B2B marketplace companies Faire Wholesale Inc. and Tundra Inc. are brimming with marketplace activity — both in the ecommerce industry and in federal court.
The two organizations have grown their commerce operations in recent years, fostering B2B sales to retailers from suppliers of products ranging from home décor to apparel and jewelry. They each benefitted from a temporary COVID-driven surge in demand for online marketplaces as an alternative to in-person trade shows for home and décor products. But more recently, they have become entangled in battles, trading charges of unfair business practices.
Their legal battles began in May but have only recently become more widely publicized.
Faire and Tundra trade lawsuits
Tundra v. Faire Wholesale
Tundra, in a lawsuit filed San Francisco on May 23, 2023, in the U.S. District Court for Northern California, has charged Faire with violating the federal Sherman Anti-Trust Act and California law. It charged Faire with engaging in several unfair business practices to amass a 90% market share.
- “Deploying unfair, uncompetitive and exclusionary tactics that have thwarted competition from other would-be market participants.”
- “Charging brands fixed-price commissions … making Faire the highest-cost competitor.”
- Requiring brands and retailers conducting business on Faire to refrain from transacting sales with each other outside of Faire.
“These practices violate the Sherman Act, which prohibits monopolization, attempted monopolization, and unreasonable restraints on trade, as well as California’s Unfair Competition Law,” Tundra says in its lawsuit, Tundra Inc. v. Faire Wholesale Inc. It adds: “This suit seeks to halt Faire’s anticompetitive, unfair, and illegal practices, obtain redress for the severe damage caused to Tundra, and restore fair competition in the market for online wholesale product marketplaces.”
In July, Tundra shuttered its wholesale marketplace. But on its website, it says: “We hope to be able to return to operating upon a successful resolution of our case.”
In the meantime, however, Tundra is continuing to operate its Wholesale Co-op platform. It lets retailers buy from more than 100,000 brands. It also lets them earn “cash back” rewards of up to 10% of the value of each wholesale purchase. Tundra forwards the orders it receives to Faire and several other marketplaces.
Tundra charges retailers no set fees but keeps a 10% share of each cash-back reward. It charges brands a 15% commission on the initial order they receive from a retailer.
Faire Wholesale Inc. v. Tundra Inc.
Faire, however, accuses Tundra of arbitrage in trying to use Faire’s business operations to expand the sales transaction volume on Tundra’s Wholesale Co-op.
Faire followed with its own lawsuit against Tundra the same day, May 23, 2023. It charged Tundra with “unauthorized solicitation, storage and use of Faire’s users’ credentials for logging into Faire’s online marketplace.”
Faire argues that Tundra uses those credentials to access such information as available inventory, prices and order lead times that Faire only makes available to the retailers and brands that maintain Faire business accounts.
“Despite Faire’s demands that Tundra stop its unauthorized access, Tundra continues to carry out this scheme to copy data from Faire’s computer systems for Tundra’s commercial benefit,” Faire says in its lawsuit, Faire Wholesale Inc. v. Tundra Inc.
Faire charges no fees to retailers. But it charges brands a 15% commission (recently reduced from 25%) on initial orders from new customers. It also charges 15% on reorders. To encourage brands and retailers to conduct more business on its marketplace platform, the Faire Direct program lets brands send a special link to retailers for purchasing products in transactions not subject to commissions.
Founded in 2017, Faire says on its website that 700,000 retailers use its marketplace platform to find and purchase products from 100,000 brands.
Faire says in its lawsuit that Tundra engages in arbitrage by encouraging brands on Faire to also join Tundra and provide their Faire Direct links to retailers in Tundra’s Wholesale cooperative.
An attorney representing Tundra said they could not comment on the ongoing case.
“These desperate claims have no merit, and are a defensive attempt to retaliate against Faire’s own complaints regarding Tundra’s harmful practices,” Faire said in a statement to Digital Commerce 360. “We look forward to resolving the matter swiftly, and remain committed to giving small business owners around the world the tools and technology they need to compete and succeed.”
Faire has filed a motion to dismiss the litigation and a hearing has been set for Dec. 8
Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].
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