Online retailer blames downfall on Amazon
"Everyone is getting hammered by Amazon," said Adam Gebb during a phone conversation from Cuenca, Ecuador, where he now lives with his family. "People are buying everything from Amazon. Before Amazon, online retailers were stealing from brick-and-mortar stores. Now Amazon is wiping out everything else. Amazon has turned small-business America into a nightmare. Its fee structure is punishing on products that sell for under $15."
In October 2017, People's United filed a foreclosure notice on Gebb's warehouse on Frost Street, which housed Cultural Intrigue, an online retailer specializing in a wide variety of party decor and home d cor from India, China, Thailand, Indonesia and Nepal. Gebb built the 19,000-square-foot warehouse in 2011 and took out a pair of notes from People's United in 2014 and 2015. In its foreclosure notice, People's United noted Gebb owed the bank more than $1.55 million in principal, interest and late charges on the two notes.
Gebb also received $70,000 from a revolving loan fund maintained by the town of Brattleboro for small-business development and $140,000 from the Windham County Economic Development Program, which is funded from a $10 million grant from Entergy after it shuttered its Vermont Yankee nuclear power plant in Vernon.
Gebb denied that he fled with his family to Ecuador to avoid paying back his debts. "My background is in international stuff; I couldn't picture a job I would get in Brattleboro. It was definitely not about running away. It's about being wiped out by Amazon. It's a terrible time to be in a retail environment."
According to a fee structure posted on Amazon's Seller Central web site, the referral fee for furniture and decor is 15 percent, but Gebb said the web site information is misleading. He maintained Cultural Intrigue was paying between 45 and 47 percent of its profits on items sold through Amazon because of labeling requirements, shipping and storage fees.
Robb Mandelbaum, writing for Forbes, noted that Amazon is both good and bad for small businesses in America.
"Amazon's Marketplace hosts millions of small-business sellers," wrote Mandelbaum. "Others rely on the colossus to fulfill their orders. Last year, merchandise sold by those third-party retailers exceeded sales by Amazon itself (as measured by the number of 'paid units' sold) for the first time."
While it's difficult to find good statistical evidence on the effect of Amazon and other online retailers on small companies, it is easy to see what devastation online shopping has brought to the large national chains, wrote Mandelbaum, with just over 6,400 retail chain stores closing their doors in the first eight months of 2017.
Gebb doesn't just blame Amazon for the collapse of Cultural Intrigue, he also blames himself.
"I was offered space at the Book Press on Putney Road," he said. "The wise move would have been to throw $100,000 at a retrofit and still be sitting on $1 million in capital. But the Book Press is really dark and I was committed to downtown. It was really a bad business move to spend that money."
Gebb started Cultural Intrigue in Brattleboro in 1992 and for 25 years, he said, he offered quality jobs with a higher-than-average wage.
"I dropped $1.2 million, my life savings, building [the Frost Street warehouse]," said Gebb on Wednesday. "Downtown Brattleboro has really benefited from having a gorgeous, energy-efficient building on that corner. Yes, the town is out $70,000 and I don't like that. I would be happy to pay that back sometime if I start making money again."
The warehouse, which included flood-proofing, was built with Foard Panels, radiant floor heating and a super-insulated roof.
In October 2018, the owners of Mocha Joe's purchased the warehouse from the bank for $1 million and are using part of the building at 35 Frost St. as a coffee bean roastery and storage facility. Recycle Away is renting second-floor office space and two local woodworkers — Tom Bodett and Greg Goodman — are opening a makerspace, The HatchSpace, for other woodworkers in the region.
Gebb said despite the loss to the town's Small Business Assistance Program revolving loan fund, Brattleboro comes out ahead because in two years, it makes back in property taxes on the warehouse what it loaned to him.
John O'Connor, the town's finance director, said the tax bill for the property is $40,544.96. O'Connor said Gebb had paid his tax bill in full before leaving for Ecuador. However, noted Kate O'Connor, chairwoman of the Brattleboro Select Board, that money goes into the general fund, not back into the Small Business Assistance Program.
"The loan fund is an important program that we can offer small businesses in town," she said on Wednesday. "We want people to be able to use it and keep as much money in it as possible. The fact is, we have $70,000 less, which we can't give to other people right now."
Gebb said that before decamping for Ecuador, he had a meeting with Town Manager Peter Elwell and Assistant Town Manager Patrick Moreland.
"I gave those guys the full scoop," he said. "They were very understanding."
Elwell confirmed that he and Moreland met with Gebb last year.
"Adam Gebb owes the town $67,836.81," sasid Elwell. "We will view that relationship as being 'on good terms' when Mr. Gebb has repaid the town in full."
A spokesman for the Vermont Economic Development Authority, which administers the Vermont Yankee money, told the Reformer in late 2017 that it didn't expect it would be getting any of its $140,000 back from Gebb.
While Gebb has expressed interest in paying back his debts, how he hopes to start making money again is unclear.
"Right now, it's sort of a mystery. I do some consulting. I'm just starting over. I am being proactive and going after stuff."
Gebb also noted that all of his former employees received all of the accrued obligations that were owed to them, including vacation and sick pay.
"I am very thankful for the employees who stayed and eked it out," he said.
Gebb was on the organizing committee of Pisgah Defenders, an organization founded to advocate for Pisgah State Park in Winchester, Chesterfield, and Hinsdale, N.H. He also founded the Green Mountain Conservancy, which he is no longer involved with, and over the years spent $700,000 to purchase 250 acres on South Pond in Marlboro, which he recently sold to the Ames Hill-Marlboro Community Center for $140,000. He said he used the proceeds to pay off loans.
Gebb said he was excited that his old warehouse is getting a new lease on life through the partnerships developed by Pierre and Ellen Capy, the owners of Mocha Joe's.
"It's a good thing, and the building is good for the town."
Bob Audette can be contacted at 802-254-2311, ext. 151, or email@example.com.
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