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'How does a 4000$+ ebike go bankrupt when they supposedly have too many orders? Is this a COVID supply chain problem or a management hiding real sales figures p
by dazc 3y ago
'How does a 4000$+ 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 agoScare liquidity is an issue all across europe rn, stemming from high cost of capital
- hef19898 3y agoFor 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 agoLinus (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 agoBecause 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 agoI 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.