“Magically chaotic” retailer Ishka facing NSW Fair Trading inquiries after tidal wave of customer complaints

Heavily delayed deliveries and sluggish communication from eclectic retailer Ishka have caught the attention of Australia’s consumer watchdogs, with recent complaints against the brand outnumbering those against industry giants like Qantas, Apple, eBay, and JB Hi Fi.

The self-described “magically chaotic” brand is now working with regulators to resolve the tide of complaints, retail manager Toby Darvall says, while maintaining the number of affected customers represent a small fraction of its total orders.

NSW Fair Trading received 28 formal complaints against Ishka in January and 50 since the start of December, with the vast majority of complaints related to the supply of advertised goods or non-responsiveness from customer service staff.

The watchdog logged 20 complaints against international airline Qantas in January as the busy summer holiday season came to an end, with consumer tech titan Apple racking up 18 complaints.

In a statement obtained by SmartCompany, the regulator has confirmed it is “working with Ishka to resolve complaints and ensure consumers are provided with redress in line with regulatory obligations.”

“Ishka is responding to and resolving complaints with NSW Fair Trading and has acknowledged supply chain and staffing issues,” a NSW Fair Trading spokesperson said.

“Customers who paid for orders with a credit card should contact their bank to enquire about a chargeback for goods not supplied, noting a time limit applies for the use of this facility.”

“Inquiries by NSW Fair Trading are ongoing.”

Consumer Affairs Victoria said it does not comment on individual cases or investigations, but maintained it keeps a close eye on companies which fall short of customer expectations.

“We take complaints about poor market conduct seriously and will take appropriate actions where necessary,” a Consumer Affairs Victoria spokesperson told SmartCompany.

“This may include issuing a public warning notice, conducting an investigation and commencing court proceedings.”

Complaints against Ishka are even more prolific across online review platforms and social media, where customers have levelled hundreds of complaints about delayed and missing orders, or slow responses to refund requests.

Leela Cosgrove, founder of sales management firm Strategic Anarchy and subscription box service High Priestess, said a piece of furniture she ordered from Ishka in mid-2022 never arrived.

“I ended up taking it up and they fairly promptly refunded me, so I didn’t really think too much about it,” Cosgrove told SmartCompany.

“I just thought there was some kind of a hold up. I run a business; shit happens, right?”

However, her next experience with the brand, which boasts a wide variety of unique and handmade goods from South-East Asia, Central Asia, and South America, was not so straightforward.

When a $400 order she placed in December had not arrived by January, Cosgrove once again reached out to the company’s customer service team.

“What got me was when I reached out to the customer service reps, I asked them for an ETA, and they were like, ‘Well it’s coming from our supplier so we can’t give you an ETA,'” she continued.

“And I said, ‘I need an ETA, it’s been four weeks already’.

“They were saying to me, ‘Look, we can’t tell you when it’s going to ship, but once it does ship you need to allow six weeks for delivery.’ And I’m like, ‘Okay, but it’s already been four or five weeks.'”

Cosgrove eventually received a refund on the second order.

However, the experience encouraged her to visit online review platforms, where many others shared similar experiences, with “more coming in like every day, of people saying they have the same problem.”

Late last month, Cosgrove asked fans of her own High Priestess brand to share their experiences. She received dozens of responses, with the influx of complaints leaving her “shocked”.

“Certainly we spend a lot of time making sure we’re compliant and taking care of people, and then you see somebody doing this for quite a while, and there’s absolutely no ramifications,” she said.

“It’s like ‘Wow, that’s not how you expect this stuff to work.'”

Toby Darvall, Ishka’s former CEO and owner and current retail manager, told SmartCompany the shipping delays resulted from a drastically altered business model and the lingering impact of global COVID-19 restrictions.

Prior to pandemic restrictions, Ishka counted 65 retail outlets across Australia. Court documents reveal that in the financial year ended June 2019, Ishka enjoyed an annual turnover in excess of $54.7 million.

Today only one physical Ishka store remains, in Clayton, Victoria.

“We got just totally decimated by COVID, the constant lockdowns, and we actually shut down 64 of those shops,” Darvall told SmartCompany.

“Today we’ve only got the one shop, so we had to quickly pivot the business into something that we could sustain and keep that 50 year history going, keep people employed.”

The pivot was dropshipping: a business model which allows a retailer to sell goods and distribute customer orders without keeping those goods in stock, instead relying on third-party suppliers to actually fulfill the order.

Darvall claims half of Ishka’s business involves shipping products from its Clayton site, with the other half dominated by dropshipping.

Of that half, Darvall estimated 90% of orders flow through to Chinese suppliers.

Cracks in the business model showed in mid-2022 when the nation enacted strict COVID-19 lockdowns, which Darvall said limited the ability of Ishka’s 5,000 Chinese suppliers to handle its Australian orders.

“Most of the workshops we were dealing with and the makers were locked out of their workplaces and had to stay at home, which we didn’t understand the impact of until orders started to slow down,” he said.

“Fortunately, China has now opened up and we’re getting on top of the backlog,” Darvall continued.

“And we’re dealing with it as fast as we can.”

NSW Fair Trading has been “really reasonable” as it seeks to resolve the customer complaints it has received, Darvall added.

“As long as you resolve it quickly and refund it, they seem to be fine.”

Ishka has processed $524,000 in cash refunds in the last year to nearly 7,500 customers, he said, out of nearly 67,000 orders.

“Don’t get me wrong, I’m not trying to run away,” he said.

“We’ll work with all of those customers to resolve it as quickly as we can.

“But in the context of how many orders we dispatch it’s not a lot.”

While conceding the company has “dropped the ball” on some orders, Darvall added that the company has given fair warning over expected delivery times in its FAQ section.

A question mark also remains over the size of Ishka’s customer service team, while slow responses to enquiries remain a recurring element of customer complaints.

Darvall said “probably we should” increase the company’s customer service team from five staff.

“But the question is, how long is this going to go for? And can I afford to put more people on when I’m expecting the problem to drop away?”

While pandemic lockdowns and its impact on dropshipping has rocked Ishka in recent months, the retailer of handcrafts, flowing apparel, and New Age paraphernalia is no stranger to significant change.

Ishka was co-founded in the early 1970s by Michael Sklovsky, who expanded the Glen Iris retailer of local handcrafts to an outlet for the multicultural goods he encountered during his own world travels.

The business grew into a significant retail operation in the following decades, and Darvall stepped in as a director from 2010.

Sklovsky departed the business in 2018, leaving Darvall as the sole director of Ishka parent company Michael Sklovsky Pty Ltd.

That company entered voluntary administration in early 2020, well before Australia’s harshest lockdown measures kicked in, after the brand suffered what then-CEO Darvall described as a “catastrophic” summer period.

After a tumultuous handover, the Ishka name was pulled from the precipice in June 2020 under the ownership of Sahasrara Pty Ltd, named after the crown chakra, of which Darvall briefly served as  director until February 2021.

That venture fell into liquidation in August 2021, with the new Ajna Trading Pty Ltd, named after the third-eye chakra and directed by Tasmanian businessman Peter Di Venuto, stepping to keep the Ishka brand going.

Darvall remained involved as retail manager.

Sklovsky, who formed a new venture focused on international handcrafts after his departure from Ishka, says the brand has moved far from its roots.

“The spirit of what I created with Ishka no longer exists,” he wrote in 2021.

“So from my perspective, instead of celebrating 50 years there is much to lament.”