Cash strapped Ayonz has turned to trade financing in an effort continue trading after admitting that they faced cash flow problems.
According to trade finance Company ScotPac Ayonz has been thrown a lifeline with the finance business enabling the Sydney based distributor to get access to cash-flow during COVID-19 lock downs.
The finance business has refused to say how they are managing shipping delays, processor shortages and demands by retail partners such as Coles, Appliances Online and Big W to supply stock on consignment by the likes of Ayonz.
Ayonz in the past has relied on Chinese financing with shares in the business held by Chinese entities.
Ayonz has not said whether they had to turn to ScotPac because they were heavily into supplying stock on consigment a move that came about after the Company cut deals to consignment suppliers such as Coles with specials stock as they attempted to compete with Aldi.
ChannelNews understands that Ayonz was unable to cut any deals with Aldi due in part to their relationship with Aldi archrival Coles.
Ayonz Director Ziad Yaacoub claims that COVID-19 has accelerated the growth of Ayonz’s online customer base with the Company appearing to struggle to get into mainstream retailers such as Harvey Norman, Narta Stores and JB Hi Fi who were at one stage selling Blaupunkt TV’s.
Instead Ayonz is cutting deals with online retailers such as Nick Aboud’s Cheap As Chips & Catch.
In a crack at mainstream retailers Yaacoub claimed that existing suppliers in the market have become “stale”.
Among Ayonz’s product lines being sold at online stores and at TVSM is Blaupunkt (electronics), Brooklyn (audio products), EKO (TVs and audio products), Germanica (home appliances) Seiki Svision (home appliances) and Urbanworx (technology and kitchen appliances).
Yaacoub claimed that the flexibility and security of the Trade Finance facility with ScotPac had been crucial for the business.
What’s not known is whether their Chinese backers are also still funding the business.
With ScotPac the business now has in place an Invoice Finance facility that helps cover cash-flow gaps for up to 180 days.
ScotPac funds Ayonz sales invoices as soon as they are raised.
Ayonz claims that they are witnessing 30% year on year growth despite the Company having to move to indented stock with Appliances online.
In the past the Winnings owned business placed orders on the Company, now Ayonz has to take risks on the stock.
The rescue by ScotPac allowed the Sydney distributor to go from being “cash Strapped” to now being able to expand sales with online retailers who discount their products out often leaving little margin in the product.
Yaacoub claims that by having the backing of ScotPac it has allowed the business to ramp up import orders without being affected by any unforeseen delays from factories or from shipping lines.
He has not explained how he has managed to avoid what is a major problem for most consumer electronics and appliance brands.
As one competitor said, “It does not matter how much cash you have access to it is not going to fix rising shipping costs component cost rises which in some cases have doubled during the past 12 months”.
ScotPac pays the factories once products are on board.
Ayonz management claims this reduces risks and financial costs that we would have had to endure if there were any delays while stock is still sitting in factories.
We have tried to question ScotPac management as to how they are handling delays and shortages affecting their clients during COVID lockdowns in particular the delays that are affecting businesses such as Ayonz.
Yaacoub said “Consumers have adopted social media and so have we. We’ve made social media not just about marketing but to assist customers with their queries.”
