DC sent shockwaves through the Direct Market comic book industry in late March when it announced it was exploring a “multi-distributor model” in light of Diamond Comic Distributors’ suspension of operations due to the coronavirus epidemic.
The publisher shocked retailers again weeks later when it announced their exploration led to the seeming end of their exclusive deal with Diamond and the formation of two new distribution channels, Lunar and UCS.
Lunar and UCS, which are owned and operated by retailers Discount Comic Book Service (DCBS) and Midtown Comics, began delivering DC titles last week, nearly a month before Diamond plans to resume their operations on May 20.
And while Lunar plans to continue distributing DC titles through the month of June, observers thinking a three-distributor system is the industry’s future should take pause. DC has not responded to Newsarama’s inquiries about Lunar’s future as a long-term distributor of their books.
In an interview with Newsarama, Christina Merkler (the co-owner of DCBS/Lunar) discusses her and her business partner husband’s entry into the field dominated by Diamond, their short-term plans as a distributor and very uncertain longer term future.
Christina and Cameron Merkler
Credit: Discount Comic Book Service
Newsarama: Christina, since you came to be at the same time, explain it for us – what is Lunar’s relationship with UCS? Will you guys forever be joined at the hip cooperatively splitting geographic regions as opposed to competing for customers in that space? Or will that current cooperative agreement expire one day?
Christina Merkler: We were both approached by DC to help get books to retailers during the Diamond shutdown. Internally, we weighed the ability to efficiently fulfill and decided to move forward.
Although we both have very efficiently run mail order warehouses, the scope of the “ask” was considerable and uncertain.
In the announcement, DC recommended to retailers that dividing the geographical area between us would serve the retailers better and allow for the best transit times, but noted that any of three distributors could be used. We respect Midtown and their success in the marketplace and are happy to be involved alongside them in this endeavor.
Nrama: Has any publisher/vendor besides DC signed up to distribute through Lunar yet? Have any inquired?
Merkler: We have had a few smaller publishers inquire, but we have not signed anyone else.
Nrama: Do you have any plans to consider adding other publishers at this time?
Merkler: We have had several inquiries and we plan to follow up with them in the next week or so. We are still adding to our infrastructure and processes and do not want to take on more until those are complete and we have our systems running smoothly.
Nrama: And it has to be asked, given they make up 40% of the Direct Market, at least via Diamond, what is the status of Marvel Comics and Lunar?
Merkler: Marvel has not reached out to Lunar.
Nrama: When we inquired with DC about Lunar and UCS they deferred to Lunar and UCS, but it was DC’s announcements to the press and retailers that introduced you to the world. Why did you choose that venue to introduce yourself as an business/option to the retail community?
Merkler: The sole purpose of the announcement was to notify the retail community of the options DC had secured for current distribution.
Nrama: On that same note, DC didn’t immediately identify Lunar and UCS and being related to DCBS and Midtown. Retailers and the press made that connection themselves. Why was it revealed that way and can you speak to retailers who may be concerned with working with two entities they also compete with given both of your company’s mail-order footprint?
Merkler: Lunar Distribution was created purely to differentiate its finances and all the systems and processes as separate from DCBS and IST. We knew the moment a customer received a shipment, they could Google the address and see where it came from, and our telephone number is the area code for our area in Indiana.
We believe everyone has a place in the comic retail community. Brick and mortar, online, and digital retailers are all an important part of the industry. In the retail marketplace everyone is your competitor. Many brick and mortar retailers also have an online shop or sell through eBay or Amazon marketplace. We have been in business for over 20 years and have a great reputation for providing excellent service to our customers. We feel we can provide that same level of service to retailers who want to receive new product during the time that Diamond is unable.
There is no information that is being provided to us by the retailer that we could not get by some basic research, aside from ordering quantities, and we are not sure how that information would benefit us.
Nrama: There’s concern that with stores’ ordering quantities for specific books, you could do targeted ads in their region to entice their customers to go to mail-order. What would you say to those retailers?
Merkler: We have been in business for over 20 years and most customers know who we are. Also, the Marvel leak from a few months ago gave most retailers and consumers that information and anyone could have used that information to target their competitors or certain markets, but we did not and do not intend to do so.
Nrama: Is Lunar a permanent distribution solution or a stop-gap while Diamond has suspended their distribution?
Merkler: We’re going to help out retailers as long as DC wants us to help out, and if other publishers want to be a part of that then we’re willing to talk.
For quite some time, DCBS has received inquiries from many small publishers regarding distribution that may not currently have distribution set up through Diamond.
Now that we have essentially been forced to create some infrastructure due to the crisis, we may be able to accept those requests in the future.
Nrama: If Diamond does resume full operations and there’s relative normalcy in distribution, is there still a place for Lunar – with or without DC?
Merkler: With the infrastructure we’ve built to distribute DC’s comic books as Lunar, we could still potentially help other publishers – even those that maybe aren’t even really being servied by Diamond, or those that want an alternative. I think there’ll be a place for Lunar when Diamond returns.
Once Diamond is up-and-running and fully back to business, we’ll probably evaluate everything on the Lunar side of things and our focus going forward. And I think that focus would be taking care of independent publishers who may not be currently serviced by Diamond.
Nrama: How will Lunar work in relation to your other business, DCBS? Will it share warehouses/employees?
Merkler: Lunar is currently operating in an unused and separate warehouse space from DCBS that is owned by DCBS Holdings LLC.
DCBS employee gathering
Credit: Discount Comic Book Service
Nrama: Are you using your existing employees, or has there been some hiring going?
Merkler: We are constantly hiring new employees based on growth of customer base and changes in processes or addition of services. We recently hired on several new employees, who were left unemployed by the crisis, because our state allows online bookstores to remain functional.
We currently have the appropriate amount of space to efficiently fulfill, so we have no plans at this time to expand.
Nrama: Diamond started as a comic shop before seguing into distribution; how long have you and DCBS considered going into direct distribution yourselves?
Merkler: We have not considered going into direct distribution, because we started our business with the intent to help consumers get comics at great prices. We have a distributor in Diamond and look forward to their return, so that we may return to taking care of our customers.
Nrama: Assuming DCBS will be a retailer ordering through Lunar, will DCBS and its customers be treated any differently than Lunar’s other customers – other retailers?
Merkler: Lunar’s systems are created to pick and pack product based on transit time from the Lunar warehouse, so all retailers are fulfilled based on geographical area. DC initially provided quantities for order fulfillment that would be adequate to fill all orders received. DCBS is simply another customer to Lunar and will be fulfilled as such.
It is a lot of work to navigate the needs and expectations of retailers, when we have had such a short window to do so. We believe it is all worth it if we are able to help any retailers stay in business while dealing with this horrific crisis.