Ouch!
May 24, 2010 2 Comments
Pricing in the digital age has become a seriously complex subject. The absence of a physical check before a transaction means that a pricing error can snowball into a disaster pretty quickly. One example – 6pm.com recently lost $ 1.6 Mn during the course of a six hour pricing error. This is what happened
Hey everyone – As many of you may know (and I’m sure a lot of you do not), 6pm.com is our sister site. 6pm.com is where brandaholics go for their guilt free daily fix of the brands they crave. Every day, the site highlights discounts on products ranging up to 70% off. Well, this morning, we made a big mistake in our pricing engine that capped everything on the site at $49.95. The mistake started at midnight and went until around 6:00am pst. When we figured out the mistake was happening, we had to shut down the site for a bit until we got the pricing problem fixed.
While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $1.6 million – ouch) selling so many items so far under cost. However, it was our mistake. We will be honoring all purchases that took place on 6pm.com during our mess up. We apologize to anyone that was confused and/or frustrated during out little hiccup and thank you all for being such great customers. We hope you continue to Shop. Save. Smile. at 6pm.com.
Nice press release – done in a way that makes the best of a bad situation. However, another company could have gone bust with a mistake like this. Could one prevent this. Perhaps. Many companies build systemic alerts linked to abnormal sales volumes. Of course, this happened between midnight and 6 am – so an offshore monitoring centre could probably have spotted it 🙂
amtgrg
Gaurav Rastogi
Two MBAs, One Blog 
I wonder how many small and medium internet businesses set aside capital (and cash) for black swan-ish operational risk events like this.
Also, only small entrepreneurial firms would have the gumption to do this. A bigger, more professionally run firm would have an MBA bean-counter somewhere in the chain, who would do what BestBuy did in the same situation (scroll down to the comments on your link). And he would never be fired for doing so, while a philanthropic manager who cheerfully offers up the keys to the kingdom would be out on his fanny looking for a job by lunchtime. Organizational Behavior 101?
Absolutely! Zappos’ response probably got them a couple of million bucks worth of publicity. Add to that the lifetime value of the customers they may have added during those six hours.
Of course, you need to have a big wallet to afford it!