Marvel Comics to Self-Distribute
In last week's column, I gave a very condensed version of how I viewed the decision by Marvel Comics to self-distribute their own publications during the late-1990's. Suffice it to say, the exercise was a disaster right from the beginning. Not only did the did the Heroes World Distributing company lack the infrastructure to ship Marvel's weekly sales volume, but the Heroes World management team failed miserably in the PR war to win the hearts and minds of comics retailers. In fact, rather than win over any converts to Marvel, the hassle of having to place two new comics orders each month (sometimes at a lower overall discount), plus paying freight costs on Heroes World shipments, pushed many comics retailers to the brink of closing their stores.
The factor that ultimately made quite a few comics retailers decide to leave the business entirely was the error rate at Heroes World, both in shipments, and billings. The word "fiasco" simply doesn't come close to describing the depth of the problem. The Marvel New York executive team became so distressed at the initial failures at Heroes World that they quickly transferred Marvel Direct Market Sales Manager, Matt Ragone, to the New Jersey Heroes World headquarters to personally intercede. Despite's Matt's prodigious managerial talents, however, the problems simply could not be solved. Just as a case in point, the first week that Heroes World exclusively shipped Marvel comics there were thousands of calls made to the New Jersey Heroes World headquarters to report problems. A new phone system had been installed in anticipation of this possibility, but it was somehow forgotten to ventilate the room where the phone switching equipment was stored. As a result, the internal heat generated by the new equipment caused the entire Heroes World phone system to shut down for three (?) days. Imagine being a comics retailer with no new Marvel Comics that week, irate fans screaming at you, and no way to reach anyone at Heroes World. The frustration and anger levels among comics retailers were as high as I've ever seen them during my 34-year tenure in the comics business. To this day, I still hear from former comics retailers who exited the business during this awful period who still harbor venomous thoughts toward everyone involved with Heroes World.
While Marvel's wretchedly bad decision to self-distribute was causing their entire business to implode, their actions also dealt a mortal blow to all of the smaller comics distributors. Without Marvel comics to distribute, all of the surviving Direct Market comics distributors suddenly found their overall sales volume reduced by 35%-40% (Marvel's market share), while their operating costs remained constant. In a business where even a single point of discount or volume could translate into huge differences in earnings, these massive losses in sales volume were simply not sustainable. Steve Geppi, owner of Diamond Comic Distributors responded to this threat to the survival of his business by entering into negotiations to become the exclusive distributor for all the other comics publishers. Geppi's only viable competition in this quest was Capital City Distributing, as only Diamond and Capital had the warehouses and other infrastructure in place at the time to distribute comics nationwide. While Steve was begging all the comics publishers to switch all of their distribution business exclusively over to his company, John Davis and Milton Griepp of Capital City were making the same pleas on the part of their organization.
It is at this point in time that I personally believe that the management at DC Comics recognized a golden opportunity. If you go waaaay back to the earliest columns in this telling of my personal view of the history of the Direct Market (archived at www.milehighcomics.com/tales/), you'll see where I explained how DC Comics was able to constrain the growth of Marvel Comics from 1958-1970 through the simple mechanism of owning the newsstand distribution company that Marvel relied upon to sell its comics. It was only when Marvel was finally able to break free of DC's restrictive distribution arrangement, in 1970, that they were able to finally increase their monthly title count, and ultimately win the market share battle in the comics market over DC. Aside from the folks in the Marvel management who set up the Heroes World deal, I do not believe that there was anyone in the comics world at the time who had any faith that the Marvel self-distribution would be anything but a disaster. That being the case, it didn't take a crystal ball to foresee a future in which Marvel would ultimately be forced to return the distribution of its products to the Direct Market distributors. What if, however, DC took advantage of Marvel's tactical blunder, and took control of the Direct Market distribution system in Marvel's absence? Wouldn't that strategic move, at least in some small measure, return to DC a powerful influence over Marvel's future?
To be continued...
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