Whistleblower charges Walmart misled on e-commerce data in catch-up race with Amazon
A whistleblowing former employee alleges Walmart issued misleading e-commerce data in its race to catch up with retail rival Amazon.com, and then fired him in retaliation when he refused to stop complaining about the practice.
Tri Huynh, a former Walmart director of business development, charged in a federal lawsuit filed Thursday that the company used questionable practices to "paint an overly-optimistic picture" of its e-commerce results as it vies with Amazon for the title of world's largest retailer.
Huynh said corporate superiors brushed off his complaints. After he instead sent his allegations to top Walmart executives in January 2017, the company fired him, Huynh alleged.
"Walmart sacrificed and betrayed its founder's key principles of integrity and honesty, pushing those core values aside in its rush to win the e-commerce war at all costs," Huynh charged in the whistleblower lawsuit filed in San Francisco. "In doing this, it realized it must silence any whistleblower who spoke up against its 'win at all costs' approach to e-commerce growth."
Walmart said Huynh's allegations lack merit.
"This litigation is based on allegations by a disgruntled former associate, who was let go as part of an overall restructuring," spokesman Greg Hitt said in a corporate statement. "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. We intend to vigorously defend the company against these claims."
Walmart shares closed down fractionally at $87.51 in Thursday trading.
The charges come amid Walmart's efforts to beef up its e-commerce business, an area in which Amazon historically held a substantial edge. The company has increased e-commerce spending, including roughly $3 billion for its 2016 acquisition of startup Jet.com.
Walmart reported a 23% increase in e-commerce growth during the quarter that included the 2017 holiday season. However, the result fell below the previous quarter and also lagged behind the growth reported by Amazon.
"We've been focusing on building an e-commerce business, that's still underway, obviously," said Walmart CEO and President Douglas McMillon during a February conference call with Wall Street analysts in February.
Huynh, a former Amazon employee, charged that Walmart's income from online sales has been misleadingly boosted by questionable practices.
The company's global marketplace platform regularly classified some e-sales by third-party sellers in a category that improperly resulted in "excessive commission fees" for the vendors, the whistleblower lawsuit alleged.
Additionally, Walmart classified some returns from e-commerce customers improperly, a problem that skewed the company's online financial results, the lawsuit charged.
Huynh said the previously-glowing job reviews he'd received at Walmart turned to corporate complaints as he continually flagged his e-commerce concerns. Ultimately, he alleged he was fired days after he sent his concerns to Walmart e-commerce CEO Marc Lore and Michael Bender the company's chief operating officer for e-commerce.
Huynh's lawsuit seeks damages for lost wages and other economic losses, along with emotional distress.
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