Distributor cancelled an order and we need to move 30k bags of coffee [updated] • Hacker News Board

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#141

Post by bluedino » Fri, Dec 30, 2022, 6:57 PM UTC

When we worked with Mega-Mart, you were required to acknowledge all orders within a certain time period, and you also had to enter all your shipments into their system as well.

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.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#142

Post by webmobdev » Fri, Dec 30, 2022, 6:58 PM UTC

lesuorac wrote: post #38

brookst wrote: post #10

Earlier quoted context omitted.

And yet, if you’re a big company, transactions are expensive. If small companies need frequent payments and won’t float AP, why would you buy from them? Would you rent an apartment that insisted on daily payments? (Ok, bad analogy, but you get the idea). 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 ope…

Where have you been renting that didn't insist on payment up front? Everywhere I've seen you've payed that months rent by the ~5th of that month or they come after you for interest.

Interesting - in India, I have only paid house rent at the end of the month (post-paid). It was a shock to me to learn that in UAE they expected rent annually, in "advance" (I guess it is smart as that weeds out those living paycheck-to-paycheck, who may default on rent)!

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#143

Post by duxup » Fri, Dec 30, 2022, 6:58 PM UTC

This story isn't EXACTLY what occurred here but

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.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#144

Post by JackFr » Fri, Dec 30, 2022, 6:59 PM UTC

Did I miss something in the article about how this was a grift? While these guys feel like they were screwed, and sure, they might have been screwed, making an order and then cancelling it isn’t a grift. No one stole from them, and I’m not sure how the multi-billion dollar grocery distributor got any financial benefit from the whole episode.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#145

Post by richbell » Fri, Dec 30, 2022, 7:00 PM UTC

georgeburdell wrote: post #3

One thing that irks me about dealing with big businesses, that the post touches on, is payment terms. If I buy an item, I pay for it immediately (or if it’s large enough, a creditor pays for me). Big companies pay with IOUs that say they’ll give you cash later, say 30-90 days from now or after criterion X is fulfilled. They do not care if you’re a small company with poor liquidity. I think it’s absolutely abusive beh…

It absolutely is abusive behaviour, and it's unfortunately pervasive across industries.

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."

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#146

Post by ars » Fri, Dec 30, 2022, 7:01 PM UTC

georgeburdell wrote: post #3

One thing that irks me about dealing with big businesses, that the post touches on, is payment terms. If I buy an item, I pay for it immediately (or if it’s large enough, a creditor pays for me). Big companies pay with IOUs that say they’ll give you cash later, say 30-90 days from now or after criterion X is fulfilled. They do not care if you’re a small company with poor liquidity. I think it’s absolutely abusive beh…

I remember reading that one reason suppliers are willing to work with WalMart despite the low prices they pay is that WalMart doesn't play these games with delayed payments - they pay exactly when they say they will.

They also have: https://walmart.c2fo.com/walmart

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#147

Post by caseysoftware » Fri, Dec 30, 2022, 7:01 PM UTC

interactivecode wrote: post #84

jjeaff wrote: post #24

Earlier quoted context omitted.

I remember in a corporate finance class in college, we did a lot of calculations comparing prepayment to net 30, net 90 terms, etc. 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, provid…

I would love it if the EU or government would enforce equal payment terms for whole company. Lets say a shop wants to have a net 30 terms with their suppliers, then they should also offer net 30 terms for their customers. 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.

> they should also offer net 30 terms for their customers.

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.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#148

Post by pbhjpbhj » Fri, Dec 30, 2022, 7:01 PM UTC

seneca wrote: post #66

spcebar wrote: post #46

Earlier quoted context omitted.

The distributer said, "actually we don't need this much, so either take back this enormous amount of coffee that we know you can't handle or give it to us for free and you can "write it off on taxes," which leaves the coffee company screwed on their loans. When the coffee company says they want to take it back, the big company tries to make them pay an enormous fee. The grift, as I understand it, is in the distributo…

Those options were explicitly laid out in the contract they signed, they even say that in the blog post. It's not a grift if they tell you up front exactly what will happen.

What might happen, vs. what a company decided to inflict on you are different things.

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.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#149

Post by nebulous1 » Fri, Dec 30, 2022, 7:02 PM UTC

seneca wrote: post #51

This isn't grifting, and if they had specified the distributor it would be libel. This is a story about a small business that made a lot of bad decisions and got in way over theirs heads. 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…

Yeah. I guess it could be grift if the distributor never really had a realistic buyer for them and they were just taking a high risk with somebody else's capital or it was all in order the get the fees that the article mentioned them trying to charge. The article isn't clear about whether those fees are even in the contract or not, or how they overcame them.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#150

Post by cycomanic » Fri, Dec 30, 2022, 7:03 PM UTC

brookst wrote: post #97

lesuorac wrote: post #38

Earlier quoted context omitted.

Where have you been renting that didn't insist on payment up front? Everywhere I've seen you've payed that months rent by the ~5th of that month or they come after you for interest.

Almost like I acknowledged the specific analogy wasn’t great because rent is typically pre-paid. 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 ev…

Maybe your anologies just don't work, because the situation is completely different? The payment terms spoken about above are not to minimize transaction fees, often enough they are 90 days after the order is completed even for a single order, how does that minimize transaction cost (and how is that comparable to electricity bills?)?

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.