The seeds of the e-tailer's demise may have been sown when a contractual relationship with major IT distributor Tech Pac, came to a close, according to an E-Store ex-employee who spoke exclusively with ZDNet Australia yesterday.

-There had always been problems with paying our suppliers," the source said. -For the most part we were only given very small lines of credit, and it was virtually like dealing with cash most of the time."

According to the source, E-Store had entered stormy waters when Tech Pac changed an all-important distribution relationship earlier in the year. E-Store initially acquired stock information directly from the Tech Pac Web site, and although the e-tailer would host the transaction, Tech Pac would carry out delivery.

-Things changed back in March or April when Tech Pac decided they wanted to deliver to us in bulk, and we would have to organise our warehousing and dispatch," the source explained. -but we didn't have the infrastructure to do all that so we began to look for different suppliers."

Faced with the low credit limits generally applied to new customers, E-Store was forced to operate on a purely cash basis, the source said, as lines of credit were quickly exhausted. To add fuel to the fire, the source believes stock information displayed on the E-Store Web site was still based on data from the Tech Pac site, providing an inaccurate picture of stock availability.

-The site would say we had twenty in stock but in reality we didn't know how many units our suppliers had in stock, so fulfilling orders became a real problem," said the source.

At this stage, the source recounts when the company's problems began to snowball, with customers angry at partially fulfilled orders, and slowing sales leading to staff cuts.

-In August the entire call centre was closed down, at least half the staff were laid off, and the pressure on the ones that remained was incredible," the source said.

Not only were the remaining staff faced with an increased work load as a result of the initial round of sackings, they were also having to face increasing levels of dissatisfaction among customers.

-One of the biggest problems was that credit cards were being charged before stock was delivered, and stock was being delivered really late because we were sourcing it from wherever we could find it," explained the source.

The last straw came last week when remaining E-Store employees were told to go home, and think about looking for alternative employment, the source alleged.

-It is hard to find work out there at the moment so of course everyone was worried," the source said. -It is a real shame, the company itself is quite good, and the people working there were a great team. With some proper management in place you could really make a go of it."

E-Store's Steve Spilly was unavailable for comment.

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