It's pretty easy to understand. AV123 appears to be using their customers' advance payments to finance their operation. It's nearly free money; as opposed to paying interest to a bank (assuming they have sufficient credit to obtain a loan).
Should AV123 not have back-up financing in place, their prepayment method exposes them and their cash paying or debit card paying customers to financial failure/loss. Given the recent closure of their forum, the delivery delays reported on this and other forums, and their requirement for prepaying an order in full, months ahead of shipping, I am growing more and more concerned that they may be heading toward insolvency. Fortunately, I have protection via the credit card with which I prepaid my purchase. As with any internet purchase, I urge all customers placing an order with AV123 to pay by (a real) credit card and NOT a bank issued debit card.
The problem lies in the possibility of a mass exodus of their customers and the associated cancellation of their prepaid orders. Should the perception of instability permeate their customer base, more than it already has, AV123 could be faced with a profound loss of revenue.
Typical financing of Chinese made products requires a 50% down payment. AV123 may be using their customers' prepayments to provide this financing. If their "float" dried up after AV123 issued payment to China, they could find themselves with a big problem. The credit card companies would take what they could. AV123 would be left holding loads of unwanted merchandise that has yet to be pad for in full.
While I appreciate your input and thought into the situation, that simply isn't the case. This has been discussed before as to
why we do prepayments for
certain sales, such as the current Rocket sale. The reason for this is simple: Mark negotiates with our factory for us (as well as them) to take a reduced margin with a guaranteed number of sales. With people pre-paying for their product, each party knows exactly what they are getting profit-wise (remember, this is a business and not a charity so we do need to make money). In turn, the customer knows exactly what they are getting, what they are paying, and when they'll be getting it. This type of sale is a way for the customer to get an outstanding deal on product while the company knows it profit for this system is in the books.
These sales are not financing the company. If you have seen pictures of our warehouse, the majority of the product in there is unpaid inventory ready for shipment. You want a product, there is every finish of MFW (except Rosewood) currently in stock and available to ship within 48 hours.
While I am an employee of the company, I was most certainly a customer first and have gone through many of the same issues as other customers. I took ownership of the first Palisander Rosa Satin X-LS, CS, and SLS to come out of the new factory in Cali, Columbia. Unfortunately, I did have to wait for my product longer than I hoped. As an active member of the forum, I was able to see the delays and know they were coming. I will agree with what many people have said in that there needs to be better communication coming from us if there is going to be a delay in product. You are 100% right. That is an area we are working on a developing methods of improving this issue.
Please rest assured, we are not going away. We OEM for MANY other audio companies and recently had the largest day in sales ever on BF. We are growing and with that has come growing pains, as has been obvious across the net. Just please realize we know we've made mistakes and no one is more sorry than that than us.
If you wish to discuss this further, feel free to PM me or send me an email to scott @ av123.com
Thanks for listening to my 2 cents
Scott
