CNBC reports that Tri Huynh, a former director of business development at Walmart, has sued the company, claiming that the company “issued misleading e-commerce results” in its efforts to keep up - or create the perception that it was keeping up - with Amazon.
According to the story, “Huynh claims the retailer mislabeled items on its website so that third-party vendors were paid lower commissions, sent customers the wrong orders, and forced merchants to deal with greater returns. Walmart also overlooked basic internal controls, according to his suit, which was reviewed by CNBC.”
After Walmart acquired Jet, the lawsuit says, "A high percentage of the product sale lists between Jet.com and Walmart.com overlapped – that is, they contained redundant SKUs … Yet Wal-Mart was reporting the redundant SKU numbers as if they were separate, non-redundant, thereby misrepresenting and artificially and falsely inflating SKU growth numbers.”
Huynh characterizes Walmart’s behavior as an "overly aggressive push to show meteoric growth in its e-commerce business by any means possible — even, illegitimate ones.”
In a statement to CNBC, Walmart says that “this litigation is based on allegations by a disgruntled former associate, who was let go as part of an overall restructuring. We take allegations like this seriously and looked into them when they were brought to our attention. The investigation found nothing to suggest that the company acted improperly.” Walmart says it will “vigorously defend” itself in the suit.
Huynh, who also worked for Amazon earlier in his career, says that “he was terminated by the company under false pretenses in 2017.”
According to the story, “Huynh claims the retailer mislabeled items on its website so that third-party vendors were paid lower commissions, sent customers the wrong orders, and forced merchants to deal with greater returns. Walmart also overlooked basic internal controls, according to his suit, which was reviewed by CNBC.”
After Walmart acquired Jet, the lawsuit says, "A high percentage of the product sale lists between Jet.com and Walmart.com overlapped – that is, they contained redundant SKUs … Yet Wal-Mart was reporting the redundant SKU numbers as if they were separate, non-redundant, thereby misrepresenting and artificially and falsely inflating SKU growth numbers.”
Huynh characterizes Walmart’s behavior as an "overly aggressive push to show meteoric growth in its e-commerce business by any means possible — even, illegitimate ones.”
In a statement to CNBC, Walmart says that “this litigation is based on allegations by a disgruntled former associate, who was let go as part of an overall restructuring. We take allegations like this seriously and looked into them when they were brought to our attention. The investigation found nothing to suggest that the company acted improperly.” Walmart says it will “vigorously defend” itself in the suit.
Huynh, who also worked for Amazon earlier in his career, says that “he was terminated by the company under false pretenses in 2017.”
- KC's View:
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First of all, what other kind of pretenses are there?
I have no idea how this suit will turn out, but if the accusations are credible, I have to wonder if it creates bigger legal problems for Walmart; if it misstated financials, that could qualify as misleading investors. Not cool. Which is why a vigorous defense is Walmart’s only option.
I would normally think that a company the size of Walmart would be unlikely to do such a thing … except that this is pretty much the definition of the financial scandal in which Tesco found itself not so long ago.
