A supplier's legal battle with Loblaw Cos. Ltd. has mushroomed into a viral storm – and consumer calls to boycott the giant grocer – underlining the risks companies face when angry shoppers or vendors take to social media.
This week, the co-owner of a small, struggling yogurt producer posted a video on YouTube addressed Loblaw executive chairman Galen G. Weston. In it, Amanda House explains the financial and personal difficulties that she and her partner-fiancé suffered after Loblaw failed to ship their products to its stores. Subsequently they have alleged the retailer copied their line for its own President's Choice private label. Their lawsuit against the grocer has been winding its way through court since 2010.
The grocer carried their YoPRO product in hundreds of its stores for more than a year but it didn't sell well, a Loblaw spokeswoman said.
Ms. House's video plea, which got thousands of hits on YouTube and was shared on Facebook and Twitter after being posted Monday, touched off a stream of sympathetic viewer comments and calls to avoid shopping at Loblaw. It's the latest example of the threat posed by social media to companies' reputations and bottom lines.
In a demonstration of the power of social networks, Mr. Weston responded late Wednesday to Ms. House's YouTube plea, saying the company wanted to resolve the matter quickly. "The events she describes are deeply disturbing and do not in any way meet the high ethical standards aspired to by Loblaw Companies and outlined in its code of conduct. Putting the legal protocols of this situation on hold, I have requested a personal meeting with Amanda to better understand the situation and we will do our best to resolve it right away."
That message will be communicated through social media "directly to those who have contacted us," Loblaw spokeswoman Julija Hunter said, adding that mediations have been scheduled in an effort to settle the $20-million legal claim.
The viral yogurt spat is unusual because the owners of YoPRO Treats were already fighting the retailer in court when they turned to social media.
"That's an unconventional legal strategy," said Jeremy de Beer, a law professor at the University of Ottawa. "The court of public opinion provides far better remedies than a court of law can in many cases … The process is much faster, the impact is often much stronger and it may lead to more satisfactory resolution."
Consumers increasingly are taking on big companies by bypassing traditional routes and going viral with their complaints. But it's rare for a small business to challenge a larger one in such a public arena – and virtually unheard of for a supplier to handle a problem with a big customer through social media.
Ms. House said in an interview she had never used YouTube before. "It was desperation" after her fiancé had endured health issues. A friend of hers had started a Facebook page called "Do the right thing Loblaw!!"
The viral corporate call-out got public attention a few years ago when Halifax musician Dave Carroll fought United Airlines, after his guitar was damaged during a flight, by posting what became a wildly popular video on YouTube called United Breaks Guitars. United compensated Mr. Carroll and he moved on to write a book and, this year, launch Gripevine.com to help other people and companies locked in battle.
Mr. Carroll said in an interview that Loblaw should respond in the same social media where Ms. House posted her plea.
The wider message for companies is that their brand image can be bruised when suppliers or customers go viral with their complaints, he said. "It obligates them to respond on social media where the rest of the conversation is happening." They also need to be prepared to handle social media crises, because they will happen more often.
He said he found it more effective to skip any other conventional or legal complaint channels with United in 2008 and simply posted his song on YouTube.
He praised Ms. House for her impassioned but non-threatening tone in her video. Still, legal experts warned that going viral is risky for litigants because a big company may dig in its heels and refuse to come to a settlement. "It can undermine the strength of your legal claims," Prof. de Beer said. "You've already played your ace."