Austin-Based Awesome Merch Goes Under, Blindsiding Clients Like Topshelf Records
Mismanagement behind fulfillment warehouse hurts music clients
"The mailman here is like, not psyched on me right now," Kevin Duquette said earlier this month from his home in Portland, Ore.
The owner of Topshelf Records, influential indie rock and emo label founded in 2006, has personally undertaken a massive string of orders since his longtime mail-order fulfillment company went under. Austin-based Awesome Merchandise, distributor for Topshelf since 2018, suddenly went bankrupt at the end of August. (Prior, Awesome routinely advertised in the Chronicle.)
Duquette says he's owed over $40,000 in label revenue from Awesome Merch – a part of the Awesome Distro organization that was partly based in Leeds, UK. The shutdown hurt a number of independent creators across the country, ranging from coloring book artists to bands who commissioned Awesome to make their merchandise. One business owner, Chris Hansen of California label No Sleep Records, told the Chronicle he has "no clue" if he'll receive the money Awesome owes him for unfulfilled orders.
Hansen learned of the shutdown from a September 10 blog post on the Topshelf site, where Duquette said that 17 years' worth of his label's inventory would be seized as collateral by the Austin warehouse's landlord. He launched a Kickstarter to keep his business running and potentially hire legal assistance, which ultimately raised $37,000, surpassing its $24,000 goal. Since then, after speaking with the landlord, Awesome's local employees have regained access to the warehouse and allowed clients to pick up their belongings.
Duquette plans to travel to Austin soon to do the same. Until then, his home is stuffed with vinyl and merchandise as he attempts to make good on orders placed before Awesome's demise.
"We've paid, just this week, around $9,000 in shipping expenses," Duquette says. "Normally shipping would have been paid for already by customers as part of the ordering process, but all that money went to Awesome. So we're basically coming out of pocket [to ship] product that we paid for, but didn't receive any money for."
Awesome continued to accept orders from clients like Topshelf up until its August bankruptcy and collected customer payments directly from Topshelf's web store. Under their arrangement, Awesome took its share of profits first and then sent the label the remaining revenue retroactively, and was months behind. Awesome hasn't paid Topshelf since April, owing the label, by Duquette's estimate, anywhere between $40,000 and $80,000.
"I can't turn around and go to customers like, 'Hey, can you buy this record again?,'" Duquette says. "As far as they're concerned, they bought this record from Topshelf Records, not Awesome Merch. So even though Awesome received the payment technically, we're still on the hook for fulfilling that order."
Duquette describes "shoddy" accounting plaguing the company before it went under. Still, he didn't suspect a serious problem until August, when Awesome began assigning a "rotating door" of short-lived accounting personnel. Soon after, his emails to employees began bouncing altogether. He wasn't aware of the bankruptcy until the UK press broke the news.
On August 26, The Yorkshire Post reported that Awesome Merch had been placed into administration (similar to bankruptcy in the U.S.) and "immediately sold to a newly-established business called Print.Inc Group Ltd, whose only director is Luke Hodson – the man who founded Awesome Merchandise in 2009." The deal abandoned around 1,000 investors, who had raised over $730,000 for the business in 2018 through the crowdfunding website Crowdcube. Awesome CEO Hodson did not respond to a request for an interview from the Chronicle.
Rachel Bockheim, former chief of staff for Awesome's U.S. operations, told the Chronicle that the sale led to immediate layoffs of the U.S. team. Despite Awesome going through a "rough patch" of financial issues in the months prior to closure, Bockheim notes that the Austin company was just taking off and even expanded its warehouse footprint significantly within the last year. With all the business' finances handled in the UK, Bockheim says she was led to believe Awesome's U.S. and UK teams would eventually be separated.
Both Duquette and Bockheim point to mismanagement from the UK parent company as the source of Awesome's financial problems.
"The U.S. management team was pretty aware of some of the internal processes that needed work, but because we worked for a company that was UK-based, we didn't have a lot of ability to create change," Bockheim says. "And some of the systems … we had to use them because that was what the UK used, and they were a bigger and much older company."
Duquette and Bockheim both say Hodson has ignored their requests to speak about funds owed to clients. As one of Awesome's first U.S. clients, Duquette recalls being close enough with the founder to hang out, text, and follow each other on Instagram – where, the label head recalls, Hodson would post content that brought his business priorities into question.
"I watched him launch a weed lifestyle brand and marry this influencer lady, and just grow his hair out and turn into this John Lennon type," Duquette says. "It was like, 'You're obviously not paying attention to your business right now.' Throughout the summer, [and] the whole year really, I was just like, 'OK, I guess Luke has enough people in place where he can fuck off and do all these other things.'"
Hodson founded Awesome Distro with his former wife, Charlotte, who oversaw the company's finances until leaving in 2020 following their divorce. Duquette says there were "no problems" with accounting during her tenure, adding, "When she left, it started to get very weird." Duquette provided the Chronicle with screenshots of Instagram messages between himself and Charlotte following Awesome's bankruptcy, where she explained that she set up separate accounts for Awesome and its clients to prevent the type of debts Topshelf now faces. In a September message, Charlotte wrote: "I know for a fact that at Awesome Distro we had separate accounts set up for incoming payment from clients stores – purposefully so we would never commingle funds. … That money should NEVER have been mixed with Awesome money."
With Awesome completely defunct in the U.S., Bockheim and four other members of the stateside management team have relaunched as a new business, FKA Merch. The screenprinting, embroidery, and fulfillment company resides in the same Austin warehouse and, according to Bockheim, has retained about 75% of its clientele. FKA has already instituted the ability for clients to control their own web stores and pay the company its fulfillment fees, instead of the other way around. On a tour of the warehouse last week, the team excitedly printed their first T-shirt with the new FKA logo.
Speaking highly of Bockheim and the rest of the Awesome U.S. team, Duquette stresses that he always had a great experience with employees he worked with on day-to-day operations. Dealing with cardboard boxes for mail orders overflowing into his backyard, the label owner says he's thankful that some of Topshelf's bigger artists have accepted incremental payments, as the label is still missing revenue.
"No one starts a business to screw over all their partners," Duquette says. "There is no intentional malpractice here. It's just incompetence."