Monday, April 28, 2008

Diamond Comics and Unintended Consequences.

I just sent off my April Diamond orders, for product arriving in June.

It was 15% higher than the last few months.

I'll explain why. It's great example of the Law of Unintended Consequences.

A few years ago, Diamond offered us fixed discounts; Marvel, and DC, had their own discount levels and all the rest of the publishers fit into an overall discount level.

Marvel's medium discount was easy to reach. DC's was a bit harder, but not too hard. The next levels up, which represented about 3% to 2.5% respectively, were a bit more difficult. Marvel's next level, in fact, was so much higher I wouldn't even try.

A quirk of the ordering discount system is that it only counted preorders -- that is, orders in advance done all on the ordering form. Anything else -- reorders, bumped up orders -- weren't counted.

But I had arrived at a 'Just in Time' method of retail many years ago, because of my experience of almost being drowned by a deluge of sports cards that were late and no longer salable; and a couple of years later, a deluge of comics that were late and no longer salable.

Not accepting shipment of them isn't an option, especially in comics where there is a de facto monopoly. Burn your bridges with Diamond, and you're gone. Nor do I really want to burn my bridges with the wholesalers in games, cards and books, some of whom I've had good relationships with for years and years.

In exchange for this safety valve, I probably pay a couple percentage points more in cost of goods, and the equivalent of another couple of percentage points in postage.

I've played with this scenario over and over again. Not doing direct ship reorders each week; or bumping up my preorders; or doing a reorder every other week (my current budgetary mode.) But, ultimately, I prefer getting the product faster. I prefer being able to tell my customers, "I'll have it for you by Thursday" and then seeing the look of surprise in their eyes when I actually do it.

Here's where it gets tricky. DC has always had an excellent back catalog of graphic novels. It was usually possible for me to include enough of these in my preorders to qualify for the next level of discounts. (Sometimes I'd end up with multiple copies, but they always ended up selling.) Like I said, I didn't even try for the next discount level with Marvel. (Who, strangely, had a pretty bad back catalog of graphic novels.) As a result, I was getting a couple of extra points from DC than I was from Marvel.

Then Marvel did something unexpected. It more or less opted out of the structure created by Diamond, and said; "Never mind -- from now on, your discount will be determined by your overall purchases over the course of a year -- preorders, advance reorders, and reorders alike."

This didn't help me at first -- like I said, their level was so much higher than DC's that I didn't really try. But part of their new deal was that I could actually lower my comic levels up until 2 weeks before arrival, or increase. And most often, I increased.

A strange thing started happening. Marvel got better at creating a backlog of good graphic novels, and -- this is most important -- they started actually rewarding me for making reorders on their comics. My discount level started to rise without me really paying much attention.

DC meanwhile, froze their discount level at a fairly high level.

Over the last three years, I've been rewarded for making higher orders from Marvel, and haven't been penalized in the least for making smaller orders from DC. As a result, for instance, I've made all my graphic novel reorders on the weekly ship, instead of in advance.

This week, DC finally announced their new discount levels. And they are considerably higher than I've been ordering. The new levels count reorders, and they will have to total all those up, so I'll have to wait until next week to find out where I stand. It's going to be close, but I think I'm going to fall back to the medium level, effectively losing 3.5% discount. I knew this was a danger, but as month after month, year after year passed with no penalty, I started to trend toward lower orders from DC. It wasn't intentional.

The one saving grace is that their rolling discount will be based on a rolling 6 month average rather than a rolling 12 month average like Marvel, so I can correct the problem fairly quickly.

This month, for the first time in several years, I was incentivized to make higher orders from DC.

So the two companies have flip flopped. I'm now a full 4% better terms with Marvel than I am with DC.

Next shoe to drop; the overall discount level from Diamond. There I believe my reorders will be enough to keep my level about the same.

This is all in preparation for the new Point of Sale system Diamond will -- supposedly, eventually -- offer us. It's looking as though this is the year I'm going to be dragged into making much needed upgrades in my technology. Time for a bigger and deeper internet presence. More on that later.

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