Zappos.com's little sister loses $1.6m in pricing cockup

A sister website of online shoe retailer Zappos.com lost $1.6m on Friday morning when a pricing engine blunder mistakenly switched some of the company's product line to being available for no more than $49.95 a pop. Over the weekend 6pm.com coughed to the embarrassing technical glitch, in which it confessed that customers had …

[Ian Ferguson]

Hmmmmm

Did they really lose $1.6M, or is that the 'value' (ie. full retail price) of the items in question minus the price they were sold at?

Most shopping businesses are savvy enough to include E&OE (Errors and Omissions Excepted) somewhere in there terms and conditions.

If a business decides to honour a mistake like this, it's because they've weighed up the cost to them and good publicity versus annoying the customers. Or... they might even be making a profit from the deal, regardless of the error. After all, you can't buy publicity like the viral publicity of 'hey, check out this site, they've made a mistake and you can get a handbag at a silly price!'

[Anonymous Coward]

Exactly

That's just what I was thinking... I'm sure the $1.6M will come out of their advertising budget.

I expect it was a genuine mistake, but I'm sure they could have wriggled out of it if needed, but they've decided to use it to their advantage and get as much publicity as they can.

Good for them really.

[Tom 13]

Given the postings and follow ups

I think they really did lose $1.6 million. But even if the hit was only half that in these economic times not many companies will take the hit. Advertising budgets aren't actually very flexible after they've been set at budget time. I've worked next to the poor schmuck trying to sell advertising, and if he didn't catch them before the budget was set, there was pretty much no sale. Thankfully I was doing the typesetting for the articles and not working the sales desk.

[Polhotpot]

Good for them

Honouring the agreement, when most others have tried to wheedle out of it.

That's one of the reasons Zappos are doing well, whilst Dixons are dying on their asses.

[Darren Coleman]

@Polhotpot

Yeah selling things for below your cost price (if the quote is true) definitely is a sound business model.

[Neil Brown]

Is it not commonplace, and called

"loss leaders"?

[peyton?]

No, but....

keeping your consumer base happy and confident is.

[Jelliphiish]

yup

i hadn't heard of them until this.. but then i'm on the other side of the pond .. still... way to create a global brand! ;)

[simon newton]

thumbup

honest mistake, customers benfited and they are honoring it. Just from this alone im now going to use these guys to shop. Not for the fact i may get a bargain, but for the fact that when they screw up they dont shaft their customers.

Watch and learn dell ( btw you still owe me that 2.4ghz for 50 quid from 2003!)

[NemoWho]

Not shafting customers?

...but you said they sold womans handbags! Which is it?

[Ravi Shanghavi]

Good on them!

Very happy to hear they honored the purchases. Excellent PR really. Everyone loves a deal. I love Amazon for randomly shipping me little giveaways in my purchases, and I totally return to the stores where I've gotten 'to good to be true deals'. Though Shoebuy tends to have better stock on the brands I buy, I still buy from Zappos once in awhile. And their customer service is outstanding. -Ravi Shanghavi, Ottawa, Canada

[Maryland, USA]

Contrast Zappos's response with Chrysler's

in the 1980s, when minivans ruled, Chrysler was giving away a Dodge minivan to whoever bought a cereal box with the winning ticket inside. By mistake, 12 winning tickets found their way into cereal boxes. Chrysler refused to honor any claims but the first, missing a chance to gain favorable publicity.

[Henry Wertz 1]

How much is a bag anyway?

How much does a bag cost? If they sold them at $49 apiece, and still lost $1.5million, they must be some hellaciously costly bags.