In Part 2 of our two part interview, we continued our discussion with DC Vice President -- Direct Sales Bob Wayne on DC's sell-outs, weekly order cut-offs, and including reorders in retailer discounts.
What happened this month? We went back and tracked the number of titles that were sold out, and August just went crazy. I counted 12 DC books that sold out, and the largest number we found for any other month in the last year was three. What happened in August?
I think August is when a lot of changes we've done editorially in the DC Universe hit critical mass. I also think that we've continued to have some other successes, in particular the return of Planetary from WildStorm, the launch of Arrowsmith, Y, and Fables from Vertigo, the build-up to Sandman: Endless Nights. I also think we had a lot of momentum we picked up just from talking to consumers at Comicon International in San Diego with our booth there, and with the same type of interaction with fans at Wizard World Chicago. I think everything that's changed as far as the quality of the books, and the retailers' expectations of the books, and the fans' expectations of the books has all kind of come to a critical point here at the end of the summer and going into the fall. And with Sandman: Endless Nights coming up and with at least two issues of JLA Avengers coming up that we're in charge of, we're very enthusiastic looking into September and October and beyond.
That's on the demand side of the equation, what about the supply side? Do you have any vibes at all that sell throughs in retail stores were a little soft in May and June? Maybe retailers were cutting back a little in their August orders?
I don't have anything across the board on that. Usually there are some parts of the country where things are a little bit softer than people expect. But I'm not seeing any substantial softening that took place in that month, and certainly some of the books that started out strong for us were coming out during that time. So, nope.
We have a couple of questions on retailers and how they can manage these supply/demand issues. DC has a final order cut-off date when retailers can order and still get books in the initial run. Is that some weeks after the Previews deadline?
It's several weeks, in most cases, after that. We have a rolling cut-off deadline. Retailers have a certain deadline to get their orders in to Diamond, and then there's a deadline that's assigned for each title that to that point we'll feel very confident that any increase in orders can be added to the initial order and arrive in stores on the same date as the initial orders. And then beyond that date, then it becomes a matter of trying to make it to the next possible weekly shipment, or the retailer always has the option of having it direct shipped to the store.
Are they ordering out of inventory, or are they ordering before the print run's set?
There are scenarios for both. Orders that retailers place before the cut off date that's in their Diamond order form are put together by Diamond and given to us, and I have those numbers available to me at the time that I'm doing the print runs to go to our printers. I have the information available to me, so I know what the initial orders were, and I know what additional orders Diamond has received since the initial orders were placed. It's another column on my worksheet. The last column on this is the final, which is the total of those two numbers from the day we do the worksheet.
Those final cut-offs for ordering DCs, is that the same number of weeks in advance of street date with DC as with Marvel, more, or less?
I believe that we have a longer lead time than Marvel at this point. I believe that Marvel is turning their stuff around on about a week's tighter schedule, but I don't have an exact comparison here to verify the exact number of days. But I do feel very comfortable that right now they are doing it in fewer days than we are.
Your titles seem to be pretty active right now, and retailers seem to be underestimating their demand, and every day gives them more information. Why doesn't DC work on that shorter turnaround?
We're discussing that with our printer right now, and with Diamond, but I don't have anything yet to announce for any possible change.
Another issue that effects how retailers order and reorder is impact on discount. Why doesn't DC count reorders in its discount calculations?
Right now we don't count reorders in our discount calculations because we want to encourage retailers to order in what has been the most efficient manner for DC and Diamond to receive orders, which is to have them all come in at one time so that they can be processed in a batch rather than processed continuously. I think at this point we have enough retailers who are increasing their orders on a number of our titles on an ongoing basis that a lot of retailers have de facto started changing and upping their orders with us on a weekly basis. At this point we're still sticking with having the discount established off of the initial orders. But we have plenty of feedback from retailers, many of whom would like us to see if there's another way that we could work that out. So we're looking at that as well.
You said that you handle it that way for Diamond's and DC's convenience. Would you agree that it's better for retailers to have the maximum amount of information, which would involve perhaps seeing another few weeks of sales before finalizing their orders? It seems like good supply chain management.
One of the reasons why there is a longer time for DC than for some of the other publishers on this is that we actually allow Diamond to have the books in their hands for a longer period of time than some of the other publishers, which allows us the luxury of making sure that a lot of mistakes that could have happened (if things were shipped to the wrong distribution center or labeled for the wrong distribution center), we can fix invisibly behind the scenes. So we don't end up with a situation where one distribution center doesn't have copies available to put out on the week, and one part of the country then doesn't have the book available until a week later. So one of the most significant differences is that we have done that in order to cut dramatically the number of problems that can happen in the pipeline, and to make those invisible. Certainly if we were to cut the time between the order cutoff and when the books would arrive in store, one of the possible results could be a theoretical increase in the number of mistakes that happen within the system.
Is there also a connection there with how DC manages its channel conflict issues? If you're trying to give the direct market more time before the other channels get books, that actually would be in the other direction, right?
Right. If the direct market was getting books even quicker than they are now from when they come off the presses at Quebecor, that would just be a longer lead time in most cases than the books going through the other distribution channels. But that's really already in place, so having them move quicker through Diamond's hands would probably be a wash on that, because we have to change some of our other timing and deadlines around anyway in order to meet that. I don't think a change would have a negative impact on the advantage that the direct market retailers currently enjoy on almost every market.
You observed that more retailers are adjusting their orders between the Previews deadline and the final order cut off. Do you attribute that to the fact that they are looking at orders during that period? That they're building systems to look at orders weekly because of the change in ordering from Marvel, and they're looking at all the publishers instead of just Marvel?It's difficult for me to assess the impact of what one publisher's philosophy might do to the overall ordering decisions people make. I think that there's also just a rolling level of promotional effort that we put in on driving the sell-through on some of the titles that starts to impact people at that point. In particular, the DC Horizon publication that we've been doing for about a year, which has previews of actual story pages and goes out in very large quantities to the retailers, that a number of consumers now are seeing enough of a taste of a new project before publication that they're then increasing their willingness to sample the book. And if they're communicating that to their retailers, I think it also then helps the retailers know that they ought to get some extra copies in of that book. There's a lot of efforts and a lot of buzz on things, but I think all those tools also just generate that attention. There are also books, Batman for example, where we continue to have increases in the orders of Batman #619, the final issue by Jim Lee and Jeff Loeb and Scott Williams, and we had the largest increases between the initial orders and the order cutoff that we had seen on any Batman issue in months. I know we made that particular issue a challenge for retailers to estimate what their needs will be, but I did not expect to have that many numbers shifting at the last minute. And I still have plenty of copies.