Direct market

The direct market is the dominant distribution and retail network for North American comic books. It consists of one dominant distributor and the majority of comics specialty stores, as well as other retailers of comic books and related merchandise. The name is no longer a fully accurate description of the model by which it operates, but derives from its original implementation: retailers bypassing existing distributors to make "direct" purchases from publishers. The defining characteristic of the direct market is non-returnability: unlike bookstore and newsstand distribution, direct-market distribution prohibits distributors and retailers from returning their unsold merchandise for refunds.

Comic book specialty shops
The evolution of the comic book specialty shop (or "direct-only stores") in the early 1970s created a whole new system for delivering comics to customers. Before the advent of the comics retailer, most comics were found in grocery, drug, and toy stores. The specialty shop presents a number of competitive advantages over those other venues:
 * Condition: direct market retail outlets usually attempt to maintain their inventory in good condition. Their shelves are often the full height of the comic book, whereas the wire racks of grocery, drug, and toy stores were typically only half the height of the comic books, resulting in bent spines and dog-eared pages.
 * Content: direct-only stores cater to older, more mature audiences, and thus can market material deemed too offensive (due to graphic violence, nudity, language, drug use, etc.) for grocery/drug/toy stores. In addition, due to the non-returnable nature of direct sales, typical direct-only stores contain a substantial archive of back issues.
 * Price: The older, more mature customers of direct-only stores are typically willing to pay several times more than the average customer of a grocery/drug/toy store. Cover prices approaching (or even exceeding) $5.00 became common.
 * Knowledge: The proprietor of a direct-only store is often a collector himself, which means he is quite familiar with his inventory. Customers often have the option of phoning their orders in ahead of time, and by the time the customer arrives at the direct-only store his order will be set aside behind the counter. Direct-only store proprietors often arrange their inventory by publisher and/or genre, as opposed to the haphazard presentation of grocery/drug/toy stores.

Background
Before the direct market, most comic books were distributed through newsstands, pharmacies, and candy stores. The major distributors during this period included American News Company and the DC Comics property Independent News. This situation lasted from the 1930s through the 1960s.

1970s
The direct market was created in the early 1970s in response to the declining market for comic books on Newsstands. Fan convention organizer and comic dealer Phil Seuling approached publishers in 1972 to purchase comics directly from them, rather than going through traditional periodical distribution companies. Unlike the newsstand, or ID (for independent distributor) market, which included drugstores, groceries, toy stores, convenience stores, and other magazine vendors, in which unsold units could be returned for credit, these purchases were non-returnable. In return, comics specialty retailers received larger discounts on the books they ordered, since the publisher did not carry the risk of giving credit for unsold units. Instead, distributors and retailers shouldered the risk, in exchange for greater profits.

Additionally, retailers ordering comics through Seuling's Seagate Distribution (and within two years, through other companies) were able to set their own orders for each issue of each title, something which many local IDs did not allow. This ability to fine-tune an order was crucial to the establishment of a non-returnable system.

Direct distributors typically were much faster at getting the product into the hands of their customers than were IDs: a direct distribution warehouse generally had re-shipped a weekly batch of comics or delivered it to local customers within a day or two (sometimes within hours) of receiving the books from the printer. By contrast, most IDs would usually take two or even three weeks to do so, though some moved more quickly. This factor was a strong drawing card for retailers whose customer base consisted principally of fans eager to see the new issues each week.

Finally, another factor in creating demand for direct sales distribution was that many IDs refused to deal with comics specialty shops or with any retailer who dealt in back issues on any terms at all, fearing that used comics could be purchased by these shops from readers for pennies, and then cycled back through the system as returns for full credit at a profit.

By the mid-1970s, other direct sales distribution concerns had sprung up, mostly regionally based (Donahoe Brothers in the Great Lakes region, Pacific Comics Distributors in Southern California, and New Media Distribution/Irjax in the Southeast were all operating by early 1974), essentially replacing the order-taking and fulfillment functions of newsstand distributors for the infant comic shop specialty market. For several years, Seagate retained an edge over its competitors in that it was able to provide "drop shipping" (the shipment of an order directly from the printer to the retailer) to its customers for quantities of 25 or multiples thereof per issue, while the newer distributors had to use more conventional methods, putting together customer orders and re-shipping or delivering them from their own warehouses. Threats of legal action and the need for retailers to order very precise (and sometimes very small) quantities of items ended this practice for all but the largest customers by the end of the 1970s, and extended the ability to provide drop shipping to those large customers to all the direct distributors — by which time several of the newer distributors had multiple warehouses.

Newsstand distribution through the IDs continued at the same time (and indeed remained dominant for years afterward, on its conventional returnable, low-discount terms).

1980s
In the early 1980s, a trade organization, the International Association of Direct Distributors (IADD) was formed, consisting of all the distributors who purchased product directly from either DC, Marvel, or both. The IADD had annual conferences, issuing obscenity guidelines in 1987, and electing Diamond's Steve Geppi as IADD Vice President in 1988.

As early as 1980, Marvel Comics saw the growth potential of the Direct Market, and by 1981 was putting out a number of titles geared specifically to that market. By the early 1980s, all the major publishers were producing material specifically for the new market, series that would probably not sell well enough on the newsstand, but sold well enough on a non-returnable basis to the more dedicated readers of the Direct Market to be profitable.

Several of the new distributors lasted a relatively short time, and were succeeded by more competitive organizations; with no continuity of ownership and only limited continuity of personnel, it would nonetheless be fair to say that Diamond Comic Distributors replaced New Media/Irjax and Capital City Distribution largely replaced Big Rapids Distribution in the marketplace.

By 1985, the number of direct distributors in North America peaked with approximately twenty companies, many of them multi-warehouse operations, purchasing product for resale to retailers directly from either DC Comics, Marvel Comics, or both. There were also an unknown number, probably in the dozens, of sub-distributors who bought DCs and Marvels from these larger companies (and often the products of other, smaller publishers direct from those publishers), and re-sold to retailers. Most though not all of these sub-distributors were in cities in which the direct distributors themselves did not (at least as yet) have warehouses, including Philadelphia, Boston, Columbus (Ohio), Madison (Wisconsin), Lansing (Michigan), Indianapolis, and Berkeley (California). Many of them were eventually absorbed by the companies which had been their principal suppliers.

From the mid-80s to the mid-90s, nearly every major urban area in the United States had at least one (and sometimes two or three) local direct distribution warehouses that functioned not only as distribution points for pre-ordered weekly shipments, but also as what could be described as "supermarkets for retailers", where store owners could shop for reorders and examine and purchase product that they might not have ordered in advance.

1990s
As newsstand sales continued to decline, the Direct Market became the primary market of the two major comics publishers (DC Comics and Marvel Comics). In the late 1980s and early 1990s, as the popularity of comics collecting grew, many new comics shops opened, and existing retailers (such as sports card shops) joined the Direct Market, carrying comics as a side business. By this time, Diamond and Capital City each had in the neighborhood of twenty warehouses from coast to coast, and both were functioning as fully national distributors. Several of their larger remaining competitors, notably Glenwood, Longhorn, and Bud Plant, had either sold out or gone out of business.

Such rapid growth (due partially to speculation) was unsustainable, however. The market contracted in the mid-1990s, leading to the closure of many Direct Market shops. Diamond and Capital City began closing local warehouses, moving from a decentralized model in which many local warehouses provided full service to a given area to a centralized one with a few shipping hubs and no local walk-in service at all. In 1994, Capital City created controversy by announcing penalties for publishers who didn't deliver their products within promised deadlines; this move followed an industry-wide push for 30-day returnability, a practice formerly in use when comics were primarily distributed in newsstands.

Marvel Comics purchased Heroes World, by that time the third largest distributor behind Diamond and Capital City, with the intention of self-distributing their products; Heroes World also stopped carrying other publishers' books. Other distributors sought exclusive deals with other major publishers to compensate for the substantial loss of Marvel's business. DC Comics, Image Comics, Dark Horse Comics, and several smaller publishers made exclusive deals with Diamond Comic Distributors. Most other distributors, including Capital City Distribution, Diamond's main competitor at the time, either went out of business or were acquired by Diamond. Others established niches — such as re-orders — in which they could compete. When self-distribution failed to meet Marvel's objectives, they also signed an exclusive distribution deal with Diamond, which had by then become the primary supplier for the Direct Market.

2000s
In the early 2000s, the bookstore market began to challenge the Direct Market as a channel for sales of increasingly popular graphic novels. Meanwhile, Diamond has continued to dominate direct-market distribution, with the 2006 collapse of FM International leaving even less competition than ever. However, the growth of interest in comics among mainstream booksellers and book publishers has led to several publishers arranging for bookstore distribution outside of Diamond (for example, Tokyopop through HarperCollins, or Fantagraphics through W. W. Norton), while Diamond has created Diamond Book Distributors.

Impact
The development of the direct market is commonly credited with restoring the North American comic book publishing industry to profitability after contraction of the market in the mid-1990s. The emergence of this lower-risk distribution system is also credited with providing an opportunity for new comics publishers to enter the business, despite the two bigger publishers Marvel and DC Comics still having the largest share. The establishment and growth of independent publishers, beginning in the late 1970s and continuing to the present, was made economically possible by the existence of a system that targets its retail audience, rather than relying on the scattershot approach embodied in the returnable newsstand system.

The Direct Market has been criticized for fostering a closed "ghetto" or elite for comics, arguing that most Direct Market retailers are specialty shops patronized primarily by existing readers and highly motivated fans, without the broader exposure of the merchandise that newsstands and other retailers once provided. Some claim that the current incapability of Direct Market to reach new readers and customers, might be cannibalizing the existing market out of existence.

The Direct Market was neither intended nor designed to be the primary vehicle for the distribution of comic books, but rather as a supplementary system servicing specialty outlets. The failure of the former primary system of distribution (the network of local IDs), which had itself been declining for many years by the time the Direct Market had any significant impact, left the direct sales distributors as the industry's principal system of circulation, not from design but by accident.

Direct market distributors
The list below includes sub-distributors, who bought their mainstream comics from one of the companies below but many of whom were on direct terms with one or more of the smaller or underground publishers.

Current

 * Diamond Comic Distributors (Baltimore) — established in 1982 with the demise of New Media/Irjax, inheriting that company's distribution centers and warehouses
 * Bud Plant Inc. (Grass Valley, California) — wholesale distribution operation acquired in 1988 by Diamond
 * Alternate Realities Distributing (Denver, Colorado) — wholesale distribution operation run by Nanette Rozanski after an aborted 1979 foray into the distribution market by Mile High Comics. Acquired in 1987 by Bud Plant.
 * Charles Abar Distribution (Belmont, California) — acquired in 1982 by Bud Plant
 * Capital City Distribution (Madison, Wisconsin) — acquired in 1996 by Diamond
 * Friendly Frank's (Gary, Indiana) — acquired in 1995 by Capital City
 * Common Ground Distributors (Berkeley, California) — Sub-distributor. Started by Bob Beerbohm in 1977 or 1978 and initially supplied by Big Rapids Distribution. Acquired by Capital City in 1982.
 * Destiny Distributors (Seattle and Vancouver) — Sub-distributor. Started by Phil Pankow in the early 1980s, and initially supplied by Bud Plant. Acquired by Diamond in 1990.
 * Fat Jack's (Philadelphia, Pennsylvania) — Sub-distributor and retailer.
 * Global Hobo — Founded in 2003; hand-made and hard-to-find comics
 * Last Gasp (San Francisco) — Founded in 1970 as a publisher; began distributing soon after.
 * Westfield Comics (Madison, Wisconsin) — Mail order retailer/distributor founded in the mid-1970s.

Former

 * Action Direct (Kansas City) — formerly Cavco
 * Big Rapids Distribution (Detroit, Michigan) — began circa 1970 focusing on the distribution of underground newspapers, radical literature, and underground comics. Big Rapids' entry into mainstream comics distribution came in early 1975, when Donahoe Brothers Inc. of nearby Ann Arbor went under. Went bankrupt and their assets were liquidated in 1980. Two former employees went on to form Capital City Distribution.
 * Donahoe Brothers Inc./Comic Center Enterprises (Ann Arbor, Michigan) — The second direct distributor (pre-dating both Pacific Comics and New Media Distribution by a month or two). The Donahoes had been in business for about a year, dealing first with Marvel Comics, then Warren Publishing, Atlas/Seaboard Comics, Charlton Comics, and Archie Comics, and finally (and only for about two or three months) with DC Comics when they went out of business. Accounts acquired in 1975 by Big Rapids Distribution.
 * The Comic Distributor (Lansing, Michigan) — Sub-distributor. Started by former Donahoe employee Jim Friel in 1975 and acquired by Big Rapids Distribution in 1979. (The name "The Comic Distributor" was later taken by Mark Hylton of Comic Carnival.)
 * Nova (Los Angeles, California) — Sub-distributor. Acquired by Big Rapids Distribution
 * Isis News (Minneapolis, Minnesota) — Sub-distributor. Acquired by Big Rapids Distribution
 * Well News Co. (Columbus, Ohio) — Sub-distributor. Acquired by Big Rapids Distribution(?); their personnel became the nucleus of an early Capital City Distribution branch
 * Wisconsin Independent News Distributors (WIND) (Madison, Wisconsin) — Sub-distributor. Run by Milton Griepp and John Davis, later acquired by Big Rapids Distribution
 * Comics Hawaii (Honolulu, Hawaii)
 * Comics Unlimited (Staten Island, New York)
 * East Coast Seagate Distribution (Brooklyn, New York) — out of business in 1985
 * FM International (Wisconsin) — Founded in 1996; primarily supplied back-stock; acquired by Westfield Comics
 * Glenwood Distributors (St. Louis, Missouri) — sold in 1986, they went through a financial crunch in the spring of 1987, were sued by four publishers that summer, and declared bankruptcy in the fall of 1987.
 * Comic Kingdom (Detroit, Michigan) — Started in 1981 by retailer Bob Hellems. Acquired by Glenwood in early 1980s
 * Haven Distributors — formerly Cold Cut Distribution. Primarily focuses on non-exclusive independent publishers. - Out of business as of October 31, 2011.
 * Heroes World (New Jersey) — The third largest distributor (behind Diamond and Capital City) at the time of its acquisition in 1995 by Marvel Comics, and out of business soon thereafter.
 * Longhorn Books (Texas) — Went out of business in 1985; accounts acquired by Action Direct
 * New Media Distribution/Irjax (Rockville, Maryland) — Irjax had been run by Hal Shuster since the 1970s. In late 1981, the company, now known as New Media Distribution, or New Media/Irjax, filed for Chapter 11. Shuster relocated to Florida early in 1982, effectively selling the distribution end of the business to Steve Geppi (who immediately founded Diamond Comics Distributors).
 * Pacific Comics Distributors (San Diego, California) — retailer, publisher, and distributor; bankrupt in 1984; distribution centers and warehouses acquired by Bud Plant Inc. and Capital City Distribution
 * Print Mint — also a publisher and retailer; mostly focused on underground comics, posters, and other products of the counterculture. Operated as a distributor from c. 1969 – c. 1975.
 * Second Genesis Distribution (Portland, Oregon) — out of business in 1991
 * Comex Distributors (Calgary, Alberta, Canada) — acquired by Second Genesis in 1988
 * Solar Spice (Boston, Massachusetts)
 * Southern Fantasies/C.I.B. (Atlanta, Georgia) - Started in 1986. Out of business circa 1994.
 * Sunrise Distributors (Los Angeles, California) — run by Scott Mitchell Rosenberg, out of business circa 1988.

Canada

 * Andromeda Distributing Limited (Toronto, Ontario)
 * Comex Distributors (Calgary, Alberta) — acquired by Portland, Oregon-based Second Genesis Distribution in 1988
 * Multi-Book and Periodical (Toronto, Ontario)
 * Styx International (Winnipeg, Manitoba)

United Kingdom

 * Slab-O-Concrete — run by Peter Pavement; out of business by the early 2000s
 * Titan Distributors — part of Titan Entertainment Group (which also owned the British retailer Forbidden Planet), sold in 1992 to Diamond Comic Distributors.