This story reminds me of my offshore performance boating days. There was a guy on a famous offshore boating forums (go fast cigarette style) name Fred Cecil. A boat owner that was active and attended poker runs and APBA racing events. People got to know and like him.
Well he opened a business called Trick Marine. He became a distributor for every brand of part and accessory for these boats. He had low over head, but his prices were killer low. His business exploded overnight and everyone was buying from him because of the low prices and because they liked him. I spent about $3k with him on gauges, bezels and props really quick and had no issues.
About a year end all of a sudden he did not have as much inventory, deliveries were slow and people began to complain. Well guess what? Yeah he was not paying for his inventory and vendors finally caught up to what was happening and cut him off. I know a lot of people lost money in the end, both customers and vendors.
You can sell at any price if you don't pay for your inventory!