Friday, March 17, 2006

Abraham Maslow and the Underpants Gnomes Part Last

Whew... I'm back, did you miss me? If Mamakaze had let me take the laptop, I might still be living on lobster and tequila south of the border! But enough of that, she didn't and I'm not, so let's tie up this excercise as promised with a look at the retail side of the equation.

Yep, retailers, my peeps, as much as I wish it weren't so, we do have to share in the blame here. Again, as with publishing, I speak with experience as I have been a comic shop owner/operator for much of the last 25 years. I have also made many (OK, most) of the idiotic mistakes that could be made to prevent the success of a comic shop and if truth be told, I've made some of them many times.

Looking back at previous installments, you might remember me mentioning that if I could pick just one reason for the woes of the comic industry, it is the extremely low barrier to entry. Because it is so inexpensive to create and publish a comic or even to sign a lease and open an account with Diamond Comics Distributors, the industry is rife with Hobbyists (vs Professionals), folks whose purpose is often less for profit and more for vanity. The lack of expense, seems to trick people into believing the endeavor will be easy and that business planning isn't necessary.

The industry can survive hobbyist creators and publishers and in fact may actually benefit from some of them. Until books are solicited, they really aren't on anyone's radar or timetable and there are thousands of other items available each month. So it really doesn't matter what other obligations or financial hurdles the creator/publisher has, as long as they ultimately solicit and deliver responsibly. But hobbyist retailers, well, these folks could very well be the death of the Direct Market as many stand as the proof of the Comic Shop Guy stereotype, representing the industry as the first (and last) face to current and potential customers and the way things stand today, if the DM falls there will be a lot of collateral damage.

So what exactly is the difference between a hobbyist and a professional and how does this relate to comic retailing? Well let's look at the two words, Robert Bogue at says:

Before we delve into the differences between the two, it's necessary to explore the definitions of the two groups. The first definition, that of a hobbyist, is:

"a person engaged in activities, in their spare time, that bring them pleasure."

OK nothing sinister there, eh? Aren't we all told to seek a profession that we enjoy? Unfortunately those who are not looking to their shops as a full time job, needing it to be profitable in order to support themselves and a family, often behave in ways that are detrimental to both the appearance and acceptance of comics as art and literature, furthering the basest of stereotypes for both the medium and it's fans.

So let's look at professional:

The professional has a slightly more complex definition, which includes:
Being Paid - A person being paid for a skilled activity
Being an Expert - Having demonstrated great skill or expertise in a given activity
Career Activity - Engaging in an activity for the purpose of a career
Professional Behavior - Conforming to standards of professional behavior

So while there is nothing nefarious about being a hobbyist, one can certainly see where it isn't necessarily as conducive to growing the comic market as the professional might be. Why? Retailer Failure #1

  • Like many comic shops, Comickaze opened on the strength of a partner with a decent line of credit and a condo whose rent was part of my compensation, my personal collection and my labor/knowledge. I ran the shop open to close, 7 days a week. The "plan" at the time was to grow the business to a point that it would pay both my partner and I a decent wage and then we would open more locations. Like the Underpants Gnomes, we had step 1: get comics and step 3: profit/expansion but totally spaced on step 2!

But let me back track here for a moment because I think some of you might think you know where I'm going with this and I just want to make some distinctions here.

Comickaze started primarily as a front of the catalog comic shop. Not because I don't like small press books, I have always had an affinity for them from Quack, Star*Reach, Metamorphosis Oddysey and Nexus to Groo, Star Slayer, Boris the Bear and Ex-Mutants, I personally enjoyed a far more diverse selection of comics than the stereotypical comic reader but from a business point of view, I had a hard time passing on my appreciation for small press work. Heck in my first go-around as a retailer as co-owner of The Comic Alternative in the early 1980's my distributor was also a small press publisher, Pacific Comics (and later as Blackthorne), who brought us a line of (as then relatively unheard of) creator owned series like Groo, Starslayer, Rocketeer and Captain Victory.

10 years later, following a long absence from anything comic related, I re-entered comic retailing with Comickaze and found that in my absence, the market had regressed. Having grown fat and happy while embracing style over substance the late 80's and early 90's exposed the lies of get-rich-quick gimmick covers and other manufactured collectible practices. And as fans realized that they had been lied to (whether overtly or covertly) by both publishers and retailers, they abandoned the hobby in droves, leaving many publishers and retailers mortally wounded. Why? Retailer Failure #2

  • Most (OK, all) comic retailers became retailers because they love comics, not because they were great business people who saw an excellent earning potential. Being able to buy their personal books wholesale and covering operating costs and a little more to scrape buy on was good enough and for many it still is or as Joe Field, owner of Flying Colors Comics and the man behind Free Comic Book Day points to a comment by the late Carol Kalish in a column he wrote for Comics & Games Retailer:
    ...get your comics for free and have enough left over for a Big Mac and a Big Gulp.

This type of retailer was unable to recognize the oncoming headlights or able to make out the license of the vehicle that ran 'em over.

Since a lot of this growth had been built on smaller press and specifically black & white comics as everyone hoped to find the next Teenage Mutant Ninja Turtles, when those who'd bought into the get-rich-quick, copies by the case aspect of comics disappeared those that remained, went back to buying what they enjoyed reading and doing so in single copies. Leaving many remaining retailers wary of anything non Marvel, DC or based on recognized licenses like Dark Horse or "hot" creators like Image. It was easy and comfortable for bothe fans and the retailers to slip back into the Zombie mentality and for me, having missed both the boom and the bust, I set up Comickaze with those I was familiar with from my 80's tenure, Marvel, DC, Dark Horse (the new Pacific Comics to me) and Image still the belle of the ball as the new Marvel, with Lee's WildCATs & Silvestri's Cyberforce (X-Men), Liefeld's Youngblood (X-Force), Keown's Pitt (Hulk) and McFarlane's Spawn (Venom).

Many retailers, myself included continued to ride the Image bandwagon, even as our competitors continued to drop off, touting their potential future value as well as reaping the profits on recent "rare" back issues. IMNSHO the arrival and subsequent success of eBay probably did the most to expose the claims of rarity for many of these recent "hot" books as thousands of "rare" books began appearing there but not before registering with publishers that they had indeed been leaving a great deal of money on the table by leaving their properties innaccessible to fans who merely wanted to read the stories and would not pay $10+ for back issues if indeed they could be found. The mid to late 90's brought the (re)emergence of the Trade Paperback (TPB) collecting multiple issues of out of print issues, often for less than their combined initial cover price and always for less than the market price for the actual back issues as well as the & Graphic Novel (GN) long form comic stories never released in serial comic form but rather all at once in book form like prose novels.

This was probably the most significant change in the Direct Market since it began as it served as a demarkation point, an opportunity for comics to return to its role as entertainment as opposed to a collectible and also to reach out to prose book readers with a package that resembled less a childs pursuit and more the books they were faimiliar with and appreciative of.

But I say this with the benefit of hindsight and at the time I remember being fearful of this "new format". Hard enough selling $2 comics, how was I going to get customers to but $10-$15 books, especially reprints, books that could never be sold for more than cover price? Worse, how could I afford to buy them? Enter Retailer Failure #3

  • Jack of All product, Master of none. Who are you? Why should a comic reader or better yet a non comic reader, shop with you? Are you 31 Flavors or are you any flavor they want as long as it's vanilla? Do you offer superior knowledge, convenience, utility...? Or do you just exist from day to day glomming on to whatever hot item you can to maintain the satus quo but never really moving forward?

Me, I had Magic the Gathering, Sports & Non Sports Cards, Spawn Action Figures, Pogs and Pokemon! Why take a chance? Fortunately, for me a light went on about then. I'd spent a lot of my life in retail: books, pets, electornics... and I was seeing some patterns emerge. I realized that too much of what I was dealing with was fad driven and though that, in and of itself was not necessarily a bad thing, there was a strong possibility that these things would quickly go the way of Cabbage Patch Kids, Power Rangers and Metallic Die-Cut covers, so I had better figure out what could take their spot and hopefully lay a foundatin for future growth.

So I took a tip mentioned to me years earlier which was, to succeed, look at what everyone else is doing and do the opposite. So I began identifying the strengths of my competition and deciding where I could compete and where I couldn't or didn't want to.

The first thing I noticed was that 4 local shops had shut down in the previous 18 months (3 that were part of multi-store chains) and 2 prominent behaviors of these shops were, Retailer Failure #4

  • Reliance on high priced collectibles sold as investments. In other words something akin to a pyramid scheme that needed a steady supply of folks constantly buying product not to use it but to hold and resell at a higher price later. Problem, wheat happens when the items don't increase in value, folks whose sole motivation was resale, stop buying, leaving you on the hook for non-returnable product preordered to maintain sales levels.

and Retailer Failure #5

  • Discounting. For most comic shops a 15-20% discount wasn't uncommon which meant they were actually giving away close to half of their gross profit. Once sales started to slow, they had no way to compensate for lost profits and instead of eliminating discounting, actually increased it in an attempt to pull customers from other stores. But to do that, they had to move to a 100% sell through model meaning that customers that didn't pull and hold would be unlikely to find anything new on the shelves past New Comic Day. Those retailers continued to eat their own tails until *poof* nothing was left.

Armed with this info, I decided that it was time to separate from the herd and start building my business on the aspects that excited me about it in the first place. Out went the Sports/Non Sports Cards, Gaming and figures were de-empasized and a slow but considered addition of small press comics and trade paperbacks including my first exposure to Manga through Dark Horse. Oh yeah, no more discounts.

Some folks left for discounts elsewhere but many returned as they saw our commitment to having copies on the shelf for them to browse before buying, even weeks after they shipped, as well as carrying books that their new shop couldn't be bothered to order and in the meantime I actually started making enough money to afford to help to get an occasional day off! Which brings us to Retailer Failure #6.

  • The start of most business ventures, are going to entail a honeymoon period, a period where 60+ hour work weeks are novel and exciting but the length of that honeymoon is almost always finite and seems to be in proportion to the amount of preparation excercised prior to start-up. As it becomes evident that there is more to the day to day operation of a comic shop, than sitting around reading comics moods change which affects shopping experiences. Often you will also see a shop being run by "employees" legal or otherwise as owners re-join the work force to cover living expenses and business shortfalls.

    Unfortunately businesses like this (as well as weekend/eBay warriors) tend to leech sales from the marketplace and as discussed, with a market that is as malnourished as this, it can prevent the professional stores from finding sufficient volume to make it worthwhile to develop a full service full line shop.

Over the last two years I've forced myself to hire 2 employees, move to a larger location and made a concerted effort to market and merchandise Comickaze as a full service and full line comic bookstore. The effort and expense has clearly paid off both financially and professionally as we posted our strongest sales year ever, were named San Diego's best Comic Shop for 2005, and routinely have customers referred to us not only from other area comic shops but from area book stores. I was told that when TokyoPop approached a Borders store last year in preparation to bring VIP's from Japan to see the TokyoPop offerings, they were told they'd be better off coming to Comickaze!

The last failure I want to address though certainly not the last that could be addressed, is Retailer Failure #7

  • Communication or lack of. Too many comic retailers act as if they exist in a vaccuum, behaving as if competing businesses are the enemy, unwilling to share information or resources. No co-op outreach advertising. No buying groups to share increased discounts on products and services. No way, no how. Not always but seemingly more often than not.

Ultimately communication is the biggest reason for my success so far and will likely continue to be the catalyst for future growth. In 1997 I was at a crossroads, I was engaged to be married, I was still working 7 days a week, my former business partner lost the condo I was living in and my landlord decided that they were going to move up the demolition of the building my shop was in to facilitate the chain drugstore that was to build on that spot despite the fact that the new store fronts we were supposed to be moved in to were not going to be available for over 6 months. Due to our incredibly cheap but month to month lease (gee, it seemed like such a great deal at the time!) I had 30 days to vacate. Homeless both personally and business wise!

These are the kinds of things that happen when you fail to have a plan and any one or two of these would generally be enough to knock an unprepared person out. Somehow I kept on my feet but realized that I just didn't have the knowledge base to turn things around so I was going to have to figure out something quickly or I was going to have to fold the tent and explore opportunities in the fast food industry.

Someone was looking out for me because as I was doing product searches on the internet, I came across an ad for an online message board community. Looking at it I realized this would be an excellent way for retailers from around the country to share info with each other in a controlled environment. Hopefully the geographic distances of the people involved would allw them to lose the fear that might exist in giving a nearby competitor a hand and The Comic Book Industry Alliance was formed. Not long after this, membership which had originally been restricted to retailers, was expanded to include creators, publishers, distributors and other folks employeed in industry supportive positions. Over the last eight years the resulting exchange of information between the 700+ members from all facets of the industry has been invaluable to me and feedback from other members suggests this holds true for many of them as well.

OK, we've gone through the areas I feel are both most egregious and easily addressable at each level of the Comic Industry food chain. Next Monday a final pass as we look at how each level would work, IF I WERE IN CHARGE...


  1. Hold on. Are you saying that Retailer Failure #5 does not apply to non-comic book items in regards to your approach to retail? I understand that the discounted or free (in some cases) DVDs are considered promotion - but aren't you just promoting to those who already shop at your store? Seems to me that the main goal of promotion is to entice new customers which would mean advertising the "sale" in some fashion (outside of the store) - which you may have done, I'm not clear on that. Just seems like you are discounting the item right out of the gate. Its not dead stock.

    I also read that you gave a 10% discount on pre booked DVDs... is this something that you do for your "pull" customers as well?

    I agree, in general with your Retailer Failure examples and your experience backs up your observations - but your DVD "discount" baffles me...

    Maybe I'm jumping the gun since you will further address the class this up coming Monday...

  2. Hi CBI, my comments on discounting do not apply to promotional discounting, they apply to full line or pull & hold discounting.

    I generally don't stock DVD's as they generally have a high acqusition cost and a low return on investment. However at times, we are expected to stock these things (like comic based movies) by current and potential customers (like moms going to the Weight Watchers next door) and I see it as an opportunity to pull some money from the Costco/WalMart/Blockbuster bucket and putting it back into the Comickae/Direct Market bucket.

    It also let's me use someone else's money to subsidize the purchase of the DVD (in this case) and gaurantee a 100% sell through.

    If I can guarantee that the sale is mine, rather than wherever the customer may notice the item first (which will almost always be mass market venues) AND I get to bank the money for a month or more before I have to pay for product, it can be worthwhile to offer a token discount.

    Once the preorder dealine passes, a discount is only available if the customer does something I need them to do, ie: buy more stuff. They can't just walk in and get a 20% discount, they need to buy other (and higher margin) items or items I'm motivated to be rid of and these are generally not items that they would have already bought at full price.

    For instance we had some cool Captain America Baseball jerseys that weren't moving at the $65 msrp or even at a clearance price of $45. I gave a copy of the DVD for free to the people who bought the last 2 at the full $65 price. Everybody won.

    Packaging Toys (again items I might not normally stock) and DVD's allows me to pull mass market sales as well as motivate current customers to buy from me instrad of wherever they see it first.

    We will post sales posters in our windows to pull in casual walk by traffic from the other businesses in our center.

    Does that clear it up a bit more?