TILTING AT WINDMILLS #303: Re-figuring the basics Part 3: distribution

Sponsored by Battle Quest Comics

By Brian Hibbs

So, Heidi asked me that for the third of the “New World Order for Retailers” columns that I cover the variety of brand-new distributors that are starting to spring up in the wake of Diamond’s collapse.  And there are quite a few.  The most visible might be “Philbo“, but there’s also “Power Pulp” and “Curator of Comics” and probably a few more that came into my inbox then almost immediately fell out.

There’s an issue however: I genuinely don’t want to yuck anybody’s yum (seriously!), but most of these new businesses are trying to take pathways that are essentially antithetical to retailers actually making any profit on the sale of comics, and to make this point properly understandable, I must go fairly deep on several subjects.  So… I’ve been slow to start writing this one.

First off, let’s begin with cursing Diamond for what it ended as – poor inventory control and record keeping, which ultimately led “Sparkle Pop”‘s Diamond2 iteration to selling material that had no or at least uncertain title upon; terrible communication which cause massive amounts of confusion and strife, and so so so much extra work and losses for retailers and publishers alike.  Diamond should be very rightly castigated for all of this, and probably much more.  And yet, it grows gravely tiresome listening to folks with little day-by-day, week-by-week stake or interaction with what Diamond was and did cheer on the demise of what was an utterly central pillar of not only what the Direct Market was, but all of the things that it allowed the primarily mom-and-pop Direct Market stores to build and accrete over the years.

Here’s the thing you really need to understand: the very model of non-returnable periodical comics that are (relatively) low priced, and which also allows serializations with sub-2000 copy print runs to have national (!) distribution, was really only even slightly economically viable overall because of  the profit from the best-selling comics that flow through that same system.  

Generally speaking, distribution works on taking “x%” of the cover price — Diamond would buy for, let’s say, 55 or 60% from most vendors, and then resell at 40-50% to the retailers.  I believe that the most typical kind of split for the smaller presses was 60% to Diamond, 45% to retailers, but if you’re selling only 800 copies of your $4.99 comic, and Diamond is taking 15%, then their gross income is like all of $600.  From that small amount of money, they have to have a workforce who is handling the initial pick-and-pack for some 3500 accounts (only ~500 of which who are actually receiving that specific item, in the pick line), you have to handle invoicing and billing, not to mention the time and labor to build the data into their own ordering systems (and layout of Previews).  You also have to pay the marginal costs of warehouse rent and utilities (not trivial) – you add all of that together, and it would seem pretty obvious to this observer that the bottom third, to maybe the bottom half of comics, that were moving through Diamond’s systems weren’t making a penny in profit!

Now this wasn’t too big of a problem, I suppose, when you had 100% of the volume and velocity of all periodical comics flowing through.  The profit you make from the best-sellers (from Marvel, DC, Image, and the rest) really covered for a ton of the losses coming from the poorer sellers.  But once DC pulled themselves out of Diamond, that was a significant and mighty Jenga block to remove from the underlying structure that was supporting the industry.  And once Marvel followed suit, then the math became completely impossible for Diamond.  Losing ~70% of your volume?  That’s simply not sustainable in any fashion to viably distribute periodical comics.

“We got rid of a monopoly, hurray!” declared people who don’t actually understand the underlying math.  Because without that monopoly, most creators and publishers are ending up with less access to the marketplace – and all we actually did was replace one monopoly with two different ones.  At the moment right now I still have zero choice where I can viably purchase DC or Image periodicals other than Lunar.  Or Marvel, Dark Horse, IDW or Boom periodicals other than Penguin Random House.  That PRH and Lunar “compete” in the overall “distribution of periodicals” means exactly nothing if we retailers don’t have freedom of movement between distributors, and the ability to leverage competition in order to get better deals.

In fact, I think it actually means less than nothing, because it did nothing whatsoever to help with margins for most retailers – costs have basically done nothing but increase for most of us since DC left Diamond in 2020; both from the direct changes in discount calculation, as well as the substantial indirect costs involved in needing to navigate parallel, but mostly un-interchangeable, distribution systems.

That’s so much time, and energy, I can barely begin to tell you.  Because the other thing that Diamond did, besides enable the bottom third or so of the market to even exist, was to smooth and organize the data that was coming in to make it significantly easier to both order, as well as market (through tools like the all-publishers Previews magazine), comics products.  I’m now losing, quite literally, at least a full day’s work each and every month to now having to fix, relink, reorganize and rename data just so I can reliably do the most basic part of my job: ordering comics.

Here is what I believe is a reality for a lot of stores: while retailing comics can supply a reasonable enough living, it is generally not a path to vast riches for most stores.  As near as I can tell, the overwhelming majority of stores are essentially “mom & pop affairs” who have incredibly small staffs that are backing up the owner/operator.  Most of those owners are working very long hours to keep on top of the increasing mechanical complexities of retailing comics, but can’t simply scale up staff to compensate, because our margins have been simultaneously eroded.  While most stores are likely economically sound, I believe that it is by a smaller margin than it has ever been before now.

Wage pressure is a very real thing.  Especially in a “big city” like San Francisco.  Our local minimum wage is now $19.18.  And we’re certainly not a “minimum” wage job – my lowest employee is currently making $21.50, and after I have to pay the matching taxes and stuff that’s nearly $25/hr.  Add in rent and utilities and miscellaneous operating expenses and we average around $60/hour of operating expenses.  If we’re open 7 hours on an average day that’s about $420 a day just to pay bills.  And, of course, the product we’re selling is, on average something like half off the cover price, which means we have to sell about $840/day just to break even.  Not a single penny of profit yet at that point.

Please understand that while certainly there are many days we are able to meet or beat $2000 in a sales day, there are also days we absolutely only gross three or four hundred bucks.  This is the nature of retail.  And I know that this isn’t just me: at least in my own micro-environment of San Francisco proper, when I opened in 1989 we had twenty-four comic book stores, and now we’re down to just eight in 2025.  I’ve spent thirty-six years keeping my head above water – just like most of my local peers — but running a retail store in meat space isn’t, even slightly, a trivial matter, and we, by and large, spend much of our year just barely staying above water.

Now, similar calculations can get made when the ordering process happens – again among the many things that Diamond brought to the industry was consolidation and concentration of time involved for retailers for ordering, tracking orders, receiving packages, having to potentially handle damages, shortages and returns, paying bills and so on.  Simply placing an order has costs!  When you add up all of the various steps involved, it is essentially impossible to make a profit for our operation, at least, until we are generating at least enough money to pay for all of the steps of labor involved from stem to stern.  Even removing general operational costs it still means that, minimally, orders placed and being received by my store that are below at least $50 pretty much automatically lose money.  This is because from the initial order through to the paying for the product and all of the steps in between invariably take at least an hour, all told.

This assumes “industry standards” are being met – 50% off, free freight, normal payment terms.  In that circumstance, a $50 order can generate $25 of “profit”.  But change any of those inputs, and the math gets worse.  And here is where we start running into heinous issues with “small press only” distributors.  Most of them are offering just 40% off, and charging non-optimized freight costs, as well as making us pay in advance of receipt! Suddenly, that $50 order is only generating $15 (or less) of “profit” – and tying up money for months to boot. So, thus, to generate enough money to at least pay for labor (no rent, no taxes, no utilities yet), my “break even” point shifts from a $50 order to at least $75.  This is untenable towards the goals of staying in business.

This is probably an overly broad statement, but generally speaking creators/publishers who are only able to land at a “small press” distributor are ones who are dealing in bespoke quantities to begin with, the kinds of books that are generally “special order only” at the vast majority of stores.  There are multiple periodical-focused publishers right now that I absolutely carried for special orders before the Diamond collapse – some who have been in business 20-30 years, even! – but who sell such a specialized product that there’s no real growth opportunity, where the sole reason it made sense to stock their works for the 1-2 interested customers was because it was truly incidental additional labor to the fully-profitable ordering from the largest vendors.  But going out of my way to ordering them from a distinct distributor that doesn’t have twenty other publishers that have broadly commercial prospects?  (Or worse yet, directly from the publisher itself?)  That almost never is going to make sense as a regular, profitable action in the normal course of business.

Like I said at the top of this piece, I sure don’t want to yuck anyone’s yum.  I love comics too much for that! But without either sheer margin to allow for profit, or a huge amount of velocity and volume, adding new distribution for periodicals, at under the minimum understood requirements for retailers just is never going to work out.  The math doesn’t math.  It absolutely takes unified and national distribution to have a chance for periodical publishing to be even theoretically profitable for the majority of retailers.

Sorry.

Brian Hibbs has owned and operated Comix Experience in San Francisco since 1989, was a founding member of the Board of Directors of ComicsPRO, has sat on the Board of the Comic Book Legal Defense Fund, and has been an Eisner Award judge. Feel free to e-mail him with any comments. You can purchase the two collections of Tilting at Windmills (originally serialized in Comics Retailer magazine) published by IDW Publishing. You can also find an archive of pre-CBR installments right here.

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Sponsored by Battle Quest Comics