Pricing Recent Back Issues is so Difficult

In my last installment of this column, when discussing a serious drawback of the new Official Overstreet Comic Book Price Guide, I made mention of the fact that I believe that today's market for recent back issue comics is completely chaotic. I believe this has resulted from the evolution of a back issue comics retailing system which no longer can economically handle the consequences of declining individual title demand function. This becomes an even greater problem when combined with rapidly increasing overall demand for back issues. If what that concept seems somewhat confusing to you (as well it should...), let me explain what my concept means by telling you all about how I came within a tiny margin of going bankrupt in 1996.

Simply put, I almost went broke because too many comics had been published. My primary occupation is selling inexpensive back issues through the mail. I built this business over twenty years from a tiny operation which Richard Alf was running out of two rooms in an old house, into a fully-integrated company with over 5 million back issues, stored in a 22,000 square foot warehouse. While this sounds like a success story, the problem I ran into during the mid-1990's was that each month more books were being published. It doesn't take a huge amount of reasoning to recognize that the number of items I was required to keep in stock was expanding very rapidly. In fact, during certain months during the early 1990's, over 500 new comics were being published each month. Trying to keep at least a couple of copies of each of these new back issues in stock turned into a total logistics nightmare. Especially considering the extreme volatility of the back issue market during that period of time.

The situation I was facing in 1996 was that the printed quarterly catalog of back issues that was the backbone of my entire mail order business became an exercise in futility. While we did a pretty good job of adding the new titles being published each month into the catalog, the number of actual copies we had in stock to back up these new listings were very low. As a result, we found our out-of-stock ratio climbing from approximately 20% in 1990, to over 50% by mid-1996. When you're forced to return over half of the gross revenue that your catalog is generating because you simply can't fill the orders, you're in big trouble. In the end, it was only the creation of the Internet which saved us. By compiling a massive online database which contained all possible titles, but then only accepting orders for those issues for which we actually had copies in stock, were we finally able to reduce our operating costs enough to focus our energy on increasing our available inventory. Increasing our inventory gradually increased our orders, which in the end, allowed us to slowly go from the edge of financial death, to today's robust vitality.

In many regards, most comics retailers have gone through the same trials as ours during the past 15 years. Selling back issues has become a real nightmare, as no matter how many issues you keep in stock, consumers almost always seem to want the issues you're missing. Retailer frustration with this inability to meet consumer demand had led a great many of them to stop carrying back issue comics entirely, choosing instead to dump their overstock at very low prices. This has led to an incredible price dichotomy in the back issue comics marketplace. While consumers can find huge numbers of random selections of back issues for $1 or less at many comics conventions, the steep operating costs of the database-driven back issue providers require them to often charge a premium over original cover prices.

It was this very factor that led me to first enter into a dialog with John Jackson Miller about writing this column. About two years ago I had just seen the latest prices published in the CBG comics price guide, compiled by Pete Bickford. While I respect Pete a great deal, he and I have a very differing views of the state of the back issue comics market. Specifically, Pete sees most recent comics selling for $1.00, or less, at comics conventions, and judges that to be the current national "value" of those issues. I, on the other hand, assume that dealers selling at conventions usually only know about pricing "hot" books, and are simply dumping everything else to recover working capital. As a result, I frequently find books I can sell for $20+ online mixed in with the drek. Just because I find a $20+ book in the bargain bins at a convention does not change my opinion of that book's potential for sale on our website. To me that is just another example of the current gap in functionality, and access to consumers, between those who have online database systems, and those who do not.

The reality right now is that all comics being published are "limited editions," based on any reasonable definition of that marketing term. With almost all of today's comics print runs under 100,000 copies, and many seemingly "popular" titles selling less than 30,000 copies, finding any given back issue from several months back can be a real bear. The math is compelling. If 40,000 copies of a book are printed (that's a whopping 800 copies per state...), I think it is reasonable to assume that at least 30,000 copies immediately end up in someone's collection. That leaves, at most, only 10,000 copies of that book in what I call "float." Books in "float" are uncommitted issues available to service demand in the secondary market. Due to the inherent inefficiencies of comics retailing, at least half of those floating 10,000 copies will end up in some retailer's back room, lost in the huge stacks of other unsold issues. That leaves only about 100 copies per state (assuming no offshore sales...) of that issue to service back issue demand. Is it any wonder that finding a specific back issue right now can be a real problem for most consumers? For us, however, that lack of readily available supply is the key to our survival. If we had to sell all recent back issues at cover price or less (which is the pricing most frequently attributed by CBG, Wizard, and Overstreet), we'd be right back in financial trouble. It is only by earning a premium over cover price that we can offset the operating costs of maintaining both our database, and our huge in-stock inventory.

The irony of this situation is that most comics dealers are dumping their back issues at bargain prices during a period that is seeing the highest back issue demand in over 20 years. Because print runs are so low, and local comics shop owners are cutting their orders so tight, demand for recent back issues is exploding. For most comics dealers, however, this explosion is but a distant echo. They have no way to effectively reach the consumers seeking the books they own, so they have no choice but to dump them for pennies. This brings me right back to the concept I mentioned earlier, of the difficulty of servicing rapidly increasing back issue comics demand, which is now spread over a huge number of potential variables. It is exactly this difficulty which has made pricing recent back issues so difficult for the experts at Wizard, CBG, and Overstreet. Do you use the dump price, or the premium-priced online valuation when publishing your price guide? Which is the "real" marketplace for back issue comics? When both of those diametrically opposed answers can be argued to be correct with very reasonable validity, it can only reflect a back issue comics marketplace that is in complete chaos. We live in very interesting times....

Next week: A listing of some of the recent titles that we price far above the price guides.

Mile High Comics, Inc.
Attn: Chuck Rozanski
2151 W. 56th Ave.
Denver, CO 80221



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