4 ms·

There is undeniable an F-up on the producers part here, however I think you are assuming too much in your calculation. They don't say at any point the $250k ord

There is undeniable an F-up on the producers part here, however I think you are assuming too much in your calculation. They don't say at any point the $250k order value was the initial order as they understood it. They explicitly state that they kept getting further orders past what they understood as the initial 6k units. 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.

lisper 4y ago
Again, this is not possible unless they were complete morons. At some point they either had some idea of what they were going to be paid, at which point they should have realized that a unit could not possibly be a bag as they were assuming, or they did not, in which case they had no business being in business. There simply is no way to spin this so that this is not 100% their fault.
- samwillis 4y ago
  No one can make that judgment without seeing the paperwork. We don't know how it was written down. 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.
  - lisper 4y ago
    The only circumstance in which "how it was written down" might matter is if what was written down is different from what they said in the blog post. Which doesn't really help. 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 $250,000 3. The deal was not written down. In case 1 and 3 they are morons, and in case 2 they are liars. There are no other possibilities.
    - Retric 4y ago
      My guess was one of these being far more likely: 1a) the deal was written down for ~6000 units and X$/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.
      - lisper 4y ago
        Re-reading the blog it appears that the initial deal was just verbal, and the contractual element was individual purchase orders coming in. Everything seemed OK until they realized that they were getting POs for more product than they expected.
    - dtnewman 4y ago
      There's another possibility: 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.
      - Ekaros 4y ago
        Add to this it seems they didn't fully understand all of the details of those POs. Like payment schedules, that they can return unsold inventory after certain point and so on. The distributor likely treated them as some bigger operator that could just supply stuff and have other buyers. Or they just didn't care.
    - deleted 4y ago
      [deleted]
  - chadash 4y ago
    > 6k bags a year, their old volume, is only 23 bags per day 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).
- dtnewman 4y ago
  Neh. Perhaps the initial communication from the broker was along the lines of "Here's the deal I cut for you. The distributor is going to place several orders that together are going to add up to 6000 units." "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 They get the first order like this and they say, great, that 1000 units. We should probably expect 4 more orders roughly like this. When they got more than 5 orders like this, they started to freak out. 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.
- deleted 4y ago
  [deleted]
cauthon 4y ago
Is it a standard retail practice to agree to a sale quantity but not a price?
- samwillis 4y ago
  Price per item/unit/case/box whatever and a volume would be on the purchase order, not necessarily the total. If the PO said "6k units @ $7/bag" (made up price), that's ambiguous enough to cause confusion.
  - cauthon 4y ago
    That’s a good example of how this could be written ambiguously, thank you!

lisper 4y ago

Again, this is not possible unless they were complete morons. At some point they either had some idea of what they were going to be paid, at which point they should have realized that a unit could not possibly be a bag as they were assuming, or they did not, in which case they had no business being in business. There simply is no way to spin this so that this is not 100% their fault.

samwillis 4y ago
No one can make that judgment without seeing the paperwork. We don't know how it was written down. 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.
- lisper 4y ago
  The only circumstance in which "how it was written down" might matter is if what was written down is different from what they said in the blog post. Which doesn't really help. 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 $250,000 3. The deal was not written down. In case 1 and 3 they are morons, and in case 2 they are liars. There are no other possibilities.
  - Retric 4y ago
    My guess was one of these being far more likely: 1a) the deal was written down for ~6000 units and X$/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.
    - lisper 4y ago
      Re-reading the blog it appears that the initial deal was just verbal, and the contractual element was individual purchase orders coming in. Everything seemed OK until they realized that they were getting POs for more product than they expected.
  - dtnewman 4y ago
    There's another possibility: 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.
    - Ekaros 4y ago
      Add to this it seems they didn't fully understand all of the details of those POs. Like payment schedules, that they can return unsold inventory after certain point and so on. The distributor likely treated them as some bigger operator that could just supply stuff and have other buyers. Or they just didn't care.
  - deleted 4y ago
    [deleted]
- chadash 4y ago
  > 6k bags a year, their old volume, is only 23 bags per day 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).
dtnewman 4y ago
Neh. Perhaps the initial communication from the broker was along the lines of "Here's the deal I cut for you. The distributor is going to place several orders that together are going to add up to 6000 units." "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 They get the first order like this and they say, great, that 1000 units. We should probably expect 4 more orders roughly like this. When they got more than 5 orders like this, they started to freak out. 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.
deleted 4y ago
[deleted]

cauthon 4y ago

Is it a standard retail practice to agree to a sale quantity but not a price?

samwillis 4y ago
Price per item/unit/case/box whatever and a volume would be on the purchase order, not necessarily the total. If the PO said "6k units @ $7/bag" (made up price), that's ambiguous enough to cause confusion.
- cauthon 4y ago
  That’s a good example of how this could be written ambiguously, thank you!