Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

modest.coffee

Post reply on HN
Print view View original

331–340 of 386 posts

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

#331

Post by ZephyrBlu »

analog31 wrote: post #89
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's worse than that because they will drag out payment after the term has passed. 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 remem…

I've heard of enough similar stories that if I was ever in this sort of position I would be factoring in the risk that the large company decides to not pay.

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

#332

Post by andrew_ »

buu709 wrote: post #111
asah wrote: post #21

It's 101 that wholesale buyers order by the case and for producers to specify the casecount and price, and for errors like this to be caught when the prices/etc don't line up. This is equivalent to not knowing that URLs can redirect, or that http:// and https:// aren't the same thing. Distributors work with 1000 brands each and don't have time (or margin) to babysit. Also, when a company gets a much larger and differ…

I work in wholesale, but a different industry (electrical) and this is 100% wrong from my experience. Varies from business to business but often times our POs go out for single units rather than cases. It's actually a huge headache for us as we can't get the team responsible to keep our ERP system up to date on which units to use for which lines.

I grew up in a piping wholesale business in the midwest that's still going after 35 years. Orders could be ea. (each, single part) or cs. (case, which is arbitrary based on supplier). That industry is never arbitrary unit (e.g. per "units")because the suppliers sell in bulk and piecemeal, and buyers all have their own specs for how they order.

So I can confirm that at least one other wholesale market is indeed different.

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

#333

Post by Niksko »

charlie0 wrote: post #304

No one has pointed this out. These guys are selling high end coffee. They also admitted this was their largest order by far. Where are they getting this high end coffee from? Is there an unlimited supply of this coffee somewhere? The cynic in me suspects some of that coffee might not even be what's advertised.

There's high end and then there's high end. I don't know this roaster well, but I can take a stab at how this works, based on roasters local to me.

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.

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

#334

Post by ekidd »

dtnewman wrote: post #237
lisper wrote: post #174

Others have pointed this out, but no one has actually done the math yet, so... 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 w…

From the article: > 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 pi…

> 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).

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.

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

#335

Post by acchow »

nebulous1 wrote: post #132
asah wrote: post #21

It's 101 that wholesale buyers order by the case and for producers to specify the casecount and price, and for errors like this to be caught when the prices/etc don't line up. This is equivalent to not knowing that URLs can redirect, or that http:// and https:// aren't the same thing. Distributors work with 1000 brands each and don't have time (or margin) to babysit. Also, when a company gets a much larger and differ…

> when the prices/etc don't line up 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?

I think gp comment is saying that the coffee roaster believed they were selling it at $x/bag. But the acquirer thought they were paying $x/case, which looked very very cheap so they ordered 6000 units of it.

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

#336

Post by prawn »

lisper wrote: post #174

Others have pointed this out, but no one has actually done the math yet, so... 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 w…

I'm assuming they had a stated wholesale price sheet somewhere - maybe it specified per bag and per case prices. They received the indication that orders for 6,000 units would come in. If even 6,000 bags was a massive deal for them, the idea that it could be 6,000 cases might not have even entered their thinking.

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.

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

#337

Post by conductr »

nebulous1 wrote: post #132
asah wrote: post #21

It's 101 that wholesale buyers order by the case and for producers to specify the casecount and price, and for errors like this to be caught when the prices/etc don't line up. This is equivalent to not knowing that URLs can redirect, or that http:// and https:// aren't the same thing. Distributors work with 1000 brands each and don't have time (or margin) to babysit. Also, when a company gets a much larger and differ…

> when the prices/etc don't line up 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?

The word unit alone begs the question, what is a unit? I wondered myself reading it the first time in their article, before I knew it was going to be a land mine of their situation. I never read how they got “grifted”. This is just very poor business management, except they managed to sell it all online with this story which is impressive.

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

#338

Post by toast0 »

fbdab103 wrote: post #268
astrange wrote: post #177

Earlier quoted context omitted.

You’re already giving the customers net 30 by accepting credit cards. Offering BNPL/afterpay would be another way to do it.

No, the credit card company is on the hook for your debt and will pay the business. The credit card company will be the one coming after you in 30 days looking to be made whole.

The merchant isn't being paid immediately either though. I don't think Net 30 is unusual for merchant accounts, but it's been a long time since I was exposed to details of payment processing (knock on wood)

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

#339

Post by pjdesno »

ekidd wrote: post #334
dtnewman wrote: post #237

Earlier quoted context omitted.

From the article: > 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 pi…

> 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). 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…

I had several f'ed up contracts in the 90s-2000s, and tried to negotiate each of them. In a fairly good position several times, as they had forgotten to have me sign the specific contract (non-compete, outside of CA) when they hired me.

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.

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

#340

Post by quickthrower2 »

manv1 wrote: post #161

Inventory financing is a severe pain in the ass for small businesses. It makes moving up to the next level incredibly difficult. 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…

Looks like you added the inventory cost twice? $5 a unit in the unit math and then the $52k. Also do you need to pay the tax immediately?
Post reply on HN