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Out-of-stock = Lawsuit? Supplier files a lawsuit against Amazon.com

Alpha International has filed a lawsuit against Amazon.com, claiming the company has used false and misleading statements on the Amazon.com web site. In a press release issued by Alpha International, Connie Keener, CEO of Alpha International is quoted as saying "Amazon.com is damaging our credibility with our wholesale and retail customers.'' 

According to Alpha, the company has sold products to Amazon.com for resale to the public in the past, specifically the Gearbox 1940 Ford fire truck riding pedal car. The company claims that Amazon illegally, improperly and falsely states at its web site that the Gearbox fire truck is not in stock but will contact the customer when the truck is available. Meanwhile, according to Alpha, Amazon.com has not placed any recent orders with Alpha International and there are no back orders.

Alpha suggests its wholesale customers and potential customers competing with Amazon.com improperly believe Amazon.com is receiving the product from Alpha at a substantially lower price than is offered to them. The result is that the company claims to be loosing sales.

I assume Alpha didn't mind Amazon.com promoting its products when it was buying them! This case raises an interesting question regarding the ability of an eRetailer to advertise products that are not in stock. Given that so many eRetailers do not carry stock of any products, it is hard to see how this can be effectively prevented. Nor is it likely that Amazon.com would knowingly advertise a product that it is out of stock since this is hardly good customer service.

Given today's highly automated websites that track inventory positions automatically, it is highly likely products will go into an out-of-stock position without any human intervention. Does this highlight some underlying devious plot by Amazon or perhaps just a supply-chain blunder being exploited by Alpha International? I suspect the latter, how about you?

Amazon.com's official response: "the lawsuit is completely without merit" ........ well, what did you expect?

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Is this a fair case? Should suppliers be able to sue retailers who go out of stock on their products and fail to remove the products from their website? Should eRetailers simply avoid the problem altogether by designing systems that will not display out-of-stock items? What does this say about the legal system in the US, where people can file law suits without worrying about picking up the costs if they lose? (OK, maybe that's a little deep)......click here for our online opinion form or email us using this link: mailto:feedback@eretailnews.com?

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Nigel Fenwick 08/31/00 Source: Alpha International announcement

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