Londis and Bestway partnered dropshipping firm IDC is to enter administration, potentially disrupting supply to thousands of independent retailers.
In a letter sent to suppliers on 1 February, and seen by betterRetailing, the collapsed firm said partners would be contacted once its bank ABN Amro had appointed administrators.
The company added: “It is with deep regret we have to inform you that, despite all efforts right up to the last minute, we have been unable to secure the investment needed to improve the company’s position and secure its future.
“As a result, we now expect IDC to enter administration this week. As soon as our bank, ABN Amro, has appointed administrators, they will contact you.
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“We fully appreciate this will have a significant impact to you, your business and employees and we unreservedly apologise that we have been unsuccessful in trying to turn our current situation around.”
The firm added its assets would be acquired by DropShipment UK Ltd, a firm owned by Tim Marland who ran IDC’s dropshipment business “for many years until his early retirement”.
betterRetailing understands Marland’s brand will be separate to an existing DropShipment UK company listed as part of IDC.
IDC said: “He will be writing to you separately, but DropShipment UK is ready and able to take your business forward, should this be of interest.”
The collapse comes as suppliers said the firm filed an intention to appoint administrators in December. Credit reports seen by betterRetailing showed that it filed the same notice again on 20 January, while it had more than 900 outstanding invoices to customers. Various suppliers confirmed they halted orders after IDC failed to make payments last year.
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The collapse means Bestway and Londis stores reliant on drop-shipped goods would face potential lost sales, shelf gaps and missed deliveries if they are unable to secure an alternative means of sourcing goods normally sourced through IDC.
Issues related to IDC also impacted suppliers in Londis’s central billing system. In an update to stores on 26 January, seen by betterRetailing, Booker Retail Partners sales director Stewart Fenn said: “Some smaller suppliers choose IDC as a facilitator for their invoicing. Unfortunately, we understand there may have been a delay in issuing payments to these suppliers by IDC.
“IDC have assured us this is a temporary issue that will be resolved. However, we are also working with the most popular central billing suppliers on an interim solution”.
Fenn warned retailers not to pay for any outstanding invoices to IDC, and to contact suppliers directly for a solution.
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Despite the communication to Londis, other affected suppliers criticised lack of clarity from the company. One supplier, who asked not to be named, said they were unable to make deliveries to a key retail account and warned that smaller suppliers could be at risk with IDC’s administration.
They told betterRetailing: “We stopped putting invoices through as it became clear they weren’t going to pay. It affected orders to one of our large retail accounts.
“I looked up IDC’s credit file and saw there was a notice of intention to appoint administrators. Apparently, there are ongoing discussions, but we’re having to work on the assumption that they’ll go into administration and we’ll lose the majority of that debt. The issue could be critical for smaller suppliers.”
Another senior industry source agreed, adding: “It’s not just smaller firms. Supply from larger firms could be affected too as they won’t want to deliver to stores through IDC when they know they’re at risk of not receiving payment.”
One affected retailer, who asked not to be named, added: “It’s impacted the newspaper orders I make through central billing. It’s not affected supply yet, but I’m concerned this could be an eventual consequence. Newspapers are a major category for me. I just want more clarity on what is happening.”
IDC has been approached for comment.
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