Comic Shops and COVID-19: Diamond, the Direct Market, and the Way it Was

There's no denying that the coronavirus pandemic has devastated nearly every aspect of [...]

By Nicole Drum

There's no denying that the coronavirus pandemic has devastated nearly every aspect of entertainment. As COVID-19 has spread across both the country and the world, we've seen film and television productions shut down indefinitely, movie theaters close, and disruption to other businesses, including restaurants and retail, as well. One area that has been particularly impacted by the pandemic is the comic book industry, specifically local comic book stores. As the pandemic continues, most stores are closed nationwide and even those that remain open find themselves without new titles and shipments. The result is an industry trapped in limbo for more than two months and while things are beginning to open up again, the impact of the pandemic on the comic book industry is one that will continue for years, lasting long beyond the temporary shutdown.

While there's been quite a few stories delving into what's going on on the wholesale end of the comics industry, specifically in terms of the publication and distribution of new products, less attention has been paid to the details of what the average comic book retailer is experiencing in these trying times. In order to help our readers better understand the reality facing their local comic book shop, we're taking a look at the current state of the comics industry from the perspective of local retailers. In order to do that, we spoke with several comic book shops across the country to get their input. Now, we're publishing a multi-part series to inform readers how things worked before the coronavirus pandemic, the current state of the comics industry and latest developments, the current impact of the coronavirus pandemic on retailers, and a look at the way forward and how retailers see the future -- as well as some spotlights on novel ways shops are staying in business and continuing to serve their communities in trying times.

In order to best understand the impact the pandemic has had on comic book shops, we need to take a look at the way things were before this new set of challenges. Even before the pandemic disrupted the supply chain and forced stores to close, retailers were already facing challenges that we need to examine in order to understand where things are now. To do so, we spoke with various comic book shops across the United States and asked about the challenges of their business prior to the pandemic as well as how they've been impacted. First up is an explanation of the way it was for comics retailers prior to the pandemic. With the direct market and comics being such a unique industry, a bit of explanation is required to get the full picture on how things worked before the pandemic.

Read on for more.

What is Diamond Comic Distributors?

Before we get into any discussion of what "normal" looked like for comic book retailers prior to the pandemic, it's important to first introduce something that will come up in a lot of our coverage of the industry and that's Diamond Comic Distributors. Diamond's shutdown in March, while in response to the coronavirus pandemic, itself shutdown the comics direct market, making it impossible for even shops that remained open to get new product for customers. It's a move that highlights just how fragile the direct market truly is and how an event such as a pandemic can derail the whole system.

Prior to the 1970s, comic books were primarily sold much the same way magazines and other periodicals were and were distributed through newsstands, pharmacies, grocery stores, and even gas stations and candy stores. In 1972, however, comic book convention organizer Phil Seuling developed a model referred to as the "direct market" that bypassed those traditional magazine and newspaper distributors. The shift offered those sellings comic books a more diverse offering of content and also made a major change, business-wise. Prior to the direct market, unsold issues were returnable, but under Seuling's system, unsold merchandise became unreturnable.

That model expanded through the 1980s, with several distribution companies joining Seuling's Sea Gate Distributors -- including Diamond Comic Distributors in 1982. As the popularity of comics grew and, thus, the rapid growth of the direct market, so did the size and number of distributors. However, rapid growth isn't indefinitely sustainable and by the mid-1990s the market had contracted leading to the closures of shops as well as the consolidation of distributors eventually leaving only one: Diamond.

Founded in 1982 by Baltimore-based comics retailer Steve Geppi, Diamond Comic Distributors is the primary distributor serving comics retailers both in North America and worldwide. The company distributes not just comic books and graphic novels, but other pop culture offerings such as toys, games and apparel to the direct market and has exclusive distribution arrangements with nearly all of the major U.S. comic book publishers. This includes DC Comics, Marvel Comics, IDW Publishing, Image, Dark Horse Comics, and more. Diamond is also the parent company of Alliance Game Distributors, the largest distributor of tabletop games in North America.

By 1997, Diamond's grip on the comic book industry caught the attention of the federal government. With Diamond having absorbed a large number of its competitors, the company came under suspicion of being a monopoly, prompting the Department of Justice to launch an antitrust investigation into Diamond. The investigation went on for three years and was closed in 2000 with no further action deemed necessary. It was a loophole that prevented further action from the DOJ: because Diamond had competitors in the much larger book market, DOJ determined Diamond didn't maintain a monopoly in the more specific comic book market. You can read more about the investigation here.

On March 23, 2020, it was announced that Diamond would cease distribution to retail shops until further notice due to the pandemic and instructed printers to not send any additional shipments to them at this time. As of the time of this writing, it's been announced that Diamond plans to resume distribution on May 20th.

Local Comic Book Shops: The Basics

Now that we have a basic understanding of what Diamond Distributors is, it's important to understand the basics of what your local retailer does. All of the comic book shops we spoke with across the United States indicated that they got the vast majority of their comics and other products via Diamond.

Even shops that do try to diversify their offerings or appeal to customers with other offerings such as coffee, collectibles, board games, etc, are still required to go through Diamond for their new comics. One shop in particular, Ash Ave Comics in Tempe, AZ, noted that they also carried a lot of small press titles, but almost everything else came through Diamond. "We also sell a lot of small press titles, so I'd make regular orders through Hollo Press, TKO, Floating World, and Shortbox," Drew Sullivan, Ash Ave Comics told us. "But the vast majority of our new releases and reorders were through Diamond."

As with any business, inventory is an important part of comics retail, but when it comes to comics, retailers are the most vulnerable member of the supply chain thanks to the non-returnability of product. Simply put, comic book shops cannot return any inventory. If a shop owner orders a certain amount of a title anticipating its popularity with customers, but it doesn't end up selling the shop is stuck with the product. As not every comic sells out on retailer shelves and can't be sent back, we also asked shops what became of unsold product. Almost universally, shops told us that unsold issues ended up as backstock or put up on online store fronts. A few shops indicated that they would end up putting back issues on sale or clearance -- often at a loss for the store.

Business as Usual

Before the pandemic, most shops had a similar regular flow to their weeks. New books arrived on Tuesdays and were processed for sale on Wednesday, known to fans as New Comic Book Day. Wednesdays were the biggest and busiest day for retailers. After Wednesdays, Saturdays also tend to be a busy day for comic shops much in the way they are for American retail in general. Crush Comics in Castro Valley, CA indicating that Wednesdays accounted for 30 percent of their weekly business, but Saturdays were a close second. It's a sentiment that other shops echoed.

"We see a lot of the same people every Wednesday so it's fun to see everyone," Patrick Zambrano, owner of Z's Comic Lair in Nashville, TN said.

For the shops that we spoke with, processing those new comics also included filling customer's pull lists. For those unfamiliar, a pull list is a form of subscription system offered by comic book retailers that allows the customer to ensure that they get the specific titles they want each week while also helping the comic book store more accurately gauge how many copies of each title they should order -- a title that is requested by a number of customers' pull lists could be a title that would also sell well with more casual, walk-in customers. This makes the pull list an important service not just for customers, but for retailers as well though it can be a double-edged sword. If a pull list subscriber opts not to fulfill their obligation to buy the books they've requested, the shop is still on the hook for that unsold product thanks to non-returnability.

It is also important to understand that preparing each week for New Comic Book Day is on top of all of the other duties and obligations retailers deal with on a day to day basis. Shops still have to deal with the standard work of retail including regular traffic and walk-in customers, general shop upkeep, sending out their own mail orders (if that's a service that they offer), and more. Dennis Barger of Wonderworld Comics in Southgate, Michigan in particular noted that his shop also had a process for calling in damages, shipping their own mail orders on Wednesdays, and receiving replacement orders on Thursdays.

Pre-Pandemic Challenges

Retailers also had their own sets of challenges prior to the pandemic upending business as usual. A common issue that shops indicated they faced was anticipating demand -- both in ordering enough of a popular title to meet customer request and ordering too many of titles that perhaps didn't sell so well, something that could be tricky given the length of time between order and receipt of new titles. This in particular was a significant problem for comic book shops when one considers the non-returnability issue. With all of the factors involved -- having to predict demand, the length of time between solicitation, order, and actual delivery -- every order becomes a high risk gamble, one that can be unsustainable for small or struggling shops.

"The biggest challenge we face is the amount of books we don't sell, that we are, more or less, stuck with," Zambrano said. "With Diamond, we order books up to two months in advance. So, a title or story arc might look and sound cool, but if that issue doesn't sell, we are stuck with it. We take a lot of the risk on if a title is successful, and the majority of titles don't have any returnability."

Other shops indicated that their biggest challenge was the actual receipt of their products. While Diamond is the only source for product for comic book shops, they don't have a great reputation when it comes to the actual delivery of products. This is compounded by the fact that, due to their grip on the industry, they cannot be held accountable for issues such as missing or damaged product by retailers who would in any other area of retail take their business elsewhere.

"Receiving our comics was our biggest challenge," Mary Jo Bammel, owner of Villainous Grounds in Perryville, Missouri said. "In the four plus years we have been open we have received two orders that were correct and in good shape. On average we are either missing 10 or more comics and we usually have anywhere from 10 to an entire box of comics damaged. By the time we have received our comics, many of them are already out of print. That makes for very unhappy customers -- they have to wait months for a second printing or travel a great distance to look for the title elsewhere."

As you can see, the direct market model was already problematic and put retailers in a complicated position before the global pandemic hit and further complicated everything. Issues such as a functional monopoly in terms of comics distribution, non-returnability issues, and a general lack of accountability gave retailers the short end of the stick in "normal" times. With a system not prepared for even a small disruption to its flawed status quo, a global pandemic sent things into a state of panic and chaos that has threatened the continued existence of a number of retailers -- as well as the long term state of the comics industry on the whole.

In the next article in this series, we'll take a look at the timeline of developments within the comics industry since the onset of the coronavirus pandemic.

Photo By Douglas Graham/Roll Call/Getty Images.

Trending Now: