In keeping with our May 1, 2020 decision to continue our e-commerce and delivery suspension and revisit the decision at the end of every week, this is our May 8, 2020 update.
The COVID-19 pandemic has decimated Throne Factory and many of our small business collogues. While we are enlivened to see more states partially reopen, we are mindful of financial hardship the government mandated pause has caused and focused on mitigating the inevitable downstream issues arising from the absence of federal, state, or local guidelines or coordination.
On May 1, 2020 we disclosed that we experienced a 57% refund rate, a 70% transit inventory expense, a 200% anticipation inventory expense equating to a cash burn exceeding $150,000 in April and a cash burn of approximately $45,000 as COVID-19 began to disrupt our operations in March.
As previously disclosed, we are attempting to liquidate cancelled and anticipation inventory to recoup the cash-burn directly related to the government mandated pause so that we have sufficient cash to resume operations. We remain focused on restructuring our business, including reducing our capital expenditures, funding the remaining open orders with our overseas manufacturer so we did not surrender deposits, arranging terms with vendors who had collateralized containers en route, negotiating with our credit card merchant provider, and reviewing our options regarding stimulus and funding.
We are continuing to develop a realistic fulfillment timeline for past due orders and disseminate the new fulfillment dates to our customers. In the coming days we will survey our customers to determine if they will accept the new fulfillment date or if they prefer a store credit.
We are developing and will soon introduce a store credit program, which will include an opportunity for customers who no longer anticipate a need for our products in the future to convert their store credits into refunds as we sell the product they originally committed to.
We are grateful to the many customers who empathize with our attempt to remain in business so we can manufacture and distribute our incredible products. Regrettably, we also have those who are less aware of the pandemic, devastating financial impact it has continues to have on small business, nor the economics of pausing, maintaining, or restarting a business after it was forced to cease operating without notice.
The following are answers to the most frequent questions we’ve received this week:
Will my order be delivered on time? No. As stated above, we are developing a realistic fulfillment timeline for orders and will publish in a near future update.
Will my pre-order arrive on the date you specified before the COVID-19 pandemic? No. As stated in past updates, the global supply chain has been severely disrupted. We are developing a realistic fulfillment timeline for orders and will publish in a near future update.
Why can’t/won’t you refund my order? As stated above, the COVID-19 pandemic resulted in an early April refund rate of 57%. This depleted our cash resources. Our situation is not unique, United Airlines, who unlike many small businesses received billions of dollars in stimulus, is only issuing flight credits while they remodel their business. We are currently only issuing store credits. We are developing and will soon introduce a store credit program, which will include an opportunity for customers who no longer anticipate a need for our products in the future to convert their store credits into refunds as we sell the product they originally committed to.
In simple terms, every aspect of our business has been disrupted, were working hard to stay in business, and we are going to make sure we are fair in how we distribute our time, money, resources, and products.
Throne Factory, with the principal remaining in the epicenter throughout, is committed to act equitably and make thoughtful decisions with regards to our customers, our vendors, and our landlords, and our team until such a time we can resume normal operations.
For those of you who are safe and unrestricted, our eyes are upon you. For those of you suffering, our hearts are with you. We will update no later than May 15, 2020.