Walmart is offering a particularly unusual example of how third-party marketplaces can get the companies operating them into real trouble.
Over the weekend, the retailer apologized for a sweater on the marketplace of its Canadian site depicting a wide-eyed snowman in a Santa outfit in front of three lines of what the sweater and its description intimated was cocaine. Beneath the image on the sweater it read “Let it snow,” and the description said, “We all know how snow works. It’s white, powdery and the best snow comes straight from South America. That’s bad news for jolly old St. Nick, who lives far away in the North Pole. That’s why Santa really likes to savor the moment when he gets his hands on some quality, grade A, Colombian snow.”
After social media users began to spot the garment, Walmart promptly removed it and other rude holiday-themed sweaters from the seller, a company called FUN Wear. It couldn’t avoid a backlash, though. A Colombian government agency has threatened to sue Walmart for associating the nation with cocaine.
The National Agency for Legal Defense of the State is demanding that Walmart compensate Colombia for the harm the listing caused, reports Colombian news outlet El Tiempo (link in Spanish). Camilo Gómez Alzate, the agency’s director, told El Tiempo the sweater damages the country’s reputation and legal products. “It is damage that must be fought, and although Walmart apologized, the damage was done,” he said. If Walmart doesn’t comply, the agency will begin legal proceedings. Alzate said the money will go to foundations supporting the families of military and police who were hurt or killed fighting drug trafficking. Colombia will also ask Walmart to spend 10 times the amount used marketing cocaine-related products to promote Colombia’s legal goods.
In its apology, Walmart said the sweaters, “sold by a third-party seller on Walmart.ca, do not represent Walmart’s values and have no place on our website.” The company said it was sorry “for any unintended offence.” We have reached out to Walmart Canada for comment on the demands by Colombia’s government and will update this story with any reply.
Third-party vendors have caused Walmart headaches in the past. Last year, the company apologized for t-shirts and baby onesies that read “Impeach 45,” in reference to Donald Trump, the 45th US president. The year before, it had to say sorry when a seller used a racial slur in a product description.
Walmart and retailers, including Amazon and Alibaba, have also struggled to keep third parties from listing counterfeits on their marketplaces. Though companies generally have seller codes of conduct, they may have too many sellers listing products to be able to police everything. They also have an incentive to make it easy for sellers to sign up and list items, since they get a cut of the sales. The sales add up. In April, Amazon revealed that 58% of its sales now come from third-party vendors.
Companies have sought to beef up protections, using technologies such as automation, for instance, to detect and remove listings. Still, it’s a tradeoff. Amazon admitted in an earnings report this year it could be liable for counterfeits sold on its marketplace.