Media Updates, page-8014

My interpretation was that they had something in place for conventional sales but that it had a long-standing blind spot when it came to the grey channel resellers, daigou.

Since the dagiou originally operated by buying stock in supermarkets, and onselling this fairly quickly (i.e. there were no obstacles as there are currently) there was not much inventory build up in this 'invisible' part of the supply chain. Daigou were probably also less involved in CBEC platforms as they are now, and more directly supplying their customers through networks etc. So no inventory build up = no glut of formula to resell too cheaply on CBEC platforms (thus competing with A2's more official CBEC channels) = no reason to care about where the formula went after it was sold in Coles or Woolies. Or so they thought.

It was only until last year that the obvious problem with this equation appeared when they began to build inventory again based on what they could see in conventional channels and what they assumed was low inventory levels in daigou channels. Turned out to be a bit like trying to restart the car too aggressively and flooding the engine. They said as far back as September that they though the corporate daigou inventory warehouses were running low but in hindsight the language around this was quite vague - they did not have hard data that a more robust tracking system should have given them. They presumably knew what they were selling to their main corporate daigou partners directly, just like they know how much stock is going to supermarkets etc., but they never knew where this went - to a customer or other resellers who were untracked? IMO that is how it played out.