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How does a 4000$+ ebike go bankrupt when they supposedly have too many orders? Is this a COVID supply chain problem or a management hiding real sales figures p

by jbm 3y ago

How does a 4000$+ ebike go bankrupt when they supposedly have too many orders? Is this a COVID supply chain problem or a management hiding real sales figures problem? -edit- > VanMoof bikes, however, offload many of their configuration functions to a smartphone app and are much easier to unlock with a phone than manually ouch

dazc 3y ago
'How does a 4000$+ ebike go bankrupt when they supposedly have too many orders? Is this a COVID supply chain problem or a management hiding real sales figures problem?' Possibly both but if you have significantly more customers than product you're going to run out of cash eventually. Not bike related but I work with a UK retailer that has this problem with some high value products shipped from China/Vietnam. When they do get stock they start to discount it almost immediately, I assume they are either crazy or that their cash-flow is more critical than profit.
- wklm 3y ago
  Scare liquidity is an issue all across europe rn, stemming from high cost of capital
  - hef19898 3y ago
    For companies relying on investor money to stay afloat, yes. And not just in Europe, that goes for everyone everywhere. If demand exceeds capacity, as was the case with VanMoof apparently, cash flow should be positive so. Any capacity incrwases, assuming there is real demand, are also finacable through traditional means. Unless of course, you screw up your supply chain, as a manufavturing / hardware company cash flow is to a huge extent driven by that. And yes, at 4k a bike, a company has an easier time staying cash positive that at, say, 200.
- elaus 3y ago
  > if you have significantly more customers than product you're going to run out of cash eventually I don't get this. Why do you run out of cash simply because there's more demand than you have production capacity? I would think having open orders doesn't cost money.
  - netsharc 3y ago
    Linus (Tech Tips) has a video talking about cash flow: https://www.youtube.com/watch?v=LSxbc1IN9Gg https://www.youtube.com/watch?v=LSxbc1IN9Gg
  - martin8412 3y ago
    Because they can't charge the customers before shipping the product. Their operational costs may be higher than what they earn from the amount they can ship.
  - weego 3y ago
    I have no idea how their business works internally, but it's very easy for physical goods vendors who extend into supply chain verticals to end up with all their capital tied up in hardware. Not being able to ship due to a missing critical piece (in this you could see a situation where they have everything ready and in storage but waiting on battery supply) is a real problem and can leave your business functionally bankrupt (zero liquid capital) while having lots of assets.
float4 3y ago
The S3 was the real problem. VanMoof released the VanMoof S3 in 2020, which was €2000 (the predecessor was close to €3000). The S3 sold very well because of its low price and great design, but its build quality was really subpar. In fact, insiders say around 10% of all S3 bikes had defects that required repairs (note that 1 - 2% is standard for a typical bike model). So in the end, VanMoof sold many cheap bikes which was great for their market share but not so great for their margins. Then, on top of this, they had to repair many of the bikes they sold which ate into their margins even more. Lastly, because of supply chain issues, they weren't able to offset the repair cost by fixing the S3 issues and quickly selling many proper units to new customers.
Scarblac 3y ago
They did not use standard components, but designed everything themselves, so they could control the repair market and everything. Like Apple does. If as a result 10%-20% of bikes sold need repairs, while still in the warranty period, you're not going to make a lot of profit.

by jbm 3y ago

dazc 3y ago

'How does a 4000$+ ebike go bankrupt when they supposedly have too many orders? Is this a COVID supply chain problem or a management hiding real sales figures problem?' Possibly both but if you have significantly more customers than product you're going to run out of cash eventually. Not bike related but I work with a UK retailer that has this problem with some high value products shipped from China/Vietnam. When they do get stock they start to discount it almost immediately, I assume they are either crazy or that their cash-flow is more critical than profit.

wklm 3y ago
Scare liquidity is an issue all across europe rn, stemming from high cost of capital
- hef19898 3y ago
  For companies relying on investor money to stay afloat, yes. And not just in Europe, that goes for everyone everywhere. If demand exceeds capacity, as was the case with VanMoof apparently, cash flow should be positive so. Any capacity incrwases, assuming there is real demand, are also finacable through traditional means. Unless of course, you screw up your supply chain, as a manufavturing / hardware company cash flow is to a huge extent driven by that. And yes, at 4k a bike, a company has an easier time staying cash positive that at, say, 200.
elaus 3y ago
> if you have significantly more customers than product you're going to run out of cash eventually I don't get this. Why do you run out of cash simply because there's more demand than you have production capacity? I would think having open orders doesn't cost money.
- netsharc 3y ago
  Linus (Tech Tips) has a video talking about cash flow: https://www.youtube.com/watch?v=LSxbc1IN9Gg https://www.youtube.com/watch?v=LSxbc1IN9Gg
- martin8412 3y ago
  Because they can't charge the customers before shipping the product. Their operational costs may be higher than what they earn from the amount they can ship.
- weego 3y ago
  I have no idea how their business works internally, but it's very easy for physical goods vendors who extend into supply chain verticals to end up with all their capital tied up in hardware. Not being able to ship due to a missing critical piece (in this you could see a situation where they have everything ready and in storage but waiting on battery supply) is a real problem and can leave your business functionally bankrupt (zero liquid capital) while having lots of assets.

float4 3y ago

The S3 was the real problem. VanMoof released the VanMoof S3 in 2020, which was €2000 (the predecessor was close to €3000). The S3 sold very well because of its low price and great design, but its build quality was really subpar. In fact, insiders say around 10% of all S3 bikes had defects that required repairs (note that 1 - 2% is standard for a typical bike model). So in the end, VanMoof sold many cheap bikes which was great for their market share but not so great for their margins. Then, on top of this, they had to repair many of the bikes they sold which ate into their margins even more. Lastly, because of supply chain issues, they weren't able to offset the repair cost by fixing the S3 issues and quickly selling many proper units to new customers.

Scarblac 3y ago

They did not use standard components, but designed everything themselves, so they could control the repair market and everything. Like Apple does. If as a result 10%-20% of bikes sold need repairs, while still in the warranty period, you're not going to make a lot of profit.