The Commerce Commission has received 25 complaints about Kmart in the past year of which six relate to products being sold and advertised online despite them being out of stock.
Concerns about Kmart’s sales tactics online, selling goods to only cancel and issue a refund days later, have been a topic of conversation online in Facebook groups.
One customer complained about Kmart’s sale tactics, calling these “Kmart click bait”.
Another woman said: “These have been sold out country wide since before Christmas. They were sold out online as soon as clearance went up. All purchases for click & collect were refunded as none available.”
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Other similar comments have circulated.
But Kmart has defended its online platform, blaming demand for its products for the reason why it needed to issue refunds.
Unlike the majority of large retailers in New Zealand, Kmart does not have a central order fulfilment centre it fulfils orders from. Instead, it packs and dispatches orders from the store located closest to were the order had been placed from.
“Occasionally we have to cancel a product from an online order as that item is no longer in stock, even though it was when the order was placed … this can happen where an order is being filled from a store and these products are purchased in store at the same time as they are being ordered online,” a spokesperson for Kmart said.
“The reason we fulfil many of our online orders from our stores is because it’s closer to the customer for click and collect or home delivery meaning they can get it faster. The downside, of course, is the risk that both online and in-store customers ‘purchase’ a product at the same time.”
The spokesperson said Kmart held back on making some of each product available online to help prevent this, but “on occasion” it still happened given the volume of products its stores could sell, particularly its most popular items.
The low-cost retailer said it was in the process of building a central distribution centre in Hamilton to fulfil its future online orders and working on other initiatives to ensure it was not selling more product than it had in stock.
“We are working hard to ensure this doesn’t happen, with a number of initiatives underway including perfecting the number of each product we hold in reserve and the current construction of a new distribution centre in Ruakura which will fulfil more online orders directly and therefore further reduce the risk of this occurring.”
The Fair Trading Act prohibits false and misleading conduct by businesses relating to the availability of goods.
Kmart is in the process of building its Ruakura distribution centre in Hamilton – its first for New Zealand.
The Commerce Commission said any representation about the availability of stock must be clear, accurate and businesses must be able to back them up. If an item being advertised online was actually out-of-stock, then this should be made clear to the consumer.
It said businesses should have “good processes to monitor stock levels and update their website accordingly so that they don’t risk misleading consumers” by advertising and selling items online that are no longer available.
Vanessa Horne, Commerce Commission fair trading general manager, said the commission was not currently investigating Kmart concerning its online sales and promotional activity.
“Pricing, discounting and other promotional practices are an area of focus for the commission, and we are committed to improving compliance in this area, because these practices have an impact on consumers’ purchasing decisions,” Horne said.