Distributor cancelled an order and we need to move 30k bags of coffee [updated]
modest.coffee
modest.coffee
Also, when a company gets a much larger and different customer, I would expect any CEO to pickup the phone and talk with peers about how to manage the process. Brokers are outsourced commissioned reps, not shareholders.
Not sure why you're being downvoted because thats standard in wolesale. Not sure how they couldn't catch that when looking at the price either.
Maybe they thought they'd sell a lot less for the same price and aren't talking about this?
Did the consultant drop the ball? Yes, but so did they, in a pretty big way.
Still, I've run businesses and when you're trying to bootstrap without experience this kind of thing does happen.
The addition of the consultant led to a delegative mindset ("I'm paying someone to handle that problem") that ultimately didn't pan out for them.
That's it right there. I've rarely, if ever, seen that work out well honestly. The consultant has no real skin in the game and so you still always should be doing your due-diligence. They're there to help rapidly guide you to competency, but they won't do that work for you, you really need to be an active participant.
They sell for 50% off right now for 42 a case, meaning normal price was 84. 84 × 6000 = 504 000
This doesn't add up with the 250k they were hoping for and the 50% off. Or am I wrong? (too bad they only have decaf yet, wouldn't have minded to try.)
https://bellwethercoffee.com/blog/how-to-start-selling-whole....
(I do know some great ones, btw)
The "Think Different" mentality. I think there are too many CEOs who are only CEOs because they refuse to take advice from others. In this case, all they had to do was literally have a single person on the staff with some experience.
I doubt this is some "I know better" mistake. It's an "I don't know what to do here and I asked someone I think would know but because I don't know, I didn't know how to select that person to ask either" mistake.
It sounds like the broker made a mistake on the point around payment terms.
I do agree the confusion on “units” should’ve been caught by the roasters, given order $ amount.
So I can confirm that at least one other wholesale market is indeed different.
Actually, that does have me confused as to how this could happen. Was the coffee quoted per case or per bag? And when the order came in per "unit", how did they not notice that price was 6x higher than it should have been?
It wasn’t that the order was too big; it was indeed that the middle-man screwed up. There’s no evidence that had they done more due diligence that they could have avoided the issue. Supply chain has had lots of unexpected waves since COVID anyways.
In other words, the issue isn't that they were selling entire cases at a wholesale unit price; the contract probably stated something like pricing of "$x/case, 6 units per case," but the issue was that a noncontractual, oral term of "6,000 cases" was conveyed as "6,000 units," leading the company to assume they had the cashflow and resources to handle that scale of order. It wasn't, and they didn't. As a result, they went negative free cashflow because they weren't prepared for the capital outlay, payment terms were subject to the entire order being fulfilled (which was 6x larger than they expected), and then the order was entirely cancelled with no recourse or break fee.
So it seems to basically have been a perfect storm of a very small, retail roaster with very limited wholesale experience signing a contract for a single deal that was far larger than they could financially handle, having to take on a bunch of high-interest and friends-and-family debt to cover the costs of fulfilling the contract, then the contract allowing a unilateral out on the part of the resale broker with no recourse for the roasters. It's not the first time I've seen a company get stranded at the growth inflection point with insufficient cash or credit to get over the hump. Looks like they might survive this learning experience, and hopefully will be a lot more cautious about growth opportunities in the future. And it might serve as a cautionary tale for some folks on this site who could find themselves in a similar situation, taking on more growth than their business can operationally or financially support.
6000 "units" for $250,000 is $41/unit. At wholesale. For a product that retails for $16/bag.
It is just inconceivable that no one noticed this discrepancy. This is not a "grift" by the distributor, this is an elementary and obvious fuckup by the producer.
In fact, it's so elementary and obvious that it would not surprise me a bit if this whole thing turns out to be a publicity stunt that succeeded spectacularly well, at least for a little while, because once the cat is out of the bag all the people who bought that coffee will realize that they are the ones who got played.
(I don’t actually know the details of those descriptions. Playing devils advocate it sounded to me like they were trying to run a very ethical, environmentally friendly, health-focused business from the start, which is expensive as far as I can tell in the US, so maybe those prices made sense.)
The story smells fake to me. The most charitable interpretation is that they were misled by their "food broker" more than they realize even now.
I also think it's pretty dishonorable to publicly characterize the consequences of their mistake as a "grift" by their distributor. Modest Coffee is not the victim of anything but their own negligence.
> June 2022 comes, and the orders for this retailer start coming in from the distributor. This coffee was shipping to five distribution centers so we were receiving multiple orders. The orders were large but we thought we could handle it. Then the orders kept coming, spread apart by days.
So it sounds like they had an initial agreement for 6000 units, but the actual purchase orders were coming in piecemeal.
There's no question that these business owners made some stupid mistakes and probably failed to read the fine-print. On the other hand, when you are a small business looking to grow, you learn as you go along. And oftentimes you have about zero leverage with a multi-billion dollar distributor or a supermarket. You can't really ask them to change their legal terms from their boilerplate language because fuck if they are going to get their lawyers involved to change boilerplate documents at the request of a new manufacturer fulfilling a tiny order [1]. So you sign anyway and hope for the best.
[1] Reminds me of my friend who got a lucrative job offer from a large investment bank out of college, but wanted to adjust the terms in the non-compete section of their contract (something you hear suggested a lot by people here on HN). They literally laughed at him when he suggested it and said something sarcastic along the lines of "yeah, let's phone our legal team and tell them that the first year analyst wants a personalized job contract".
What difference does that make? They thought they had a deal to sell 6000 "units" for $250,000. If they had just bothered to divide 250 by 6 they would have immediately realized that a unit could not possibly be a bag, and they would, by their own account, have passed on the deal, and none of this would have happened.
No, I'm not. I'm not assuming anything. Here is what they wrote:
"In April 2022, a representative from this distributor reached out to us to see if we would be interested in participating in an online specialty coffee program for a major nationwide retailer. The opening order would be approximately 6,000 “units”."
At this point there are only two possibilities.
1. They asked how much they were going to be paid for these 6000 "units" and on what terms.
2. They didn't.
If they asked, the answer should have immediately clued them in that they were making a false assumption that a unit was a bag. And if they didn't, well, that's still on them.
No, I'm saying they should have asked.
> They thought they had a deal to sell 6000 "units" for $250,000.
Now you're agreeing that they didn't necessarily have that deal up front, and that they should have asked for it.
"TLDR: We got grifted by a multi-billion dollar distributor for $250,000."
That is a lie.
What actually happened is that a broker came to them with an offer which they accepted despite not achieving clarity on exactly what the offer actually was. They thought they were signing up for 6000 bags when in fact they were signing up for six times as many because they did not understand a term of art in their industry. This was their first mistake. Then, when they realized their mistake, they decided to proceed and invest the necessary capital to meet the order without fully assessing the potential risks. That was their second mistake. They could have pulled the plug then, but they chose not to.
Then it all fell through. That's tough, I feel sorry for them, but they are not the victims here. Deals falling through is a Thing That Happens in business. That's why there are contracts and insurance, and why finance and risk management is a thing. At every step in the process, their situation was 100% their fault. No one lied to them. No one put a gun to their head and forced them to do something they didn't want to do. No one did anything that was not part of standard business practice. The situation is entirely the result of their naivete, failure to do their due diligence, failure to properly assess risks, and unbelievably poor decision making in the face of newly discovered information.
And now they are digging themselves in even deeper by accusing their distributor of grifting them. No, sorry, they were not grifted. They were just stupid, and rather than admit it and learn from it, they are trying to shift the blame to their distributor and make this sound like a David-v-Goliath story. It isn't. It's a company-being-stupid-failing-to-own-up-to-it story.
And under no conceivable scenario are the justified in accusing the distributor of being a bad actor.
Yes, it would, if the price was quoted per bag rather than per unit/case. That seems unlikely, but it's possible, and it would make the initial confusion slightly more understandable.
This smells like a slimy growth hacking strategy.
From the article, they said they knew that $250k was coming so it would be worth it.
This is a major error on their part, to think they had really found somebody willing to pay $41/bag.
All that effort to get them over the hump and they're basically making $10hr at best. Future orders like this wouldn't be sustainable because you can't pay labor that little. They seem like a lifestyle business that got in over their head.
The "orders kept coming", as I understood the article, because, again, they were expecting 6,000 bags, not 6,000 cases. So by the 1,001th case arrives, you're raising eyebrows, as you're now getting more than you though you ordered. A few over is perhaps whatever, but they were going to get 5,000 cases more than expected — quite a bit more than a few over.
¹… if you've done the math. But I've seen deals in my own field done where I know very little math got done, so … I can kind of see this mistake being made.
If not, why not?
Maybe such requests wouldn't work in consulting/IB/law where it seems like starting comp is very regimented ("our first year asssociates all get $X unless our competitor across town raises their offer to all their first years") or in the case of juniors, where firms aren't expecting much from a 22 year old fresh college grad beyond learn to do things the way we want and grind, but I think there's still value in bringing up such matters even if they are non-negotiable.
"We can't change the contract? Darn, I really care about IP assignment clauses!" gives you some plausible ammo for asking for higher comp without just transparently saying "give me more money because you have it and I want it," plus you're subtly implying you are someone who produces IP that has value, not like all those other programmers who didn't ask.
I've never gotten a company to change their IP assignment clause for me, FWIW, but I have had success getting other exceptions.
You probably hear this a lot on HN because:
- In the US, programmer contracts are often negotiable, within reasonable limits.
- Default programmer contracts are often shockingly bad for the employee. And no competent lawyer would ever advise you to sign some of the ones I've seen.
I've successfully negotiated almost every contract I've signed since I was an intern, and I've been doing this for over two decades.
In my experience, very few employers have ever read their contracts. Several years ago, when I renegotiated a contract, the leadership team said, "Wow, that really is ridiculous and unfair," and actually wound up fixing their standard contract.
I got fuck all, as well. In 2 of 3 cases I think it was the VC who set the contract terms - I assume it was easier to lose 10% of their engineering team than to renegotiate, and I wasn't willing to play chicken and see if they fired me.
That makes negotiation harder.
There a number of books from the Harvard Negotiation Project which offer roughly the following advice:
- Make sure your plan B is good enough that walking is no big deal.
- Focus on finding a fair solution, even if you need to keep pulling the discussion back to that ideal.
Basically, 75% of your negotiation effort should be spent improving your plan B.
You want to be mostly saying things like, "I would love to work for you, but a 5 year world-wide, industry-wide non-compete is simply not fair. I knew a guy who basically got locked into indentured servitude when a private equity firm abused a similar clause. I'll tell you what. You have employees in California, right? California law strikes a pretty fair balance on this issue. What contract language do you use there?"
And if they say, "No, I don't think we can do that," you say, "Oh, I'm sorry to hear that! I was looking forward to solving your challenges with _____, but it sounds like we can't find mutually agreeable terms. No harm, no foul. I wish you the best of luck." Then you walk out the door and make the phone call to move ahead with plan B or C.
The businesses entire pitch is ethics, it would be batshit crazy to try and run such a gambit when ethics is core to their business.
That's possible, but unlikely. The whole concept of "bags" just doesn't enter into it in a wholesale transaction.
But even if this did happen, they could have avoided the problem by clarifying: "So that's a total of $X, right?"
Also, at some point this deal should have been put in writing, at which point, again any ambiguity should have been resolved. They had a lawyer, surely they would have asked him to review the deal before signing?
Sorry, but there is just absolutely no way to spin this so that this is not 100% their fault.
They were dealing with a broker who is responsible for getting a deal done, the broker has no investment in the intricacies of the deal, so it’s totally plausible that the broker was saying whatever was necessary to get the deal done even if that meant providing ambiguous information that could have confused a naive supplier.
I didn't say it had to be a conspiracy, only that I find this hypothesis plausible in today's world.
> the broker has no investment in the intricacies of the deal
He certainly does. Brokers don't get paid unless their deals close.
> it’s totally plausible that the broker was saying whatever was necessary to get the deal done
Of course. It's still their responsibility to achieve clarity on what they are signing up for before agreeing. At the very least they should have done a sanity check on the terms and the bottom line.
Saying the broker would behave in the suppliers best interests is like saying a sales person in a software business will behave in the best interests of the companies developers.
I think what's happed here is that as the order kept a growing they took on more debt to fulfil it. I don't think they believed the initial order was for $250k and that they were being payed more than wholesale per bag.
Also they are a really small business. 6k bags a year, their old volume, is only 23 bags per day (5 days week, 52 weeks)! Of course they were out of their depth, and very naive to how this all works. It's not fair saying they are morons and don't deserve to be in business though.
There are only three possibilities:
1. The deal was written down, and it was, as they report, for 6000 units and $250,000 (modulo phraseology)
2. The deal was written down and it was not for 6000 units and $250,000
3. The deal was not written down.
In case 1 and 3 they are morons, and in case 2 they are liars. There are no other possibilities.
1a) the deal was written down for ~6000 units and X$/bag.
2a) A price per bag was been negotiated and the deal was only estimated at 6000 units, but a total was never explicitly stated as it would depend on actual order. Each actual order is unambiguous and the numbers add up correctly.
Remember negotiation, order size, and billing are three different steps. Miscommunication is amazingly easy as people ask clarifying questions like “So you want 6000 units at 7$/bag?” Thinking holy shit 42,000$. And get answered “Yes” by someone thinking 7 * 6 * 6,000 = 252,000$ yea that adds up.
4. The initial deal was verbal or even written down, but not in a contractual way. i.e. they get an email saying, hey, we are going to follow up with multiple purchase orders that will total 6000 units
When the actual POs (which are more "legally binding" so they won't use ambiguous language or industry jargon) come in, they use language that specifies the exact number of cases + number of items per case + payment per case + total payment.
The distributor likely treated them as some bigger operator that could just supply stuff and have other buyers. Or they just didn't care.
They were bigger than this, but still small. They said that 36k bags is about 1.5 years of sales for them, so that's 24k bags/year, or about 65/day (using a 7-day week calculation). 24k bags at $15/bag is $360k/year revenue, which is still quite small, especially if you have employees (and I believe some of these bags were sold through local stores, so that means revenue is less).
"Great, we can do that... sounds good"
Now, the actual orders come in and the language is more concise and doesn't use industry jargon. The actual purchase order probably says something along the lines
500 cases regular (6 bags per case) * $40/case = $20000.
500 cases decaf (6 bags per case) * $42 = $21000
Total order: $41000
For your assumptions to make sense, the initial language had to match up to the PO language, which I wouldn't think it necessarily the case. Not being in the food industry, I can 100% imagine how one would assume units to be bags of coffee. I can also 100% see how people well versed in the industry would know that units means cases. This is obviously a rookie mistake and I'm not even going to claim that these are astute business people, but given a kinder interpretation of events, I would say moron is a strong word here.
If the PO said "6k units @ $7/bag" (made up price), that's ambiguous enough to cause confusion.
Not a grift. Their fault for not clarifying, and arguably a failure from the consultant to not step up and help them navigate uncertain waters. But I can absolutely see how it happened in a way that wasn't a stunt.
I worked for a company who was faced with a big customer interested in a deal that would roughly quadruple the amount of business that we did, possibly more. But as things went on all the assurances / up front claims from big company had exceptions. "Well that's not always the case." and the complexity and frankly our trust in this big company seemed to erode fast. Yeah they said they'd pay for the extra work we'd have to do, but it wasn't clear (specifically to me) if even they understood how much work that would be and from meeting to meeting expectations seemed to shift, sometimes wildly on the part of big company. The more clarifications we asked the weirder things got. It would take a dedicated team larger than our own company to really even approach / get a handle on these guy's problems.
We passed. Told them they were too big for us and frankly we weren't setup to deal with them at their scale and potential complexity. We hoped to be one day but we just weren't there yet. They took the news well.
Another similarly small company got the deal... 2 years later went bankrupt. They invested heavily to support big company, lost many of their smaller customers who were their main income (we know because they came to us), and the deal with big company failed because big company really didn't know what they wanted and ultimately should have chosen a much larger software company.
Years later big company had a subsidiary that was largely independent but had some issues that our software could solve. Big company VP remembered us and told subsidiary "just hire those guys". So we got a deal in the end / handled the subsidiary's problems easily / quickly.
In a past life, I ran a small business selling lip balm to small grocery / specialty stores. It started small and then with some good ol' fashion cold calling, we got into more and more stores. Eventually direct store sales is too much for a handful of folks to operate (and if your goal is to expand outside of your local region).
The next step (which they are at) was to start working with one of the big distros (I'm guessing for them it was UNFI or KeHE). You eventually get to a point where most buyers at larger store chains (Kroger, Whole Foods, etc.) eventually just want to streamline their ordering, which means moving to a distributor (also the Regional / National buyers for the categories eventually just push that way if your sales are growing rapidly).
Looks like they mentally had gotten to that point and did the right thing, find and expert to take you there.
If I had to guess on how this whole issue actually went down, the broker / consultant negotiated all the terms with the distro and basically they (the biz owners) didn't clearly read the contract details (putting all your trust in the expert without much verification). I was in that same position once and learning the distributors industry terms is tough to figure out without outside resources / guidance. As they write in the post, the broker basically let them down, while they equally leaned on the broker too much for obfuscating industry knowledge.
They might order 10x what they think they’ll need to hedge a risk on their side, fully expecting to cancel 90% of them (and telling the suppliers the opposite of course), and screw all but the lucky one. And often use that as leverage on the ‘lucky’ one too.
The numbers in this story don't exactly line up, in a way that tells a fun and clearly stressful story: (The cases have 6 bags each.)
The intro to the blog post mentions 34k bags of coffee actually made. The initial order was thought to be 6k bags of coffee, but was actually 6k cases = 36k bags of coffee. So it looks like some got sold off between the delivery fiasco and the blog post. Later in the blog post it's mentioned as approximately 30k bags sold for half off + free shipping.
It looks like at time of writing there are $5277 in donations at $50/case, so 630 bags from the fundraiser. The Fire Sale has sold out at 24k bags, short of their original 30k bag goal. (Edit: They sold out of all of the caffeinated coffee, not all of the decaf.) They raised between $173k (all $7 bags + donations) and $197k (all $8 bags + donations), not counting the substantial shipping costs for 4k cases of coffee.
The debt likely to be paid off first is $60k of personal credit cards, $65k of business credit cards, and $45k of personal loans (there's a social cost to keeping these after such a successful fundraiser). $170k total here, leaving the $66k of other debt to be paid off more gradually.
(Edit: They only have decaf left from the sale coffees. The 4k bags not put up for sale, and some remaining decaf, are all of their excess inventory. Ignore following paragraph) ~~I'm guessing that they chose to keep the extra inventory after seeing the wild and immediate success of the sale. Knowing that they can pay off their worst debt, and getting a ton of new customers as well, they'd rather have the extra 6k bags around to sell at normal prices. It's also possible that they sold out of one type of coffee first, and that helped them decide to shut down the sale, rather than keeping it updated with the different varieties still in stock.~~
Modest Coffee now seems poised to be successful. Extra stock, no longer extra warehousing space needed, exposure to a ton of new customers, and their worst debts paid. I wouldn't be surprised if they look back on this fiasco as their biggest success in a few years.
FTA: "All of the bags of caffeinated coffees sold out. That’s approximately 24,000 bags of coffee."
The numbers still don't quite add, given 24k bags sold + 634 cases of decaf still for sale (= 3804 bags) is still under the initial 30k bags. But I suppose 2k bags of decaf could have easily sold in the meantime.
Wouldn't that imply that they would be doing even worse in the future?
It’s almost a half a year old coffee (time since roast), a great part of the flavor has been already lost. We also don’t know how it has been stored, temperature will also affect the quality.
here’s a very deeply technical explanation of this, right from the source (SCA): https://sca.coffee/sca-news/podcast/81/the-science-of-coffee...
just a small part: “A lot of volatile compounds that escape from coffee after roasting is about 1000 compounds identified in coffee and out of those, 50 compounds are important for the aroma of coffee.
[…]
So, when we look after one month some of the compounds like this one Methanethiol ends up at less than 10% of what we had in the fresh coffee, but also others they behave very differently. This is means that the relative composition of the coffee changes with time. ”
there’s a lot more fun stuff in there for the coffee enthusiasts.
When you buy from a roaster directly something like roasted a week ago would be more like the typical age. So I'm a bit surprised, I would have expected this audience to be much pickier about the age of the coffee.
1. Taking the "loss" to support a small business
2. Normies who feel like they are getting a deal on "Specialty coffee" that they normally wouldn't buy. Some people can't pass up a deal (esp a feel good one!)
There's likely a lot of lay coffee lovers assuming that since it's vacuum packed it must last a really long time. At least it isn't preground.
1) There is no such thing as asking too many questions.
2) Legal advice is expensive, getting into a bad contract more so, as a result make sure that you understand exactly what the contract says, and what "bad things" it is protecting you and them from.
3) Distributors don't make "big orders", their customers do. If a distributor tells you they have a big order then talk directly to the customer making the order about it. If the distributor won't tell you the customer then don't do the deal.
It looks like they survived this semester in "advanced logistics" and that will make them a much better company overall by incorporating that learning into their processes.
One of the interesting things about being at Sun from "startup" to "enterprise company" was seeing first hand the stupid mistakes that didn't kill them but they successfully learned from. I am convinced this is part of the "business experience" for everyone but couldn't prove that from my own experience (I might just pick companies to join that learn things by pain :-)
They use the word “grift” so many times, but really it was just stupidity on their part. It’s your job to understand how the industry you are entering works.
The only grift is this fake sob story to get sympathy and get rid of excess inventory (and of course the internet ate it up).
In college, I worked in a lab that used disposable pipette tips to measure/move samples around, which come in small "racks" like these https://www.coleparmer.ca/i/thermo-fisher-molecular-bioprodu...
We normally got a copy-paper box or two of these at a time, which lasted for a few months. However, one day one of my colleagues, who did not grow up speaking English, placed the order and asked for a huge number of cases, thinking "case" was a synonym for the individual plastic boxes that they came in.
It...was not, as we found out when a delivery man appeared up with a motorized pallet jack. He's a bit miffed too: "Is there an easier way to bring up the rest?" The order ended up filling an entire closet and then some. They were still working through them when I left a year later.
In retrospect, the price was obviously too high, but it was a small part of a big equipment order--and science stuff is often eye-wateringly expensive anyway.
Like you said, they must have agreed a per unit price. The mistake had to have been purely in volume.
When they recognised the mixup with cases / bags, they wouldn't have pushed to deliver the actual expected volume had the unit pricing been a problem.
As someone that has gone through the process of trying go to build a business that sells to distributors, I cannot understand how you’d miss a 6x discrepancy in your price model. Your margins are slim, a 6x markup means you’re seeing more than 500% profit margin. (Probably by not having a price model, if I had to guess…)
The problem with this interpretation is that it would mean that the entire second half of the story would realistically have to be a lie. Once they realized that they were getting 1/6th of what they thought, they would have to find a way to get out of the contract or go bust, which is the opposite of what they say happened. As such, it's too much of an accusation to make with essentially no evidence.
There's definitely something odd about the unit pricing and unit ordering though.
> The food broker laughed and said “I wondered why you’ve been so upset and concerned. When they said ‘units’, that was cases. They’re right on target so far.” You can imagine how we felt in that moment, realizing that the person we hired to make this a smooth transition and to guide us and to tell us the things we don’t know failed to ever ask us if we were ready for a 36,000 bag order.
I.e. they thought they were getting a 6000 bag order, not a 6000 case order.
The error on pricing can only go one way; they can't have signed a deal where they charged <fair-per-bag-price> per unit and therefore don't break even at 1/6 the per-bag-price, since they would just walk away at that point instead of borrowing money to throw into a deal that they don't break even on.
So they must still break even at 1/6 the price, which means the distributor priced it somewhat-fairly (at least not below-cost) per-bag, and they originally thought they were getting an insanely good per-bag-price that was 6x what they should have been getting per bag. Again, not questioning your working when you think the distributor is paying 6x what they should is a big red flag for me. You should notice a 2x discrepancy as margins are really thin in this kind of business, and your business plan needs to have a pretty good idea of the margins in order to determine if you can even break even.
Edit to add: I suppose it's possible that they agreed a per-bag price, with "bag" and "unit" used in different places in the contract. On reflection I should reduce my certainty on the above.
> Mid July, after 6 weeks of roasting 21 hours a day on the roaster in 3 shifts, working 12-16 hour days, regularly working until 11 pm to finish bagging and boxing, bringing in every friend, young and old, to help get this order done, we sent off the last pallet. In the end we produced 34,000 bags of coffee, an insurmountable feat. We were exhausted, mentally, physically, and emotionally, but we did it. We figured it would take a couple of weeks to move to the retailer’s warehouses and then the payments should be released. To make this order happen, we had to take $45,000 in personal loans from friends and family, $65,000 in business credit card debt, $35,000 from a business loan, $60,000 in personal credit card debt, $20,000 in outstanding invoice debt, and $11,000 in loans from us personally to the business, for a total of $216,000 in debt. We maxed out every credit card and depleted our personal and business savings. We had no other choice but we reassured ourselves that the $250,000 that this opening order would pay us and continued future orders from this retailer would be worth it in the end.
The natural conclusion in that situation is "we must do anything and everything to get across the finish line so all of our effort is not for nothing" and if the contract is due to pay out $250k in a few weeks, then taking on $200k of debt is plausible. Sure, an expert in the field wouldn't make these mistakes and wouldn't take on the risk however these aren't experts and so they did not understand the risk, they thought the $250k was guaranteed if they could just get to the finish line.
The debt did not exist prior to execution of the contract, the debt and contract are linked. Your comment supposes that they started out by borrowing $216k.
I'd guess that the reason they don't name names is that most of their ire is directed at this facilitator, their attorney has advised that naming them could end them up in a nasty libel suit, and the last thing they want is any more "excitement". I'd also guess that the title/narrative puts the focus on the big company for better virality.
I understand that that is the story they want to tell us. But that story doesn’t add up.
If you are selling anything you need to know at the point of signing the contract how many you need to deliver, for how much each, and what is the total.
Even if the person negotiating completely drops the ball at worst you will realise something is very bad when you look at these three numbers. Either the price you receive will be 6 times as much as you expect, or the count won’t match your expectations, or the total won’t match.
As practical advice to avoid getting burnt, yes what you say is true.
But as condemnation from an Internet Investigator who's going to get to the bottom of this company's possibly flimsy story to save us from some possible omitted details? meh. I can totally see how the attorney reviews the contract, the consultant explains the terms, and the business owner is mistaken about what they're signing up for. They did think they knew, that was the entire problem.
I recall when I took basic accounting, we learned that common payment terms were "2/10, net/30" meaning "2% off if you pay within 10 days, and it's all due within 30 days."
So it was common practice to wait 30 days (or more) and still take the 2% off.
This is in no way blaming the victim, but "for a total of $216,000 in debt" I would hope I'd just say, "no, we're not doing that." One of those hard calls that nothing in business school can prepare you for.
Do you really need a business school education to see that this was a mess right from the beginning, though?
It sucks for the small business owner, but at the same time...if you sign one of the largest contracts of your businesses life and are not even sure that you are selling individual bags of coffee or cases of bags of coffee...
No business school is going to help that level of dumb...
They’re playing in the big-leagues and needed the kindness of strangers to bail them out of what appears to be their mistake as going by other comments units as cases are industry standard. That the distributor couldn’t move the product compounded the issue. Supplier/distributor shenanigans are common and something to be on the constant lookout for, but this seemed pretty normal, the prudent thing to do would be to not have signed up for so much but of course they didn’t know they did. Pulling the pin early might have helped, as it wasn’t selling they wouldn’t be liable for damages for failure to supply, but it would have impaired their ability to grow.
Not suggesting those here did anything nefarious beyond overextending by mistake but there does seem to be a new trend in e-begging where someone gets themselves into a situation and seeks a bailout from social media. “Help I accidentally bought a $100K couch” for example.
I don’t blame people doing something that’ll help them. I often wonder if I were to get terminally ill and there is an expensive cure beyond my ability to pay what my go-fund-me video would look like.
Math example:
You sell something for $20, and it costs you $5. You have free shipping, which costs you $3. Shop and CC fees are maybe $2, so you're netting $10. Then taxes means you net $6.
So if you sell 10,000 units you've netted $60k. But to make that $60k you need to spend $50k up front to buy the inventory, and maybe $2k more to ship the inventory to you. Then you need a place to put it, so maybe $1k/month.
So when you need to order your next batch of inventory you need, say, $52k. You haven't made that much yet, because your inventory has a 2 month lead time. So you use money from the 60k in "profit" to buy inventory, leaving you no profit.
At that point you haven't made anything. It looks like you're making money, but you aren't. Maybe you dip into your tax reserve fund to buy that inventory, but the fact is that you probably haven't paid yourself much, if anything.
This is the brutal reality of small business math.
> So you use money from the 60k in "profit" to buy inventory, leaving you no profit.
That is incorrect. The business still has made a $60k profit, but they have no CASH since they had to redeploy that cash toward additional inventory (which leads to additional profits).
> At that point you haven't made anything. It looks like you're making money, but you aren't.
Again, sorry: You have made $60k in profits, but you're short on cash. Your business is making money -- you now have the next batch of inventory paid for and you were able to afford that with the profits from the previous batch. Those are real assets, But your business is indeed short on cash -- this is where revolving credit lines and similar financings come into play (which carry a cost and complexity of their own).
It's definitely a challenge!
So much so that there's names for various ways of cutting up the receivables risk. For example:
Those are getting harder to find and more expensive. Lack of those at the right time is what causes the liquidity traps the Fed is always talking about, when it happens at large scale.
Little risk of that happening now it seems, and a lot more ‘reaping’ of marginal business is likely before the Fed changes direction.
You've described cash flow, not profit.
You still have a profit of $60k. That you choose to reinvest that profit in acquiring additional inventory does not affect the profit calculation on the inventory already sold.
But yes, they’re talking cashflow and liquidity issues.
Not exactly related but I see a lot of comments online from people usually saying "wow, this business is made up of a bunch of greedy profiteers gouging customers for doing _____ behavior" when in reality... aren't most businesses at most running at 10-20% net profit margin? Small, medium, and large?
Let's say you're moving 10,000 units per month.
You buy the stock for $50,000, get it delivered for $2,000 and store it for $1,000 - so you had to get an investment of $53,000 to set the business up.
You sell the stock for $200,000.
Making those sales, you spend $30,000 on shipping, $20,000 on credit card fees, and $40,000 on sales tax (assuming your "taxes means you net $6" means your country has a 20% sales tax which you included in your $20 selling price)
At the end of the month you owe your investors $53,000 and you've got $110,000 of cash. You've basically doubled the initial investment in a month? That doesn't sound unprofitable to me, that sounds incredibly profitable.
I run an advertising company and we always take payment in advance and work with several large (publicly traded) companies.
This was 2003-2006ish, for the record.
How the hell is this even legal?
Advertising or informational industries (e.g. non-tangible goods industries) seem to operate differently, as you've said.
So it makes sense to never extend credit.
I do think it’s very industry specific and food / retail as one of the worst.
The reason kind of seems to be to give more flexibility to the supply chain. If everyone required payment upfront to get items to shelves or lots for customers to buy, then the risk goes more fully on the last link in the chain. It appears this pattern began to spread the risk to the entire chain.
But from the industry side. At the big corp level this is all handled by some CRM/Oracle/IBM/SAP system and once things have been approved by whatever chain of people need to sign off, the payments are automatically sent out. The flip side is that if someone hasn't approved something, or they're waiting for paperwork unbeknownst to you, you have to wait until they do another run. So you have to nag them. The people who bought the thing from you are probably not the people who will actually pay you.
I don’t have a good answer, but this isn’t a one-sided thing where the big guys are taking advantage of small companies. This is also small companies agreeing to operate the way big ones do in order to get a foot in the door.
Everywhere I've seen you've payed that months rent by the ~5th of that month or they come after you for interest.
Fine, let’s talk post paid. Electric bills. How you would you feel about an electric company that sent you an invoice and wanted to be paid daily? Yes, yes, the analogy is also imperfect because consumer electric companies can do auto-pay and walmart generally does not for small vendors. But please try to see the point even with a less than totally perfect analogy to consumer life.
This would be trivial via Direct Debit.
I know that in Australia the terms in groceries are horrendous. Generally, frood vege suppliers have to buy specific boxes for delivery (from the supermarket chain) they then still have to pay rent on those boxes and if items don't sell they have to take them back (and pay a box use fee again), make items available at discount for specials run by the supermarket, on top of that the payment terms are as described above. Essentially the big chains don't take any risk, and the small suppliers all the risk. This might be particularly bad because the market is dominated by 2 chains. Supposedly Aldi and Lidl were much better at the time, because they tried to break into the market.
This situations where paying in advanced _every_ time would be cumbersome just means the customer has to maintain a balance. There is also a difference between a business and residence.
And forget about daily. It's very reasonable to want monthly pay, and should not be a burden at all. And monthly pay would need at most a month of float, on average probably less. That's not where the real payment issues are.
If you have enough brand recognition where they must have your product specifically, this usually means you are big enough that the payment terms aren't that big of a deal
The game is to maximize cash flow, though in the end, it doesn't make a lot of difference except in very thin margin businesses. But the general wisdom is to always try to take maximum advantage.
I always felt that it is a silly strategy considering that it strains your suppliers, provides little financial benefit, and big corporations blow so much money on so many other things that could easily be addressed before worrying about setting up net 30 payments.
As a supplier, payment delay is basically a cost you have to bear to deal with large distributors. It’s a trade off between somewhat predictable volumes and cash flow availability.
I would never do a one off with a large distributor however. You are going to get swindled as this article nicely illustrates. Large distributors buyers have years of training exploiting people in your situation.
Honest question: Is this really a free loan, or is it the cost of the load hidden (i.e. the interest charges are not broken out explicitly)?
For example, if a supplier has shipped goods with a wholesale prices of USD 100 to a retailer with a net 30 day payment term, I would assume that the USD 100 includes all of the costs associated with that USD 100, including the costs of "financing" that USD 100 for 30 days.
Edit: I've known many people who started freelancing and who forgot to include all of their costs when calculating their rates, especially costs for things like repayment terms. This seems like a very easily overlooked problem for most new businesses.
You don’t think being ordered a very large amount of a product then being told months later that actually that was a mistake and you now have to take back the products while not having been paid at any point during the process and having them try to charge you for the costs of storing it and shipping it back to you sounds like a swindle?
With BNPL, small companies are paid right away (within 1-2 business days), and the BNPL provider is responsible for collecting payment from the other party.
I don't think BNPL it would apply in this case specifically as the grocery industrial complex seems stuck in the last century, but in other cases it is an innovation in payment terms that could help.
Full disclosure - I have no affiliation with Affirm or any other BNPL provider.
This would equalize power dynamics. The large corp shouldn’t be allowed to demand immediate payment on one side and then just significantly delay payments on the other side.
This is a terrible idea. Half of the people wouldn’t have the money and your company would become a debt collection agency. You’d be forced to charge at least 3X for the product.
Consumers already have Net 30 terms via credit cards.
The difference is that the shop isn't waiting for you to pay and the credit card company takes on the risk.
If the terms are simply "net 30" with no early payment discount and no late payment penalty, there is no incentive for the customer to pay on time.
While in Japan everything is paid up front because this is what is culturally appropriate.
They’ll pay you say 97% of invoice. They’ll collect as they can
This is a feature, not a bug.
If you are in an inventory-rich industry, you do not want to deal with a supplier that has no working capital.
Goods first - money later sucks if you are a small startup. But it's much easier to work with inventory and figure out the money later than vice-versa. Toyota does not want to stop the production line because their order of ball-bearings showed up late and now they have to start a new purchase cycle.
That was half the reason for the chip shortage. Auto manufacturers collectively (and incorrectly) forecast a decline in demand in cars during the pandemic, cancelled a bunch of orders for chips and a bunch of the suppliers went under. Then started offering 10x-20x for replacement chips from their few remaining suppliers (that pretty much all went to buying out wafer slots that would have been non-automotive chips) to keep a $35k car not being able to be shipped for the lack of a $0.30 part.
Worst in my experience was Unilever, who simply assumed they could pay in 90 days, which ..er.. rankled. Thankfully the job I did was directly for someone quite high up, so a week's worth of pointed emails and calls somewhat hastened payment.
In the end they paid 2 weeks after the net-60 expired. Probably calculated to be maximally annoying with the least amount of risk of legal costs. Really takes the wind out of you. Selling to California startup type companies is so much nicer, I once took a call, negotiated a whole new pricing model closed the deal, entered the product details into FastSpring and the customer paid 40k for the yearly subscription on that model that same afternoon.
"F*ck you, pay me"[1]
In which Mike's lawyer makes the very good point that you should really put an attorney's fees provision in your contracts so that the purchaser pays your legal fees if you need to chase!
I tend to disagree with that mentality.
Imagine I need some stuff now (or on the next truck), I can place the order and it will be immediately loaded on the truck. Then separately, they'll send an invoice to the accounting department who will settle it over a week or two, which may involve moving money around, foreign exchange, etc.
It really makes me appreciate the US more. But I am still dismayed that I'm all caught up on the state of commerce and that its not even more streamlined and sophisticated.
My first job out of school was for a mom-and-pop manufacturing company. I got an inquiry one day from a very well known company, and mentioned it to the boss. He gave me a long lecture about why we didn't work with that industry. They were notorious for stringing their suppliers along and holding them in a sort of debt bondage. I remember responding with a FAX (yeah, that's how it was done) explaining our terms: Pay in advance. The boss made sure that the business was never beholden to a single large customer.
We also had a draconian, hair-trigger, credit hold process. I remember overhearing the scheduler / receptionist telling a customer: "You are on credit hold right now, we can't schedule your next production run."
Automotive? That has big automotive energy.
My fortune 10 company regularly pays our bills after the pay period - like 60 days late on a net 30. And then I, a technical person that just wants the damn AWS bill paid so I stop getting emailed about it, have to chase down the people responsible internally, even though they get the same billing emails. Because for some reason they didn't like the old way of setting up auto pay. Oh. And they will send literal paper checks to pay some bills... to closed offices since everybody works from home now.
The accounts payable department wastes more time than they save.
OTOH, it's very difficult to raise money as a retailer or distributor but 1000x easier (still hard) as a brand.
Bethesda is infamous for withholding payment to smaller companies to force an acquisition of IP. And (not to get political) big-shot celebrities like Donald Trump or online influences do it too. Often it's even worse than "we'll pay you later", it's "give us a steep discount and we'll pay you back in exposure/future opportunities to make a lot more."
They also have: https://walmart.c2fo.com/walmart
Ten minutes later I get a frantic call from procurement, begging me to put the site up. I fumbled with the billing system, and finally told her, I think the only way to fix it is make a payment... which she did. $6,200 on credit card. The customer never missed a payment after that.
I'm glad that they were able to move the bags and save their business and themselves from all this debt, but this red flag needs to be addressed and owned up.
So, initially, they believed $41/bag....
I'm not saying that the OP was blameless. I don't understand why the first thing they did after the discovering the issue was to hound the distributor and try to renegotiate payment terms. I believe the worst would have been to loose 6000 bags, which wouldn't have been too traumatic.
Edit: I haven't seen the specific order. Maybe it was written in a way that priced by bag but somehow requested UNITS in a way that the total order volume in USD wasn't clear.
The story surely paints OP in a better light than the other side would, so maybe there is more to this than meets the eye.
For sure, a good learning experience for those guys.
If the price was listed per bag as $6.83/bag (assuming 6 bags/case) and the PO said 6,000-units, that's the "best light" scenario for the OP I can come up. There are literally zero other numbers (no totals, no total dollar value) and the only difference is in the "units" which could be overlooked.
But what kind of PO doesn't have some sort of total which shows how much money the contract is expected to be worth.
I don't believe this scenario exists.
I guess we'll never know unless we see the order details...
Though these bags are only 340g.
I don't find myself very sympathetic. Feels like there is plenty of evidence that the business owners here aren't the most diligent or detailed oriented.
$45k+$65k+$35k+$60k+$20k+$11k adds up to $236k
Best case this is the result of their own naivety/incompetence, worse case this is just a distasteful marketing ploy.
>>Mid July, after 6 weeks of roasting 21 hours a day on the roaster in 3 shifts, working 12-16 hour days, regularly working until 11 pm to finish bagging and boxing.
Despite this work schedule, had no problem releasing their weekly hour-long podcasts every week in June/July.
Podcast website
> $45k+$65k+$35k+$60k+$20k+$11k adds up to $236k
$20k of that, as called out by them is invoice debt. Aka they will are owed that amount but amount, they just have yet to get it from the distributor. Leaving them with the $216k number given.
> $20,000 in outstanding invoice debt
It's either intentionally misleading or lack of diligence in presenting the numbers.
Selfish observation: this coffee has to be close to its shelf life, despite being roasted in Jun/Jul and despite being sealed. A "one year best buy date" is unreasonably generous.
Certainly. Then consider the fact that this small business is now claiming they're going to ship thousands of individual cases, all sold with free shipping. That's going to take quite a while.
It’s probably 100x better than what most workplaces stick though, so that’s probably a humane usage.
All suppliers were graded by these scores etc. Errors or failure to report would end up in your company getting removed.
The problem was, the people assigned to hound us for this information were using old data. They would get a report emailed to them the night before, and by the time they emailed us about it the next day, we'd have already submitted the requested information.
It didn't mean anything, though. The ball was already in motion where someone at Megamart would leave a nasty voicemail to our salespeople who then reported it to the CEO who would then come down to give sales/IT/logistics a mouthful.
> “I wondered why you’ve been so upset and concerned. When they said ‘units’, that was cases.
Ouch.
I get a lot of flak at work and at home when I get irritated that people don't use the right words and terms and this story won't change my attitude.
Eg:
- "we want a new tab on the website" -> they want a new subdomain with a whole new CMS and a link in menus of every site
- "we want a new site to highlight this thing" -> they want a single page with a photo and a paragraph but want to be able to change it themselves at will
In the tech side, I still think there’s a lot of value in reading through Booch and friends, even if you don’t go on to use UML in a formal way, and even old, deprecated approaches to modeling (think Shlaer-Mellor) can be valuable as an introduction to more modern (and generally more complicated) approaches to domain modeling.
For more academic and less practical works, look into philosophers of language and communication (Rorty, Habermas, Latour, etc) — if you don’t have a background there, try the “Very Short Introduction” series, which gives a good grounding before moving into further secondary or primary literature. What you get from these writers is a way to think about language, communications, and complex systems, so you’re building a conceptual toolkit. (Analytic philosophy, which is another, “mainstream” branch of philosophy, also has applications in the formal comp-sci route.)
Sociology and STS (Science and Technology Studies) kind of occupies a practical middle-ground between philosophy and design; I’ve often said that when we do service design, we’re really just doing folk sociology. There’s no shortage of textbooks, but I’d recommend looking into academic field guides for ethnographic studies (a fancy term for “going out and talking to people about what they do”) and ethnomethodological studies (a fancy term for “going out and talking to people about what they believe”). While the service design books will give you practical tools for conducting workshops and research programs, sociology books will give you a firm grounding on why those tools are used, and how to theorize effectively on what you uncover. I also like measurement theory, which is a branch of psychology concerned with understanding how to define measures and metrics — great tools for clearly defining data and reporting.
Finally, in addition to all this, consider digging into a corporate finance text or two; the three legs of the stool are product and service design; technical and operational architecture; and finance and sales. If you can read your company’s balance sheet and cash flow statements, you’ll be in a much better position to understand where you need to target investments, what the likely return on investment will be, and how much cash (or debt) is available to make things happen. Start building up a good knowledge base in all those areas, and you’ll have the tools necessary to know the “where, how, and why” to apply the “what” of technology to your organization’s problems.
Edit: specifically of this concept https://www.martinfowler.com/bliki/UbiquitousLanguage.html
From my limited experience with DDD it revolves a lot around terminology and right word choice.
Your examples are people "being helpful" by "figuring it out for you" when they don't understand all the specifics. Yes, that's an annoying problem any specialist deals with.
The article is about something that should have had clarity in a contract. It's the kind if situation that should involve lawyers.
"...yes, we do have a lawyer and we are currently following the advice of our lawyer in everything we are doing. We can challenge the contract but legal fees could run over $30,000 and take years."
Which kind of sounds like they might have hired a lawyer after the fact in an attempt to 'fix' the situation.
Oh, this definitely happens but then I just explain how things work and what it means. But it also happens a lot with people who should know better than that (with the job title and all).
Took months for them to even respond to emails about their invoices, they never ever paid on time or even a month a late
Dealing with giant firms is the worst and there’s nothing you can do as a small vendor besides having your game tight upfront
and if you do have your game tight upfront they won’t hire you in most cases
They had Net 30 terms with me so I said to them, "I'm very sorry, I am buying a house and can't float the money for 30 days. I can refer you to someone else to buy them from."
The general manager of the company told me it was no problem, send the invoice directly to him and he would pay me the day he gets the invoice.
I sent AP and the general manager the invoice and they didn't pay me for about 45 days after they received the invoice.
As a result, I barely made settlement on my house - I was literally cashing in change at the bank. I had no furniture, not even a bed and slept on the floor for the first month I lived there.
Now, if you are chasing people down pretty regularly, maybe you have a department dedicated to handling these cases and it makes sense. But if it's a once in a while occurrence, a few thousand dollars probably isn't worth the time and effort for an otherwise successful business owner.
I have a friend who worked for a large law firm and he told me that even they wrote off some unpaid bills or negotiated discounts. I was shocked to find that even when the lawyers could deal with the legal work themselves, they chose to pass.
That changed my thinking on the topic.
The reason was more to force their hand, but you don’t just “sue a large company” they will play games like ediscovery, and crazy-weird jurisdiction stuff
This sounds like the business equivalent of college advisors. They had an advisor who was probably well meaning but couldn't fully accommodate the young company because of ignorance/inability/whatever and now they're deep in a decision they never would have made.
$5-10k in a decent retainer would likely have prevented this.
This is the classic "if you owe the bank $1000 you have a problem, if you owe the bank $1 billion the bank has a problem". And thanks to the net N terms + control of the end client, you're the bank.
Why did the potential buyer have a sudden inability to sell any part of a large order, what changed? Presumably, if they're got the product for free they somehow would have found a way to sell it all. Maybe they (the potential buyer) were just using the small company to force a price with a different supplier.
I'm not sure if one can tell if it's grift or not; it certainly seems immoral. Like going into a small restaurant, ordering loads of food and then saying "oh, I ate before I came out, I'm not hungry" and just leaving without paying.
edit: on top of that you are selling coffee, something that is already well provided everywhere. it would be different if there was some element of charity or necessity, but your endeavor is purely a profit seeking one (with no negative externalities, id consider it neutral to everyone else) which furthers the mismatch between your tone and reality
edit 2: of course i think its a dick move by someone to order a bunch, then reneg. but if you werent aware of that risk, you are just stupid, especially if your going to spend 250k
Still good but hardly fresh for a specialty.
Anyway. There’s a 6x number in here that somebody (or somebodies) completely missed…
Seems like what they thought was a fair-to-good deal was actually a such a terrible deal that, given their incorrect definition of a unit, the numbers in their model lined up.
That might be something the consultant could have spotted, since they’d seen the numbers around previous deals. I’m not sure it’s their duty/obligation to.
Was going to say this, I work at a specialty coffee shop and anything over 2-3 weeks is unusable.
its so stupid. (especially since they bothered in writing how much hours of coffee that would be...)
Here is an anecdote from past experience. This is from the healthcare sector. Our client builds and installs systems for supply chain management in hospitals in North America and Europe. Think of hospitals ordering syringes, needles, gloves, implants etc., There are a zillion suppliers providing tons of SKUs and products will have multiple vendors supplying them (for supply risk management). Each product from a supplier also has multiple variants -- for eg: gloves could be in sizes Medium and Large etc.,
At the point of ordering (eg: the nurses' station) the hospital would have setup a mapping of the logical product SKU (eg: Medium Nitrile gloves) to two or three product item codes specific to each vendor. The hospital's material management system takes care of the local inventory management and reordering.
While most of the ordering happens through electronic systems, there are still orders originating through <gasp>faxes</gasp>! It is a small fraction of the total orders placed, but it is non-zero and fulfilling them is critical. Many times, the nurses maintain thick binders full of product catalog listings and ordering procedures specific to the hospital's preferred/certified vendors. Most of the time, the exception process is to hand fill a form and fax the order to the vendor designated fax number. (Yes, it still happens in 2022/23).
In the backend, the faxed order has to be entered (ie., entered into the supplier's ERP system). Our company was doing the order entry for these faxed orders.
Once we received an order from a hospital in a small European country. The order was for "baby blankets" or something similar that is used in a Neonatal ICU. Long story short, due to a two character error in translating the unit of measure from "EA" (i.e., Each = single unit) the hospital's unloading dock received two truck full of cases of baby blankets, enough to exceed the total annual birth-rate of that small European country.
True story.
That's all well and good, but the spin to try to make themselves look like victims is pretty disingenuous. This sounds like the story you get from a teenager about how it's everyone else's fault after they're caught red handed doing something wrong.
Part of the reason Walmart has crushed all their small business competitors.
The absolute biggest and best roasters have relationships and locked-in supply or exclusivity with farmers. They're also likely re-investing profits in those farmers. There are a very small number of roasters of this scale and sophistication, and they're probably already the ones in national retailers.
Everyone else is buying high quality but still commodity green coffee and roasting it.
The first group is able to get higher quality and guaranteed supply because of the deep relationships. They're excellent roasters, but they also are able to attain a higher level of quality because of the garbage in garbage out principle. Everyone else is competing on who can do the best job of roasting the same product. Important, but not quite the same.
I can't say that this company falls into the second category for sure. But if they do, that explains how they can get lots more supply very quickly. Their coffee is high end, they're doing a good job of roasting it, but it's not so high end that there isn't a bunch more green supply that they can get.
People love a good story, and a "reason why" they can get a good deal.
Amazing to see so many people engaging deeply with the story, and not even notice how incredibly effective the sales pitch is.
Otherwise, bad behaviors continue.
Happy New Years!
In school, every class that involves numbers always stresses the importance of units. This is a good real-life example of how important units are, but easy to stumble on.
How can bags be mistaken for cases when negotiating a deal? The price would be different by an order of magnitude.
Why would orders trickle in like this if the product isn't getting shipped from the distributor and sold?
Maybe I'm overly cynical and wary of things on the internet but somethings not adding up here.
"Ok, we'll order 6000 at that price"
I'd think the big company would almost demand that or else the coffee roaster could ship 6000 zip lock baggies with 10 coffee beans in each. I know that's an absurd example but a PO and contract protects everyone against that and that's why any reasonable company doesn't proceed without defined terms.
6,000 units @ $30 per unit
Or
36,000 units @ $5 per unit
You can't have:
6,000 units @ $5 per unit with the expectation that you're going to get 6,000 cases
„Can you move 6000 units?”
“Yes we can move 6000 units at 10$ per pound”
“Sounds great, get them going!”
When I saw it yesterday they had more than 1,000 cases of the dark roast left (and none of the light or medium). So 1,000 cases in a day, a big chunk of the 34,000 bags. I wonder how long it will take them to ship, what with their not having the facilities for it.
The sob story for why the shipping is delayed will be in an upcoming blog post.
Stay tuned...
These kinds of confusions happen regularly, lol. Back a decade ago when I was working in pubs, colleague ordered what he thought would be one pack of paper towels - in the order form, he chose the wrong column to place the "1" in. Next day a shipping company showed up with a pallet of paper towels. Boss wasn't amused too much, but not because of the money, rather because we lacked the space to store a fucking pallet of paper towels. We ended up selling half of them to patrons at cost and managed to squeeze the rest wherever we could - I would not be surprised if someone today would still find a random roll somewhere and wonder where it came from.
In another job at a supermarket, this happened somewhat weekly. Didn't really matter unless it were really slow-moving or perishable goods, but it rarely happened in the latter case and in the former case stuff could also simply be sent back to the central warehouse.
I quit within 3 days because I'm not a liar.
Ok, ok, it's a scam, but a very common scam! Similar to the white van scam. They really should teach people about these scams in school.
Does this business need to be saved because the customer really cares they specifically roasted and bagged some beans they got?
No, the coffee bush did all the work. And yet we never meet or thank it. (The farm workers go second. The James Harrison video you learned your coffee making technique from is third.)