If he makes you money then follow the advice above.
A few points though.
1. How did he get the impression that you wanted/needed the product? Ties in to the whole "there are no bad soldiers just bad generals" idea that so many useless employees subscribe to.
2. It is your business, if you are going to delegate tasks make darn sure the person you choose can carry their share of the water.
3. Regarding him not understanding why his mistake is a mistake, well that is the nature of employees. They come to work, work 9-5 and go home. They do not know or care about the overhead, sleepless nights, and unlimited OT business owners put in on a daily basis. That is probably why it is no big deal to him.
If the hit you are going to take is significant. Revoke his purchasing privileges. Or have AP call you with all invoices over $X. Use the product in some lame promotional way (if it is possible) Build some control into your system and learn from this. Every adversity is an opportunity to improve.

