Big Public company shafting small supplier.

[Kwayzee Wabbitt]

This is a case of the big guy S**tting on the little guy.
It is a bit of a Saga.. Read on if you dare

For a couple of years we supplied goods to a very large PLC Courier company. All went well even during the Pandemic.
After the pandemic had ended we started to notice a drop off in the number of products that this company was ordering from us, and we inquired as to what was happening.

We import the product that they use from China and the number which we order is more than the rest of the UK order in one year so you can see the following problem.
We asked why the number was dropping off and were informed that branches probably had too much stock and they were ordering less.

It came to the point where we had to order the next lot from China by container and were getting a little twitchy about the dropping sales.
We sent emails and let them know that we had to renew stocks from the manufacturer and was everything ok? (by email) and were informed that all was well and they were actually opening new branches in the next few months. So we took that and ordered the next lot of stock.

About 2 weeks after we had received the new stock their orders stopped all together and they stopped responding to emails. We wrote to them..

No answer so we wrote again - still no answer.

We got an email later to advise us that using our product was no longer commercially viable, basically gave us a load of hogwash which didn't make sense at all.
We emailed them and no answers, they basically cut us off..

The contract that we had with them said that they need to give us 6 months notice if they wanted to cancel the contract... They didn't cancel the contract (we are still listed as a supplier) they just stopped ordering!! Took us off their procurement system so branches could not order.

All this got us really depressed and we had over 6k worth of stock we couldn't do anything with. 6k is a lot for a small business.

I took advise and was advised to sue them in the county court, but the problem lies in that we would have to sue them for damages and we can't do this until we have sold off or at least tried to sell it off so we can get a figure of loss.

Also that they would be likely to bury us in paperwork and legal fees...

Has anybody got any useful advise (not what we should have done in the past).

Many thanks

 

[Financial-Modeller]

Why don't you sell the stock to another courier?

 

[Kwayzee Wabbitt]

Thanks - we would have thought of that.
I probably didn't give enough info. Our products are consumables for printers and not everybody has the same equipment that they fit.

Thanks though

 

[pentel]

We got an email later to advise us that using our product was no longer commercially viable

Everyone is looking at reducing costs as much as possible. They may have changed their process or printer type or found a cheaper source.

The contract that we had with them said that they need to give us 6 months notice if they wanted to cancel the contract... They didn't cancel the contract (we are still listed as a supplier) they just stopped ordering!

Sorry to say this but it sounds like the contract doesn't oblige them to buy any specific quantity from you.

Did you use a lawyer to draw up the contract?

 

[HFE Signs]

Can you give me a bit more detail on the stock? We have a lot of printers here, maybe we can use some of your stock?

 

[Kwayzee Wabbitt]

Can you give me a bit more detail on the stock? We have a lot of printers here, maybe we can use some of your stock?

Cartridges are Kyocera TK-3160 Manufactured by PrintRite (Compatibles) We have 504 of them.

 

[Kwayzee Wabbitt]

Everyone is looking at reducing costs as much as possible. They may have changed their process or printer type or found a cheaper source.



Sorry to say this but it sounds like the contract doesn't oblige them to buy any specific quantity from you.

Did you use a lawyer to draw up the contract?

It wasn't the fact that they decided not to order from us, just that they lied when saying everything was fine and after we asked them "should we import the next load" they said yes!! We have this on email.

 

[fisicx]

It wasn't the fact that they decided not to order from us, just that they lied when saying everything was fine and after we asked them "should we import the next load" they said yes!! We have this on email.

Everything was fine from their end. They didn’t care if you imported one or one millions. They are under no obligation to buy anything from you. They didn’t lie.

 

[simon field]

I’m afraid business can be ruthless, and not everyone is honest.

Fingers crossed you can shift the stuff eventually, but I’m not sure I’d be throwing money at solicitors here.

 

[Mark T Jones]

As you've surmised, pursuing this through the courts will be time consuming, potentially costly and far from guaranteed in outcome

The lesson here is not to be dependent on a single customer

Moving forward, you could fire off a legal letter, just to gauge the response and look for ways to offload your stock

 

[HFE Signs]

Cartridges are Kyocera TK-3160 Manufactured by PrintRite (Compatibles) We have 504 of them.

We don't have any of those, for some reason I was thinking you meant large format printers. I'm sure you can shift them though, they are quite a common machine by the looks of it. Try contacting a few compatible ink/toner suppliers, even if you sell them off cheap?

 

[MBE2017]

Another option, talk to your supplier about exchanging the items for more commonly used alternatives. Going forward, order based on actual orders, not promises.

 

[Red Wood]

I’m afraid business can be ruthless, and not everyone is honest.

If any lesson is taken from this experience it should be above.

I have lost count the amount of times we have been 'shafted' by a big customer, they don't care, at all.

However, I am of course sorry to hear about your situation.

Once bitten and all that..

Even when you have a large call off PO, they can still often wriggle out of it.

 

[simon field]

When I joined this forum back in 2011, it was to ask advice about a much bigger company than us, who’d led us to believe that we couldn’t make enough of a certain product for them. We were very naive.

We did luckily get paid out, the day before it went to court. £65k I think it was ?

 

[fisicx]

My wife does trade indemnity insurance. When they get requests for cover the very first check is for sole supplier/buyer. If they see this the risk score jumps way up high. What they want to see is transferable products and services.

She had one business who made wheelie bin covers for one company in one location with an on demand contract. Cover was refused.

 

[WaveJumper]

Over the years I have heard this so many times "yep everything is fine business is booming" when in fact they were going down the pan big time, every business at the end of the day whether we like it or not is going to do whats right for them and I would think right now if what I see is anything to go by in the last couple of weeks the country is coming to a grading halt and anyone with any sense is battening down the hatches pretty damm quick.

I happen to know of someone here in the stationary business who was selling amongst other things paper by the pallet load to business's in the city, not this year though and he's wondering what the hell has happened. I hope it all works out for you in the end and your product can find a home with someone else.

 

[fisicx]

It’s all going to come crashing down on Christmas Eve. Once the money is in the till business are just going to close down before the bills come in Jan.

I know three restaurants who are planning just that. As soon as all the Christmas functions are over they plan to lock their doors.

And if you supply the big supermarkets, watch out. All sorts of downward things happening.

 

[WaveJumper]

It’s all going to come crashing down on Christmas Eve. Once the money is in the till business are just going to close down before the bills come in Jan.

I know three restaurants who are planning just that. As soon as all the Christmas functions are over they plan to lock their doors.

And if you supply the big supermarkets, watch out. All sorts of downward things happening.

Yep i think you are probably right its not looking good on a lot of fronts at the moment and very little sign of it getting any better. I was talking to another very good friend, still in the retail game and the worry is where you would normally see sales steadily rising through this month, and hitting a small peak for Halloween before anther steady rise towards Christmas its not much of a surprise really as its going in the other direction. Last couple of weeks in September have been crap and no signs of it pulling back.

 

[Bob Morgan]

It’s all going to come crashing down on Christmas Eve. Once the money is in the till business are just going to close down before the bills come in Jan.

I know three restaurants who are planning just that. As soon as all the Christmas functions are over they plan to lock their doors.

And if you supply the big supermarkets, watch out. All sorts of downward things happening.

Don't forget the ATM Apocolypse the week before Christmas!

 

[WaveJumper]

Don't forget the ATM Apocolypse the week before Christmas!

Now that reminds me of predictions of the end of the world as we knew it when the calendars clicked over to the year 2000

 

[Mark T Jones]

It’s all going to come crashing down on Christmas Eve. Once the money is in the till business are just going to close down before the bills come in Jan.

I know three restaurants who are planning just that. As soon as all the Christmas functions are over they plan to lock their doors.

And if you supply the big supermarkets, watch out. All sorts of downward things happening.

25th December = Rent day (not quite sure whether reality is day before or 2 days after)

 

[WaveJumper]

25th December = Rent day (not quite sure whether reality is day before or 2 days after)

I would think quite a few landlords will be getting very nervous, generally for a lot of retailers the last quarter is where the monies made and I don't see that happing this year.

 

[Kwayzee Wabbitt]

If any lesson is taken from this experience it should be above.

I have lost count the amount of times we have been 'shafted' by a big customer, they don't care, at all.

However, I am of course sorry to hear about your situation.

Once bitten and all that..

Even when you have a large call off PO, they can still often wriggle out of it.

Yeah I know what you mean.
I will be checking much more carefully in the future.

The way that I am looking at it is that overall, during the time that we supplied them we are better off to have supplied them than if we hadn't. We did not make a loss over all. The situation doesn't cause us and major issues with cash flow or anything so thats always a bonus especially in the current financial climate.

It was just a principle issue, the fact that they could do this to a smaller supplier as I bet they wouldn't have done it to a Major one. After I complained to them they basically stopped all communications.

Onwards and Upwards as they say...hey ho!

 

[Kwayzee Wabbitt]

I would think quite a few landlords will be getting very nervous, generally for a lot of retailers the last quarter is where the monies made and I don't see that happing this year.

Its gonna be tough I think for most of us.. Especially I think around next Feb/Mar when its coming to the end of the financial year.

We are a little better off than some here in that we own the building we are based in so no landlord. We got burnt in the past as decided to go down this route.

A friend of mine has 3 retail commercial units and one has already gone and left a debt, so it's started :-(

 

[Kwayzee Wabbitt]

As you've surmised, pursuing this through the courts will be time consuming, potentially costly and far from guaranteed in outcome

The lesson here is not to be dependent on a single customer

Moving forward, you could fire off a legal letter, just to gauge the response and look for ways to offload your stock

Nah their contibution to sales is less than 1% of what we do so no worries there thank goodness - it was just a principle/moral thing.

 

[SillyBill]

Sorry to hear of this for OP, but as mentioned, this is not unusual. As frustrating as it is, these things have to be put down as the risks and costs of doing business, everything we do is a calculated gamble, sometimes it pays off, sometimes it doesn't. I don't count on much these days after many such outcomes, I've had customers wriggle out of solid written POs before now (let alone emails) after everything has been bought and paid for, tens of £k of stock you can do nothing with. What are you supposed to do, deliver them the stuff on a wagon that they'd refuse to offload? Fight in court and exert all your energies trying to flog a dead horse? I always find, after a period of grieving for the loss (current phase you are no doubt in), dusting yourself down and going again is the only remedy. The knocks of business can be brutal, it is why it isn't for the faint-hearted. SMEs IME tend to shaft you only when the money truly runs out, personal relationships often exist here. Big companies who don't know you from Adam can shaft you without even the faintest sign of remorse, they couldn't care less. One of the key things I try and work on is diversification of customer base in all areas, from reducing the big accounts % of total turnover to having plenty of smaller accounts as well as the big accounts etc. That doesn't mean to say we take big risks at times too though, aim to win more than you lose on those as metric of success.

 

[Directimport]

We import the product that they use from China and the number which we order is more than the rest of the UK order in one year so you can see the following problem.

I know that your problem is a difficult one to deal with now that it is all past tense, but I am posting as much for the benefit of other members as for you to know how to avoid such a problem in the future.

Kwayzee Wabbit has been acting as an import/export agent, but without the usual protection. That protection would normally take the form of payment in advance, based on an irrevocable order, with payment guaranteed by either a Letter of Credit, or Escrow.

Payment will only be made by the bank or escrow service when the import/export agent completes all of the terms of the order. Usually the most fundamental terms will be delivery of the goods meeting precisely the quality, quantity and any other description as specified, by the date specified.

I would like to add that the most common question I have been asked in relation to overseas sourcing is "How to become an export/import agent?" This frequent question is a result of exaggerated glowing stories on YouTube and in other media, promising the would-be entrepreneur a fortune if the program being sold is followed.

 

[SillyBill]

I know that your problem is a difficult one to deal with now that it is all past tense, but I am posting as much for the benefit of other members as for you to know how to avoid such a problem in the future.

Kwayzee Wabbit has been acting as an import/export agent, but without the usual protection. That protection would normally take the form of payment in advance, based on an irrevocable order, with payment guaranteed by either a Letter of Credit, or Escrow.

I don't see this being the "usual protection" at all; the vast majority of business conducted is not with letters of credit or escrow accounts. I suspect if I had that conversation with the majority of my customers for these terms we wouldn't be getting much business at all. The OP has operated as the vast majority of businesses do, with the risks attached, they buy stock, it is immaterial where it comes from, and they plan to release said stock to customers over time. He has lost a customer he thought he had in the bag, that is the crux of it. I am also familiar with the systems you're describing which we also do incidentally but it tends to be where we're doing business in Africa or the Caribbean or somewhere to protect ourselves against unknown entities or ones we'd struggle to follow up with. B2B UK do not generally trade with these expectations. You'd get a PO at best and be expected to carry all the risk on the sourcing and stock front. You expect a large UK company buying print cartridges from another UK print company is going to trade on these terms?

 

[N-UPS]

How did you manage to buy a unit? None available round here... Landlord still pushing for huge rent increases in spite of the forecast.

Did you find it yourself or have an agent looking for you etc?

 

[Kwayzee Wabbitt]

How did you manage to buy a unit? None available round here... Landlord still pushing for huge rent increases in spite of the forecast.

Did you find it yourself or have an agent looking for you etc?

Looked at the property a while ago to lease it through an agent but got pipped by another company. Current tenant was not paying rent after a year of being there and going for a free ride.
They agreed to surrender the lease after some pushing. Current landlord was 82yrs old with no family wanting to take on the business so we offered to purchase it and got a very good price. All was good.

So was luck really

 

[Kwayzee Wabbitt]

I don't see this being the "usual protection" at all; the vast majority of business conducted is not with letters of credit or escrow accounts. I suspect if I had that conversation with the majority of my customers for these terms we wouldn't be getting much business at all. The OP has operated as the vast majority of businesses do, with the risks attached, they buy stock, it is immaterial where it comes from, and they plan to release said stock to customers over time. He has lost a customer he thought he had in the bag, that is the crux of it. I am also familiar with the systems you're describing which we also do incidentally but it tends to be where we're doing business in Africa or the Caribbean or somewhere to protect ourselves against unknown entities or ones we'd struggle to follow up with. B2B UK do not generally trade with these expectations. You'd get a PO at best and be expected to carry all the risk on the sourcing and stock front. You expect a large UK company buying print cartridges from another UK print company is going to trade on these terms?

I would have to agree.

We have been trading since 2007 and this is the first time this happened to us so I guess we have been lucky. Most of our customers are small to medium sized businesses and we also sell to Schools, Local Auth and the NHS at times. so our customer base is diverse which has helped us.

Experience tends to lead that if you try to make a sale of small items troublesome or complicated with escrow and complicated contracts, companies will go elsewhere despite you being able to supply and having a good price as this is not everything these days.

 

[Directimport]

I don't see this being the "usual protection" at all; the vast majority of business conducted is not with letters of credit or escrow accounts. I suspect if I had that conversation with the majority of my customers for these terms we wouldn't be getting much business at all. The OP has operated as the vast majority of businesses do, with the risks attached, they buy stock, it is immaterial where it comes from, and they plan to release said stock to customers over time.

Yes the vast majority of business is not conducted with letters of credit or escrow, but the case experienced by Kwayzee Wabbitt is not the usual "vast majority of business". Importing specifically for one customer, whether delivered as a single delivery or little by little is what is known as indent selling, and the business making sales in that way is usually known as an import/export agency.

Import/Export agents protect themselves from defaulting buyers by using the protection provided by either letters of credit or escrow.

Experience tends to lead that if you try to make a sale of small items troublesome or complicated with escrow and complicated contracts, companies will go elsewhere despite you being able to supply and having a good price as this is not everything these days.

The items may be small and individually of small value, but the sale was not for a few small items, it was for a large quantity, so you needed some guarantee such as a "complicated contract" that the buyer would take delivery of the goods ordered. If you made the purchase in the expectation that your buyer would be periodically ordering small quantities, you were acting as a merchant stockist, and therefore the risk was all yours.