Last week we blogged that WAE+ had undergone a pre pack administration to a couple of its existing employees and that many customers had complained about not getting their orders. Well, in a recent development the new firm created, JM-limited.co.uk, has said that it is unable to meet or is legally required to fulfill any of the existing orders of the previous firm. This has angered customers who are demanding action against rogue internet operators. Advice is that you should buy with a credit card but the problem is that only purchases over £100 are covered so the protection is not as much as many believe. With many more operators online this is becoming more and more of an issue.
The online retailer attracted hundreds of complaints from dissatisfied customers but despite this it announced a trebling of its sales which showed stellar performance by increasing to £4.48m compared to £1.4m in the previous six months.
Citizens Advice confirmed that online shoppers only have a contract when a good is dispatched, though are entitled to a refund within 30 days if it never arrives.
The firm said following record Christmas sales figures it had continued to build on its success and was now averaging over 6,500 customer orders per month.
The Sunday Telegraph did an investigation and found that amid growing fury and calls for action from shoppers, WAE+'s two directors Darren Cresswell and Ben Slater put the company into administration on September 2. The business and assets were immediately sold to two of the 14 employees at the Birmingham-based company, who paid a "significantly higher" price than expected.
So what happened?
We will have to wait to see the administration report but it sounds like the usual rapid growth story where the company has run out of cash trying to fulfill orders that are coming in thick and fast. Perhaps financial controls were not adequate. Either way when companies are growing fast this can be a difficult time to manage cash flow. Download our daily cashflow spreadsheet to help you avoid cashflow problems.