What Does a Comic Section at Wal-Mart Mean for the Industry?

Early last month, Calvin Reid at Publishers Weekly reported that VIZ Media, publisher of breakout manga hits One-Punch Man and Assassination Classroom, would be making a major push into two of the biggest retail chains in the country: Wal-Mart and Best Buy. The news was underreported, but it’s important; those chains represent major inroads into making comic books more accessible to more people, and many who did comment on it saw the distribution deal as a return to the days of convenience store spinner racks. The importance of diversified distribution was made even clearer just a few weeks later when Publishers Weekly, in an interview with Kuo-Yu Liang, Vice President of major comic trafficker Diamond Book Distributors, reported that similar moves were being made from other publishers:

The U.S. market showed growth “in bookstores, on Amazon, and libraries,” Liang said. He took note of the recent expansion of Viz manga titles to more than 2,000 Wal-Mart stores, and said that there are ongoing discussions with the retailer to set up dedicated graphic novel sections. Liang called the deal, “a great example of a lot of comics people working behind the scenes toward a much bigger project at Wal-Mart. Wal-Mart wants to be a part of this. Manga is first but other graphic novels are coming.”

A few days after that interview, comics industry news site Newsarama reported that Wal-Mart would begin testing a dedicated graphic novel section in 50 stores. While there was some chatter on Twitter about the development, the usual circle of comic news sites remained relatively sedate (Comic Book Resources and Comics Alliance mentioned Viz’s deal, but as of this writing, only The Beat has touched on Diamond’s larger deal). While a 50-store test run isn’t such a big deal in and of itself, it may mean big things down the road, though it’s unclear if those things are all good.

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Assuming Wal-Mart proceeds with a dedicated comics section past its 50-store test, this situation offers obvious pros to the comic industry. A recent count has Wal-Mart with 4,655 locations in the United States and more than 11,000 around the world (though, it can be assumed that a Diamond-brokered deal would probably only include territories where Diamond does business, primarily, the U.S., Canada, and the U.K.). That’s an incredible number of stores, dwarfing the 640ish Barnes & Noble locations in the United States. It would substantively widen the accessibility of print comics, and it would make casual comic buying more convenient for innumerable people—readers who may not have a speciality comic shop or bookstore near them. It would represent a dramatic step in the normalization of comics, and would go a long way towards making the consumption of comics as commonplace as prose purchasing habits.

But which publishers stand to benefit from the deals? Wal-Mart is a massive retailer that buys in bulk. That would make the chain accessible only to the publishers already big enough to meet that production demand: Marvel and DC, but also comics arms of major book publishers like First Second (distributed by Macmillan) and Pantheon (an imprint of Random House). Like traditional book publishing deals with non-bookstore retailers, it could deter smaller publishers from participating. And while some publishers would be shut out completely, the benefits for participants may come at the risk of substantial drawbacks. This move would require an incredible investment of capital from publishers notorious for running razor-thin margins—and for canceling niche books long before they can build a sustainable audience. That kind of rash cancellation occurs in the direct market of comic book and speciality stores, where, unlike traditional book outlets, stock is unreturnable and publishers consider a unit sold when retailers buy it. At stores like Wal-Mart and Barnes & Noble, the retailer can return unsold comics and collections to the publishers.

How is that history of risk aversion going to reflect on this impending relationship? Well, “the discount store behemoth has always had a reputation for demanding lower prices from vendors,”. If this new comics section saw similar discounts, who would be eating that price differential? Wal-Mart would presumably be another Diamond client, ordering books every month. But if Wal-Mart made its standard demands of Diamond, whose margins would suffer? Would it be Wal-Mart, buying the books wholesale and then taking a loss like Amazon has been known to? Seems unlikely. Maybe it would be Diamond to take the brunt of the cost. After all, this might very well be a distribution investment that Diamond expects to take a short-term loss on for a long-term gain. Or maybe the net loss will be suffered by Marvel, DC and the other comic publishers, selling the books to Wal-Mart-via-Diamond in larger numbers for a smaller profit-per-unit, and hoping for such an uptick in units sold that they’d see an overall gain. Wal-Mart has instigated an increase in its much-critiqued employees’ wages, and it’s currently trying to shift that cost burden onto already-squeezed supplies; how would that shift affect the accounting on this deal?

And how beneficial would this relationship be for the actual creators? How would a deal with even thinner margins play into royalites? Assuming royalties are determined by wholesale units sold, minimizing the publisher-to-distributor margins could have drastic effects. These are questions that we don’t have the information to answer, but they are questions that need to be asked, and they are questions especially pertinent to publishers who leave nearly all the profits in the hands of the creators, like Image. Skullkickers writer Jim Zub described how approximately 25% of revenue from his comic Wayward went to the creative team after printing and administration costs. How might a shift in wholesale pricing impact those numbers?

Similarly, how would this affect what publishers are willing to take a chance on? If Wal-Mart were to become a sizable chunk of their business, the superstore may become a determining factor of what does or does not get published. Would that be good for recent pushes for more inclusion at Marvel and DC? Wal-Mart shoppers represent a solid cross-section of middle-class and working-class Americans. Would this audience embrace a wider range of diverse titles, or could they drive publishers to focus even more narrowly on known quantities like Batman and The Avengers? And how would all of this affect specialty shops, which are already facing competition from digital comics, Amazon and Barnes & Noble?

At this juncture, too little information is available to form a concrete opinion. Do publishers without the corporate support of Disney or Warner Bros.—publishers like Archie Comics, which recently made bold moves to stay relevant through a well-received relaunch with high-profile creators—have the capital reserves to withstand something of this size going bad? While there’s a chance the deal could maintain the status quo, a partnership between the largest distributor of comics and the world’s largest retail chain holds the potential to either boost or cripple an industry desperately in need of a larger audience.