by Mike Masnick

Filed Under:
customer service, losses, pricing


Zappos Admits Pricing Mistake Cost It $1.6 Million; But Is Upfront About Taking The Hit Itself

from the such-is-life dept

For many years we've seen stories of companies making pricing mistakes at e-commerce stores. The news of those mistakes tends to spread very quickly, with lots of people piling on to order something for way less than it cost. Inevitably, the company realizes the mistake, and usually contacts everyone who ordered to let them know the order won't be fulfilled because it was a mistake. I actually have no problem with this, though some people think it's horribly evil. Either way, what seems to almost always happen is that the negative publicity that follows leads the company to change its mind and honor the original price. Sometimes, it actually takes a lawsuit to make that happen.

However, this weekend, it looks like Zappos had a pretty massive pricing glitch on its sister site It lasted a few hours. But what's different this time is that once Zappos fixed things, it immediately decided that it would still honor the wrong prices, even though the mistakes would end up costing the company (now owned by Amazon) $1.6 million. Now, between Amazon and Zappos, the two companies have a ton of money, and continue making a lot of money every day. But, no matter what, a $1.6 million pricing error is still a big deal. Big enough that you would think that the company could potentially withstand any sort of PR hit to trying to not honor those prices (perhaps offering up some sort of gift certificate or benefit to those impacted, instead). However, for a company that bases its entire reputation on bending over backwards to make customers happy, it appears they quickly decided that it was best for their overall reputation to just eat the $1.6 million, and keep (or even boost) that customer service reputation.

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  1. identicon
    chadsford, 24 May 2010 @ 10:15am

    "I've never seen anyone call it 'horribly evil' or the like"

    You would have if this story was about how Zappos didn't honor the mistaken price. In fact I remember a story not too long ago where this happened and the comments were filled with people who were crying foul.

    "Indeed, when I managed a jewelry store, our policy was to stand by our pricing"

    Brick-and-mortar stores are a different story. You might get a handful of sales before someone realizes the mistake and corrects the price. And at that its usually that someone forgot to take the sale price tag off an item that is no longer on sale. But in an online situation where the transactions are processed by computers and not a sales person, a simple typo could lead to thousands of orders at unreasonably discounted prices before anyone gets wise to whats happening.

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