Stoke substitute Jermaine Pennant scored a late free-kick that gave the visitors a 1-0 win at Upton Park.
And the Hammers boss admitted the display was the most disappointing performance at home since they won promotion back to the top flight in 2012.
"We never got started and never picked the level of our tempo up," he told Sky Sports.
"We didn't pass the ball like we know we can and we didn't compete with the opposition enough. Probably the most disappointing at home I've seen since we got back in the Premier League, so it was unexpected by us all, certainly by me.
"This happens when you're still trying to establish yourself in the Premier League and I think that the players need to realise how tough his league is.
"And while it looked like it was going to end up being a stalemate, probably the one piece of brilliance from both sides was Jermaine Pennant's free-kick.
"To get it over the wall and down into the goal was an outstanding piece of ability, so our attacking play wasn't very good and our attempts and creation wasn't very good.
"We're not that good yet and we never really caused Stoke any problems and that was one of the disappointing things today."
Allardyce also revealed that he is unlikely to bring in any reinforcements before the transfer window closes on Monday.
"The disappointing thing was losing Joe Cole yesterday (to injury) and obviously disappointed that (Ricardo) Vaz Te chose to make a transfer request public before he told me, so we didn't involve him because he wants to leave and Alou Diarra (knee ligaments).
"And now the defeat, so it's been a horrendous week after what would have been a really good build-up to the pre-season and a fantastic start.
"All of a sudden it just shows you what can happen in this game. In the space of one week, two players have got injured and one player wants to leave because he's not in the first-team enough and we lose out first home game, so it can't change any quicker."