Dick Smith’s official eBay store was in such disarray in the month before the retailer’s collapse that it breached the online sales platform’s standards for sellers.
The electronics retail chain’s banks forced it into receivership last Tuesday following two profit downgrades, a shock $60-million inventory write-down and a pre-Christmas fire sale that failed to generate enough cash to keep the company operational.
And while the collapse caught many by surprise, Dick Smith’s official eBay store was showing signs of things to come in early December when customers started to complain that their purchases were not being delivered.
eBay customers can leave positive, neutral or negative feedback for sellers and Dick Smith’s negative feedback skyrocketed in early December.
Less than 1 per cent of feedback over the past 12 months had been negative, but 10 per cent was negative over the past month.
Almost half of the 326 negative transactions recorded over the past year happened in the past month.
Most customers who left negative feedback complained they had paid for orders only to be told later the item was out of stock.
“Sent refund days before xmas. No contact or reason, 1 month wait,” wrote one customer who ordered an $819 Canon camera lens kit.
The buyer of a $90 sports watch said there was a two-week wait before they were told the item was out of stock, while several others reported visiting stores to receive “click and collect” purchases, only to find they were not available.
“6 weeks – no contact, no item. Had to open paypal dispute,” one customer wrote.
The items Dick Smith was unable to deliver included televisions, headphones, portable speakers, sports watches and GoPro cameras.
The poor performance put Dick Smith’s store – which has now been suspended – in breach of eBay’s minimum performance standard for sellers, which demands that less than 5 per cent of transactions result in negative feedback.
Breaching that minimum standard could have led to eBay limiting the number of items Dick Smith could sell, downgrading its store to a basic format and placing items lower in eBay’s search results, making it harder for shoppers to find them.
Dick Smith’s receiver Ferrier Hodgson was unable to say on Monday why trading on its eBay store had been suspended.
However, Dick Smith was still trading online through its own website on Monday and had launched a one-day “Sale-tastic” sale promoting discounts on “most” of its range.
Dick Smith owes more than $140 million to its banks NAB and HSBC and $200 million to creditors, but neither Ferrier Hodgson or administrators McGrathNicol have been forth coming with a full list of parties that are owed money.
However it is understood that flagship suppliers like Apple and Samsung had been demanding cash on delivery for their products, meaning they are unlikely to be among creditors.
However, suppliers of second-tier items like Synnex Australia, which distributes tech products and accessories, are believed to have greater liabilities, along with landlords such as the Westfield owner Scentre Group and Vicinity Centres.
Ferrier Hodgson has said that more than 30 businesses had already expressed interest in buying Dick Smith, ahead of the placement of advertisements in Australian and international newspapers this week to invite expressions of interest by January 27.
A Ferrier Hodgson spokesman said a shortlist of bidders would be invited to commence initial due diligence and then submit formal offers, with the process expecting to run “well into February”.
A creditors’ meeting will be held at the Wesley Conference Centre in Sydney this Thursday at midday.
Business Insider Emails & Alerts
Site highlights each day to your inbox.