Selling stock you don't have.

[owas]

Do you think a web store, quite large in its market, is breaking any laws by knowingly selling stock they don't have. I guess with the likes of drop-shipping its hard to manage "but" one company has listed a few different brands on their website, and add all the ranges in different sizes and colours.
I think the hope is that when a customer orders something thats out of stock, they send them an email offering them another colour/item they do actually have in stock, which is only a quarter of what they have on their website.
I guess the pitfalls for them is loss of customer trust, and a bad reputation, and feedback on the web is showing this, but also brand awareness for those products doesn't look good, and then the question of is this actually legal?

 

[alwaysinamess]

Tesco do it all the time, you order it, they don't have it and they send you what they think is better, I done this myself a few times for various reasons, all but one customer who was a right dope finds it ok and was pleased with the upgrade., So if Tesco blatantly do this every minute of the day then I don't think any laws are broken.

Phone their legal team for conformation maybe.

 

[Nsvyas20]

I personally have never had the experience of receiving a different, possibly better item simply because another is out of stock. But I know others who report something similar! I think the safest option is to clarify with a legal team who currently provide it, then restate your conditions in your terms of service for buying off the website.

 

[Paul Norman]

I don't believe it to be illegal, but clearly, from the perspective of customer care it is very undesirable indeed.

 

[Nochexman]

Isn't this a question about managing the customer's expectation?

So long as you explain that the item will not be available for delivery for x days / weeks it is down to the customer to decide if that is acceptable or not - isn't that the case?

Of course, if they say it will be delivered within, say 6 weeks, they need to meet their obligation on time!

 

[The Wholesale Forums]

It all falls down to setting the customer's expectation. In a dropshipping platform this may be a common case but initially a good dropshipper should make forecasts of their stocks on a regular basis. Although if in cases that stocks have suddenly depleted it could then just fall as to how the seller would handle the situation, mostly by replacements or adding little extra to compensate. It is not illegal since it really cnnot be controlled at times, and there would be times that disappointed customers can be turned to loyal ones in these cases (good handling and of course, giving the customer options on how to get through it).

Best,
Erik

 

[owas]

Its not me, but the company that are doing it say on their website 2-3 days for delivery. Then when a customer orders an out of stock item they email them to say so. It makes them look very unreliable.

 

[silvermusic]

It only works for so long unless you have an infinite number of people to handle the fallout. Adversing stock you don't have and can't guarantee getting either will only work for so long before it spirals out of control. I worked briefly for a company that did this some time back, I jacked it in after a few months, did my head in fire-fighting and fielding customer complaints all day. It was a vicious circle advertising entire ranges of manufacturers products a lot of which was unavailable brought in sales sure, brought in a lot of refunds too and unproductive time. Trying to switch sell over the phone and via email ended up taking up 100% of the time for sales staff. There wasn't enough hours in the day to cope with it all. I heard they went bust a few months after I left too, no great surprise.

 

[JD@fifty6]

Jeff Bezos and his team started Amazon.com doing exactly this, but that was in a time where customers weren't so sensitive to extremely fast delivery times.

I think that you can still make it work as long as you deal with delivery expectations extremely well. It's that old cliché: Under promise, over deliver. Excuse the pun.

 

[antropy]

It seems that it's only illegal if you're selling hotel rooms! And even then if you can provide an alternative for a similar price that is nearby then it's okay:

http://en.wikipedia.org/wiki/Overselling

 

[tradefarmni]

It only works for so long unless you have an infinite number of people to handle the fallout. Adversing stock you don't have and can't guarantee getting either will only work for so long before it spirals out of control. I worked briefly for a company that did this some time back, I jacked it in after a few months, did my head in fire-fighting and fielding customer complaints all day. It was a vicious circle advertising entire ranges of manufacturers products a lot of which was unavailable brought in sales sure, brought in a lot of refunds too and unproductive time. Trying to switch sell over the phone and via email ended up taking up 100% of the time for sales staff. There wasn't enough hours in the day to cope with it all. I heard they went bust a few months after I left too, no great surprise.

Did this too for a smaller company, did my head in and as was said resulted in unproductive time. I walked out in disgust, unfortunately unlike above they are still trading- guess they didn't miss me as much

 

[edmondscommerce]

I think there was a time you could get away with this as customers were used to mail order turnaround times

These days of next day delivery forget it

However legally I think there is no issue with this strategy and I think most online shops will occasionally take orders for items that are out of stock, making that illegal would needlessly criminalise something that is going to happen in the real world

 

[owas]

What if the company was heavily in debt, and was knowingly taking orders when they know full well that they cant get the stock in?

 

[edmondscommerce]

Then is that not trading insolvently which is illegal

 

[deniser]

Is this connected to the other thread about the company with supplier problems?

It's hard enough dealing with the odd customer item which is inadvertently unavailable. I can't imagine running a whole business on a dropship basis with unreliable suppliers. They must either have very thick skin or not give a damn.

It's not a breach of contract anyway because of the three stage invitation to treat, offer and acceptance rule but it may be in breach of advertising regulations for misleading customers if it is done to deliberately deceive them.

 

[silvermusic]

It's hard enough dealing with the odd customer item which is inadvertently unavailable. I can't imagine running a whole business on a dropship basis with unreliable suppliers. They must either have very thick skin or not give a damn.

They give the task of dealing with the fallout to sales staff and blame them when the business goes down the pan. Having been involved in sales of one sort or another since I left school in the mid 70s, as both an employee and self-employed at various times, it was immediately clear to me that the company wasn't long for this world.

On the surface of it advertising entire ranges of product whether you have the items in stock or not and trying to switch sell to other products and having to refund a few may not seem like a bad idea. However there's a hidden sting in the tail that will always eventually kill the business. How long it takes depends on the level of items you're selling that you don't have that you have to deal with. Once you reach saturation point it only takes a very short period of time before the whole operation falls apart. There's only a fixed number of employee hours to fix the problems day after day, you can't fit a quart into a pint pot as my grandad would say.

Advertising and selling stock you can't supply within a sensible time frame will bite you in the backside eventually. Don't even get me started on the number of clever fools who disappear on eBay on a regular basis leaving a flood of out of pocket buyers, especially just after Xmas.

 

[Philip Hoyle]

It's quite a common strategy for search engines. You put loads of items on your e-commerce site and then you get traffic to your site from people searching for a particular product.

Of course, the amateurs do it wrong and let people buy it and then have to email to advise out of stock etc. The professionals make sure that their website diverts you to similar products which are in stock. The amateurs let you buy the out of stock item, meaning unhappy customer and having to email re cancellation/alternatives etc.

I've had a couple of e-commerce clients who've done it the professional way and have been very successful, but you need the right shopping cart software to ensure that you still get search engine results with zero stock and also ensure you get the diversion to "in stock" products working properly.

Done properly, it works very well, done badly and you've unhappy customers and lots of wasted time.

I've also seen it done in a different way to "hide" the businesses' core/popular products to prevent competition from copying you. You fill your site with lots of either "dummy" products or slow moving items, but make them look to be fast sellers. That way the competition start wasting their time looking for products that don't exist or they can't work out which products to stock when they set up to try to compete. One client had a whole area of their website dedicated to stock they no longer stocked, including help-sheets, etc., to give the impression that it was an important part of their business to fool their competitors.

 

[Directimport]

Is this connected to the other thread about the company with supplier problems?

It's hard enough dealing with the odd customer item which is inadvertently unavailable. I can't imagine running a whole business on a dropship basis with unreliable suppliers. They must either have very thick skin or not give a damn.

It's not a breach of contract anyway because of the three stage invitation to treat, offer and acceptance rule but it may be in breach of advertising regulations for misleading customers if it is done to deliberately deceive them.

If there is no intention or ability to supply the advertised product, it will be illegal.

In the UK and Australia this is known as "Bait and Switch" advertising. In the USA it is simply known as "Bait" advertising. In those countries at least, it is illegal under consumer protection laws.

If there is a genuine intention to supply as advertised, and an ability to supply, then it will be legal. Unforeseen out of stock situations would probably get the advertiser off the hook, but that does not seem to apply in the case described by the OP.

 

[umamidesignforfood]

I think it's all legally fine as long you're transparent about it (i.e. 'if products are out of stock a similar product may be sent instead/there may be a 6 week wait for delivery' clause in your T&Cs)
However, it has happened to me before and I've often not been happy with what was sent to me instead (I ordered the things I ordered for a reason! If that's what I wanted and paid for that's what I expect)

 

[a4labels]

Although we stock 100's of lines. Someone could order something we don't techincally have at say noon, but we will have it made by 4pm and they will still have it the next day.

As long as delivery schedules are adhered to ,I don't see this as an issue