retail watch | Aug 31, 2023 |
Inside the lawsuit between B2B digital marketplaces Faire and Tundra

The fight over who will control the online B2B marketplace space has moved from the showroom to the courtroom.

This spring, Tundra, a small marketplace operator that is now shutting down its operations, filed a suit against the category’s giant, Faire, claiming it engaged in “anticompetitive conduct, unfair policies” and violated federal antitrust regulations.

Faire, widely perceived as the biggest player in digital B2B commerce, returned the action the same day, filing its own suit against Tundra claiming the competitor had accessed its computer network illegally and continued to do so despite its demands to stop “this scheme.”

B2B online marketplaces emerged over the past seven years as an alternative to in-person wholesale shows and markets. They took on additional significance during the pandemic, when most of the industry’s physical events were canceled, postponed or otherwise restricted in size and scale. There are several competing platforms—some affiliated with the physical events themselves and others that are free-standing. To date, none have threatened the primacy of in-person events the way some had predicted, and the major shows and markets have resumed and returned largely to their pre-pandemic attendance levels.

Each of these suits was filed on May 23 but are only coming to light now. The Tundra suit, filed in U.S. District Court in San Francisco for the Northern District of California, claims that Faire “acquired its monopoly market position by deploying unfair, anticompetitive, and exclusionary tactics that have thwarted competition from other actual and would-be market participants and harmed the Brands, Retailers, and consumers that Faire claims to serve—all in violation of the Sherman Act and California law.”

The suit alleges that Faire has a 90 percent market share for online wholesale marketplaces for independent retailers, even though Faire did not achieve this “by offering a superior product, better pricing, or more attractive terms and conditions.”

Tundra claims that its own business model—which relied on paid advertising instead of the commissions Faire charges—“threatened” Faire, which in response “implemented and exploited exclusionary agreements with Brands and Retailers to block rivals from gaining a foothold in the market.”

In July, Tundra announced that it was shutting down its marketplace. Though the company continues as a wholesale co-op platform, it placed blame for the demise of the marketplace squarely on Faire, claiming that the company “simply cannot remain a viable concern in the face of the anticompetitive conduct, unfair policies, and the punitive enforcement of exclusive arrangements by our direct competitor, Faire Wholesale, Inc.” Tundra did not reply to a request for comment.

Faire’s suit, filed in the same California court, claims that Tundra’s wholesale operation “interfered with Faire’s business and contractual agreements, including by inducing Faire’s users to breach their agreements with Faire in order to use Wholesale Co-Op, and by causing Faire users to be locked out of their accounts or otherwise creating turmoil and customer confusion that Faire must respond to.” The suit also alleges that Tundra accessed its data by “scraping the Faire platform.”

In response to a request for comment, Faire pointed out that it had filed a motion to dismiss Tundra’s case, and issued a statement to Business of Home: “These desperate claims have no merit, and are a defensive attempt to retaliate against Faire’s own complaints regarding Tundra’s harmful practices. 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.”

Tundra is seeking injunctive relief, compensatory damages and compensatory costs. Faire is asking for similar relief—notably, neither suit specifies a dollar amount. Both sides, of course, want the other to stop what each claims are illegal activities.

Though Tundra and Faire may have their day in court, the dueling lawsuits point to a larger truth. If Tundra’s claim that its one-time competitor has achieved a 90 percent share of the market is true, no matter what damages it can hypothetically claw back, the struggle is over and Faire has won. Andmore’s (formerly International Market Centers) recent shuttering of its own online B2B platform, JuniperMarket, suggests the same. As we continue to see companies exit the digital marketplace space, it’s still unclear how big a role the remaining platforms will play and whether ultimately it’s a business that can grow in market share and profitability. Only time will tell.

Homepage image: Courtesy of Faire

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