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