Vanilla is a product of Lussumo:Documentation and Support.
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...but the real proof is just getting enough people to even notice the story in the first place.
"So our brand managers evaluate all the products that come in to us for solicitations to review those products to make sure that they meet our benchmarks. They give some latitude based on say, a brand new publisher we’ve had no experience with, or a brand new creative team that we’ve never had any experience with before, versus a long-running title that shows a decline every issue and sells below the benchmark. " ...."Our sales were down at Diamond last year, and they look to be down a little more in 2009 based on publishers’ projections, which are given to me in December by the top 15 to 20 publishers. So we’ve determined that with sales going down this year we’re going to need to make some slight adjustments on our side so that we can remain profitable and continue to service the industry at the very highest levels possible. "
ICV2: Does that apply to new product and backlist both?Schanes Yes, if it has an order form line, it applies. And there are some exceptions to that guideline, and I’m using the word guideline, not a rule. It’s not hard and fast. Certainly things like Comic Book Legal Defense Fund, Hero Initiative, those we look less at the bottom line because those are more contribution projects, charity projects.
The change will affect “offered agains” in a pretty big way. What Diamond calls an “offered again” is something that’s already been published and gone through our system once and now either the publisher or Diamond it gets put back in the catalogue a second time. Some people call those relists.
ICV2: What about items you sell out of but there’s still demand in your system? Does that purchase order also have to hit a $2500 minimum? Schanes: No, we routinely issue purchase orders for relatively small quantities or dollar P.O. amounts to supplement the initial shipments after we sell through. That dollar amount is unbelievably low, $25 or $50 P.O. value. It’s very low and at this point in time we’re not making any adjustments there.
"We’re going to be more flexible for those publishers that have marketing plans and sales plans, but I’d say that for 85% of the small press that sends us solicitations once they hit that send button to us, or put that stamp on their mail solicitation, that was their entire marketing budget; and it’s hard to support folks that aren’t doing much to support themselves, especially when those sales aren’t profitable in the first place. "
ICV2: This is a 60-70% increase in the minimum purchase order. Why the size of the increase?Schanes: We looked at the last two years of sales data, and we felt that was a reasonable amount of money to have gross profit against. A $2500 purchase order at Diamond’s cost of 60% off is about $6200 retail value. That would give us gross profit at Diamond on a blended average discount to retailers of 44% off retail of about $950, and a contribution to fixed costs, overhead, and profit of $200 or $300 after all the different departments and operations handle it. At $2500, Diamond’s not getting rich.
We looked at the last two years of sales data, and we felt that was a reasonable amount of money to have gross profit against. A $2500 purchase order at Diamond’s cost of 60% off is about $6200 retail value. That would give us gross profit at Diamond on a blended average discount to retailers of 44% off retail of about $950, and a contribution to fixed costs, overhead, and profit of $200 or $300 after all the different departments and operations handle it. At $2500, Diamond’s not getting rich. On a typical product, there’s a huge number of departments that are involved. There’s the catalogue department, proofreaders, editors, designers; we have to pay for the catalogue space at the printer; when the order comes in there’s order entry; then the product comes to us and it has to be received at four distribution centers; we have to put it on the pick line for packing; we’ve got to pay for the box to put it in; we have to process the invoice through accounts payable. Often there can be problems with the shipment, such as overages, shortages, or damages. It’s a huge number of departments that are involved, and we’ve got to make sure those people are paid and we can service the market properly. So the product life cycle is very intense, and that’s often misunderstood by the small press, or even by retailers or consumers. At $1500 we were losing money on every purchase order, and that’s just not healthy.