Group-Buy in Default

Though Novanty takes many steps to help make each Group-Buy a success, the unfortunate truth is there are risks. Some Businesses simply won’t be able to purchase all of the inventory from Buyers.

When setting up the Group-Buy, the Business is telling Novanty based on their sales forecast, how many units they expect to Purchase from Buyers on what dates. A Group-Buy is considered to be in Default if they miss more than three of these dates without buying inventory from Buyers. Or if they don’t purchase ALL the inventory by the Time-Period date they said they would.

 

What to expect if a Group-Buy is in Default:

If you own inventory from a Group-Buy that goes into Default, here is what happens:

First, it’s important to note that if a business is in Default, it does not necessarily mean you will lose money. Some Businesses choose to set lofty goals to kick their sales team in gear, others just need a little more time due to many various reasons that naturally pop up in a Businesses life cycle. A Default also doesn’t necessarily mean the inventory has no or even less value. In the event of a default, you might be able to liquidate your inventory to another Buyer who either still sees hope, or has another use for the inventory for their own purposes.

Novanty will be working with the Business to try to find a solution. Once Novanty concludes a solution cannot be reached with the Business, we will present to the Buyers their options. It is the Buyer’s inventory, so it is up to each Buyer what they want to do.

Here are some of the choices, not every Group-Buy will have the same choices. There may be additional costs associated with whichever choice you chose.

  • More time
    • It simply gives the Business more time to catch up and fulfill their obligation. You still have the ability to adjust your Sell Price at any time to help make sure you are the next in line to sell your inventory if they do come around. There may be costs associated with storage costs.
    • During this time, Novanty will be trying to work with the Business to try to get them to purchase the inventory. Our resources can sometimes be helpful to Businesses.
  • Ship to you
    • Ship your inventory to you. This will incur shipping and handling costs.
    • There may be rare occasions that the inventory is not available to send to you.
  • Liquidate
    • This might be by contacting the Businesses customers directly to see if they want to purchase the inventory, contact the Businesses competitors or just other Businesses to see if they can use it. We can also contact liquidation houses, scrap facilities, etc. Maybe one of the Buyers has an idea for the inventory? There likely will be some costs associated with liquidating inventory.
    • If you chose to liquidate your own inventory perhaps through Amazon or however you wish, you will want to have the inventory shipped to you to handle fulfillment. On some occasions we Novanty may be able to provide that service.
  • Abandon the inventory
    • We don’t encourage this because it then becomes a complete loss. But if you just want to be done with it, you can abandon your inventory at any time. Simply adjust your Sell Price to $0.00 and another Buyer will buy it from you. If they do not, Novanty will. The only financial benefit to you for doing this is the inventory will no longer incur costs. You may be able to deduct the loss on your taxes, consult your CPA for details.

In the event that a Group-Buy goes into Default and a solution cannot be reached with the Business, Novanty is committing to use any profits we may have made from that Group-Buy to purchase inventory from Buyers.