Flawed Diamond

Several weeks ago we asked Diamond Book Distributors for something pretty simple: tell us what our account balance is. We knew our balance was in the red. We wanted to know how much so we could pay it off and stop treating it like an amorphous unknown looming future expense.

It’s something we could likely reconstruct on our end, but the process would be long and complicated and still a bit uncertain as to how to proceed with the pay-off.

They couldn’t, or perhaps wouldn’t, tell us. We asked them again each week that followed, and got no response at all. That’s pretty disturbing to us, but even setting that aside, we have to take all this as a sign that we’re not in the kind of partnership relationship with Diamond that we need to be in to stay in business with them.

So we’re not staying in business with them.

We know this might leave a few comic-store owners who have been expecting to order the upcoming Atomic Robo RPG through Diamond. We’re very sympathetic about that concern and will do whatever we can to make it possible for those stores to get the game through game distribution sources like ACD, Indie Press Revolution, Alliance, and others. If those sources fail, we’re happy to take orders directly, too. If you’re an affected store, please drop us a line and we’ll personally take time to find a solution that works for you.

If you’re a patron of one of those comic book stores, make sure they know they might need to get a different supplier for the game, and point them our way (and to this post specifically). Naturally we don’t want you to get stranded, either!

THE DETAILS

So how’d we get here? How’d our (undetermined) balance with Diamond get into the red?

Well: Fiction. The sales pattern for every book we’ve put out through them has gone like this. We start with a modest, few-hundred copies order (shipped to them, held consignment style), which they tend to sell pretty well in the first month or so, with the numbers rapidly tapering off afterwards. During the taper-off period, Diamond pays us for what’s sold, according to the terms of the deal. Diamond sells new titles and special-discount titles to stores with an incentive discount, basically 2.5% off retail (so at 37.5% of MSRP instead of 40%, the standard). So our $15 fiction titles have been going into retail stores via Diamond at either $6/unit or $5.625/unit (Diamond charges the store more than that, of course; that’s their cost).

Lots of the early sales end up at the incentive discount rate. That’s all well & good and as expected. And like we said, they paid us in the after the agreed-upon period passed.

But that’s not where the sales pattern ends. After tapering off for a while, the parade of returns commences. Very consistently, with nearly every title, once we get a title being a year or more in the wild via Diamond, the long tail pretty much vanishes into the hungry maw of returns. Most of our oldest titles (keeping in mind we’re largely still at the less than two year point here) have had just shy of their past year of sales through Diamond erased by returns.

At least, that’s as near as we can tell; we’ve done what we can to track how these things go, but the way Diamond reports on sales and returns is… well, a bit arcane. Which is why we were figuring they’d have a better picture of the account balance than us.

A return carries more cost than simply covering the refund amount. When Diamond processes a return, they charge us 5% of the total retail of the returns as part of taking the book back into stock and refunding their customer. On our $15 fiction titles, that’s 75 cents per return… and it doesn’t matter if the title was sold at the incentive discount rate of $5.625 or the standard of $6, since it’s just flat 5% on the MSRP. So in addition to supporting the $6 refund per title (which in an incentive case already carries a cost of $0.375/unit, since we were paid $5.625 but the return value is $6).

So the cost to us to fail to sell a book through Diamond is between $0.75 and $1.125, on top of reversing the $6 we were previously paid or credited for the initial sale of the returnable item. Relative to that amount, $0.75 is 12.5%, so we have to look at Diamond as a situation where every sale carries a risk of not only not being a sale, but costing us 12-19% of the value of the sale if it doesn’t work out for the retailer.

To be clear, from our perspective, Diamond isn’t to blame for the fact that the books get returned. We’ve entered into the fiction market with a clear-eyed understanding that our stuff is pretty “fringey” — retro-pulp fiction that ties into an RPG isn’t exactly topping the bestseller lists.

The problem is more in how all this stuff adds up, bit by bit, return by return, creating more debt for us that we have to keep in mind and account for until, at *some* point in the future, it comes due.

The fact that Diamond both can’t tell us what that amount is right now, and appears to be ignoring our requests to get that info and pay the balance off, combines with this other stuff to make it a bad investment to continue doing business with them. Too much risk and not enough reward.

From our perspective, being able to tell your suppliers what they owe you (or what you owe them) is pretty much the central, primary job of any distributor as far as the supply side goes. The fact that Diamond can’t or won’t give this to us in a multi-week timeframe signals to us that we can’t trust their business.

So given that, our choice was pretty clear.

WHERE RETAILERS CAN STILL GET OUR STUFF

We’re distributed by a number of companies specializing in selling games to retail stores. Here are a few (apologies for any omissions).

  • ACD
  • Indie Press Revolution (IPR)
  • Alliance Game Distributors (AGD)
  • Peachstate Hobby Distribution (PHD)
  • Canada: Lion Rampant
  • UK: Esdevium
  • Germany: Ulisses Spiele

If you need help making contact with any of the above, please drop us a line at feedback@evilhat.com

WHERE FANS CAN STILL GET OUR STUFF

  • Everywhere you already can.

Bottom line for you, nothing’s changing! Dropping Diamond only means our stuff won’t have that path to get into big and small bookstores that primarily deal in fiction, not games. Previously we haven’t sold any game titles through them at all, so as far as changing what’s gone before it’s only relevant to copies of the novels that were showing up in those places.

HOW THIS AFFECTS THE ATOMIC ROBO RPG PREORDER

Hopefully very little. As noted above, there are many other ways for a store to get our games. This decision only means one route is lost, albeit maybe one of the more convenient ones for comic book stores. But at the end of the day, when a game retailer wants to sell comic books they have to get a comics distributor account to order them, so we don’t think it’s too onerous to ask that comics stores do the same where games are concerned. :)

If you have any questions about this, please do let us know. We love answering questions, especially from our fans, customers, and retailers.