia?

Maybe dystopia is not the right word, but I am sure you are aware about how GAMA/Origins “disinvited” Larry Correia in 2018 over a complaint made by someone. Upon examination, it seems the whole things was not a concern for GAMA or Origins and, from what I can tell, Larry did not do anything wrong. The complaint involved a controversy completely outside of Origins or GAMA and something that had happened months earlier. According to Larry’s own account, he found out about being “disinvited” through a posting online, so apparently the mere accusation of doing ‘something’ was enough to get him taken off the schedule, and that is what we have here today. Do or say the wrong thing, even if completely by accident, and anyone accuses you, and you are all done. You are out, disinvited, taken off the schedule, never to be talked about or mentioned again. I would call that dystopian nature.

While GAMA/Origins has a harassment policy that specifically states that the right to not be harassed is NOT the same as a ‘right to not be offended’; i.e. just because you do not like what someone is saying or their beliefs does NOT mean it is harassment. Unfortunately GAMA/Origins does not appear to hold to this in practice and these words mean nothing. When one says or does the wrong thing, even if by accident or just making an inquiry, and there is any accusation, the person being accused is thrown out without any kind of inquiry as to what happened or why and only finds out after the fact.

I, myself, had all of my lectures cancelled in 2016 when some people, who were never even verified as going to attend Origins, posted on social media and made slanderous and libelous accusation about me. I did not even find out this was going on for some time, especially since people were talking about this in a closed group on rpg.net. Apparently, I am now ‘persona non grata’ and will never to be allowed to present on anything even though I had given lectures for years and worked to present as many as possible to help the program.

I have contacted the entire GAMA board, officers and any other staff that I could find contact info for, and nothing has been done. The only message I got, that I remember, was from John Ward who said basically, “We can do whatever we want”.

As such, I intend to secure a seat on the board and will, myself, work to correct this situation.

My take on this  is that anyone connected with GAMA is that they are all simply terrified of some internet mob trying to ruin them if they do not do what the mob wants. As such they have decided that they will not do anything to correct the situation. Of course, the problem with such tactics is that when one gives in to these tactics and behavior, instead of just telling the people off,  it just encourages more of the same and is nothing more than extortion. As anyone can tell you about being on the receiving end of any kind of extortion, is that there is no future in allowing it to continue. Since eventually, as things become worse, it will reach a point that the one being extorted can’t or simply won’t be able to comply with the demands being made.

While I can understand that some people are completely irrational and unable to handle any discussion on #Gamergate or The Culture Wars, and I could have understood if GAMA decided to take those off the schedule, there was absolutely no reason or justification to take my other lectures on economics between the World Wars off the schedule and to prohibit me from ever giving a lecture at Origins again.

And that is why I fear what we have is a modern day dystopia.

In what is supposed to be an academic environment, in a free and open society with free speech, we are not supposed to be booting people out because someone ‘feels’ they are some kind of imagined threat.

Good luck and Take Care,

Louis J. Desy Jr. – June 8, 2019

LouisDesyjr@gmail.com

Running for GAMA Director-At-Large Seat plus Restitution for Larry Correia

I saw in the GAMA (Game Manufacturers Association) June 2019 newsletter (https://mailchi.mp/80506a4c96cd/gama-2019-june-update?e=b2fee8ddb4>GAMA June 2016 Newsletter ) that a few board seats are up for election at the next annual meeting on Friday, June 14, 2019 at 7pm in room A216 of the Greater Columbus Convention Center. GAMA is the parent organization that runs the Origins Game Fair each year. I put my name in to be put on the ballot for a Director-At-Large seat this past Thursday, so I will be on the ballot for voting members to cast a vote for.

I had thought about joining GAMA for a number of years and finally decided to join a little while ago, especially I would like to do my part to help the hobby and its Origins Convention that I enjoy attending so much.

So if you know anyone that is a member of GAMA, or even has any part in the overall gaming/boardgame/comics industry, please mention my running for GAMA director and recommend a vote FOR me for director. Even if the person you are talking with is not a voting member, they may know people that are or have connection to other people who are and word can get around.

While I probably will not be able to attend the meeting in person, there is an option to attend remotely through Zoom this year so I expect to be doing that.

If there is anyone that would be interested in talking about my running for GAMA Director I can be reached at LouisDesyjr@gmail.com.

One item of particular importance, it seems to me that all of us owe Larry Correia restitution for how he was treated and what we all, collectively, allowed to happen. What happened was an outrage. Larry had not been in contact with the person who made the complaint in years plus the person making the complaint did it because of a rebuttal Larry wrote to an article that their finacee had written. So the person making the complaint did it about something they were not even involved in! On top of all of that, the person making the complaint was not even going to attend Orgins, yet GAMA/Origins decided to ‘disinvite’ Larry and take part in this farce.

In the dystopia that we appear to be constructing, people are not banned, they are ‘disinvited’. It is as though we are making our own dialect of newspeak to use.

1984 was supposed to be a warning, not an instruction manual.

It seems to me that all of us should beg forgiveness from Larry for what happened; those that directly took part for what they did, and the rest of us, including me, for failing to prevent an innocent man from being unjustly slandered and persecuted.

Maybe in the future some kind restitution can be made to Larry, like some kind of official staff/officer position as a way to make amends for what happened and in some way, compensate Larry Correia for what happened.

My plan is that once on the board of GAMA, whether it is this Friday, next year or a decade from now; that I will do everything in my power to effect such restitution as soon as possible.

While we can not change what happened in the past, we all can work today to make amends for what we allowed to happen. If you have ever thought or wished that you could repair the damage done last year to Larry and make amends, now is the time to act.

Good Luck and Take Care,

Louis J. Desy Jr.

LouisDesyjr@gmail.com

Memorial for Steve Wentzell

Today would have been Steve Wentzell’s 67 birthday if he had not passed away on Friday, August 05, 2016. It is hard to believe that it is now almost three years since Steve passed away. In the week’s prior to Steve passing away I had tried to stop over to visit in the evening but always got there too late and missed him before he went out for the evening. Fortunately, his wife or step daughter was usually there, so I was able to visit and have relayed to Steve that I had stopped by to visit. I had expected that I would catch him the ‘next time’ I was over but unfortunately that was never possible once he passed away.

Steve was a childhood friend of Roger Anderson. Usually every week they were part of a role playing group that meet over at someone’s house or it move from house to house over the years as people’s schedule change, but they always got together each week.

I am glad for the time the group was able to get together and wished they all had time in retirement to have been able to enjoy things, but at least the whole RPG group had the time that it did have, and people still remember them and the group.

Good Luck and Take Care

Louis J. Desy Jr.

Tuesday, May 21, 2019

Comic Book Stores – Could Marvel Comics End Up Being Closed Down by Disney? – Part 4 of a Series

While I had planned a more orderly presentation of the different aspects of comic books stores and the comic book industry in general; there was a recent article mentioning the possibility that Marvel may end up no longer publishing comics.

While the comic book industry has been in the middle of a multiyear decline, in spite of the success of many comic book characters in a number of movies, comic books themselves have been in the middle of a gradual decline spanning multiple years. Some things are not in the control of anyone related to the industry, but there are parts of the decline that are within the control of the various stakeholders.

In general, over the decades, comics have always had boom/bust cycles, especially after the whole distribution model changed from drugstores, supermarkets and book stores around the late 1970s/early 1980 to dedicated comic book stores, as they are today.

While Diamond Comics Distributors Inc (hereafter referred to as Diamond) does not usually publish the number of comic book stores it has as customers, as far as I can tell, at the highest level, probably in the middle of the 1990s comics book boom, there were about 22,000 comic book stores. In recent years the last Diamond ‘official’ number of accounts with Diamond was put out at around 4,200 with 2,200 being comic book stores. (The non comic book store accounts are ‘entities’ that are buying comics through an account with Diamond but they do not have a retail store.)

Over the many years I have been discussing the comic industry with people, is that it was generally believed that no matter what happened, the publishers and Diamond would always stay in business as long as they right sized their organization for the level of business they had. Since most comic book sales are the result of orders in advance by customers through stores, it should be very possible for publishers and Diamond (the one and only distributor of comics) to properly size their businesses and keep operating. Individual comic book stores have a problem in that customers may order comics and then not pick them up, leaving the store stuck paying for comics that end up sitting in inventory forever and costing the store money.

Over the years I have been part of a number of discussions about if there was some ‘lower limit’ on comic book sales that could or would cause something to happen that would bring an end to comic books in the United States.

One speculation, especially during the financial crisis of 2008/2009 was the possibility of Diamond failing. Diamond is the only comic book distributor left in the United States so its failure could be the end of the comic book industry, or at least a big financial hit to publishers and comic book stores. Without Diamond there would be no way for comic book stores to get their new comics, and publishers would have no way to sell to the vast majority comics to their customers. In such a scenario, it would be easy to see how a lot of comics book store and publishers could all go out of business. It was rumored for a number of years that DC was so worried about the effect of a failure of Diamond on the industry that it had some kind of agreement of understanding with Diamond that if it ever was in danger of failing, and being unable top operate, that DC would have the first right to take over Diamond and continue to keep the distribution operation going.

A recent article at comicbook.news (DISNEY SHUTTING DOWN MARVEL COMICS? : https://cosmicbook.news/disney-shutting-down-marvel-comics , March 1, 2019 ) talks about recent rumors that Disney may close the Marvel (Marvel is a division of Disney, trading under the stock symbol DIS) comics division because of a continuing drop off in volumes and revenue. While it is not clear from the financial reports of Disney just exactly what the revenue is for the comics or if Marvel comics makes a profit or not, because comics are grouped in with other Marvel revenue in the quarterly reports. It does sound like more and more people are under the impression and belief that Marvel comics is losing money, has been losing money for a while, revenue continues to fall, and there is serious speculation about Marvel not publishing comics anymore.  

Within the same time period, IDW Media, the third largest comic book publisher, appears to be having its own set of problems. IDW Media is a publically traded company under the stock symbol IDWM. Its stock closed today at $25.75, down around 50% from its 25 week high of $53.99. Last summer there was an unusual capital raising done that looked like, to me, done to raise cash and keep the company operating. To me this lends credibility to this belief that the comic industry is having serious problems, in general. In addition, BleedingCool.com reported on March 5, 2019 that investors sent an open letter to IDW Media calling for the company to be sold.

(IDW Media Holdings Investors Call for Sale of Company in Open Letter

https://www.bleedingcool.com/2019/03/05/idw-media-holdings-investors-call-for-sale-of-company-in-open-letter/ March 5, 2019)

Here are some of the comments, posted with the first artilce, that I found alarming from the first article, Disney Shutting Down Marvel Comics?, were are follows, along with my comments on those comments:

1: ” Too bad Marvel’s deplorable business practices are killing the comic shops that kept them going all these years.

I’m done with the Big Two. It’s indies and creator-owned for me as has been for over a year now. If Marvel wasn’t putting out such miserable crap, and insulting and attacking its own customer base, maybe it would be in a better spot, but most of the creators they employ these days are worthless hacks, so…”

This commentator clearly thinks that Marvel is partly responsible for the sales declines, which also have been hurting (killing?) comic book shops.

2: If Quesada actually thinks the mouse is going to subsidize Marvel’s garbage tier work while it runs an endless deficit, because it somehow ‘inspires’ the MCU… he’s delusional. The last time Marvel made comics that were coherent, much less entertaining enough to feed into the movies, was almost ten years ago now.”

3: “It’s time for the comics industry– and Marvel in particular– to clean house. FIRE these obnoxious scolds who spend all their time antagonizing the company’s long time customer base with their endless identity politics. Stop all the scams on comic book retailers. Get some legitimate editors. Cater to the actual customers again.”

This commentator believes that identity politics has ruined the product. The ‘scams’ this commentator refers to I believe are promotional items like variant covers, or requiring stores to have certain minimal orders in order to get special limited items. The problem is the minimums are so high that usually it is impossible to sell enough to at least recover the stores cost, leaving the store with unsold inventory and losing money on the promotion.

4: ” Marvel floods the market with new #1s and a million variant covers to get that sweet #1 spot with Diamond every month so they can show their masters at Disney that “We’re still number 1. See?” It’s a bluff. It’s always been a bluff. These #1s sit on shelves collecting dust while a “Second Printing” is announced because they “sold out” at Diamond.

There has been some considerable speculation over the past few years that at times Marvel has been printing and sending out for distribution comics that no one ordered. The theory under this idea is that Marvel prints and sends out product that no one wants because it is able to report to the higher ups at Disney what their print runs are, and look better by doing such antics. Part of the reason some people think this is that there are multiple reports of stores getting in quantities of comics that they did not order or way too many ‘extra’ comics. According to the reports, this keeps happening and the speculation is that Marvel is deliberately overprinting comics so they can report better numbers. If this is what is going on, someone at Disney should be able to tell by looking at the gross margin percentage over a period of several years. If what I just describe is happening, what one would see is that the gross margin percentage would have declined over time and be much lower than it should be, for no discernable reason.

5: Gee,

You must live in a different world than many people who don’t even have a comic shop closer than 45 minutes away!

There can’t be much of a comic book industry if there’s no place SELLING comics!

There are fewer than 1900 comic shops in North America. They lost around 300 shops in the last 3 years alone! There are many people evaluating whether to keep their stores because Marvel and DC are NOT making moves to improve the situation. They essentially told them at the last major meet-up between the companies and retailers that they’re not going to change how they run the business because it would cost too much to change their business models!

It’s completely insane to do business like they have been for about 40 years and most people are aware of that except guys like you who are ignoring the reality.

The business model HAS to change if the industry wants to survive BUT they’re not going to make the changes and it’s a bit late for some of things like selling anthology reprint books at Wal Mart especially when the retailer is indifferent to that idea and doesn’t care to promote comics.

What B&N and most places sell are packaged reprints, not original stories for the most part.
B&N has DRASTICALLY scaled back the size of the American comic section (which looks disorderly) while the manga sections have at least doubled in size. This doesn’t paint a nice picture for American comics on top of the reports about massive shipments of trades and hardcovers to discount places like Ollie’s unless you care to dispute that, too? I’ve been to a local Ollie’s and seen TONS of books from the last 5 years that just haven’t sold!

Yes, the industry CAN collapse.

They HAVE tried to make a go of it on digital but digital does NOT pay the bills and many web artists are finding it impossible to make a living off of web comics!

Do you think it’ll be much better for “comics pros” who are better at insulting the people who buy comics than selling themselves and their product?!?

I think the most alarming part of this comment is the mention and estimate, if true, of about 300 shops closing within the last few years.

6: I am gonna gonna tell you what has slowly killed comic books. Comic shops. I am 49 and when I was a kid you bought comics at grocery stores and convenience stores. Comic still depend of that 9-12 year old first time buyers to get hooked for 5+ years. 
The publishers only want to sell the 100% guarantee to shop. Selling other places that return unsold issues just isnt acceptable anymore.”

This commentator cites to the change in the business model. Pre comic book shops, publishers had a big incentive to put out a quality product that people would buy, since the grocery stores and convenience stores could return unsold comics for full credit. Once the business model change to direct to comic book stores, who had to pay for the comics in full when they were delivered, the incentive and driver was just to make a comic ‘look’ good enough in Previews (monthly catalog of new comics available for ordering with Diamond) to get customers to order them through the store.

Hopefully, Marvel is still doing at least ‘ok’ and sales will rebound, but I find it alarming for an article like this to be published, and, with how things have been going with sales, for it to seem very possible that Marvel comics could get shut down by Disney.

Good Luck and Take Care,

Louis J. Desy Jr., March 8, 2019

LouisDesyjr@gmail.com