Walmart Whistleblower Claims Ecommerce Results Overstated

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A former director of business development for Walmart is claiming in a lawsuit it skirted rules and published misleading results that helped to inflate its ecommerce numbers, according to a report in Bloomberg, charges the company denies.

Tri Huynh claims in the lawsuit he was terminated “under false pretenses” after he set off alarm bells about Walmart’s “overly aggressive push to show meteoric growth in its e-commerce business by any means possible — even, illegitimate ones,” Bloomberg reported.

Among other things, the lawsuit alleges, Walmart placed some marketplace items in the wrong product categories, causing some vendors to pay higher commissions. It also alleges the company’s failure to process customer returns worth $7 million led to inflated ecommerce sales.

Huynh, who came to Walmart from rival Amazon in 2014, said he was told by superiors to stop bringing up his questions about business controls and ethics breaches, leading him to approach ecommerce head Marc Lore in early 2017, the report stated. Shortly thereafter, he was terminated during a broader workforce reduction.

“This litigation is based on allegations by a disgruntled former associate who was let go as part of an overall restructuring,” said Walmart spokesman Randy Hargrove. “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.”

In the fourth quarter of 2017, Walmart’s ecommerce sales growth, which had been averaging north of 50% in prior periods, dropped by more than half to 23%. CEO Douglas McMillon blamed it on “operational challenges” including inventory overstock during the critical holiday period. The company’s ecommerce sales growth rate for the entire year was 40%.

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