Internet Store Accidentally Prices Everything $49.99, Loses $1.6 million (Updated)
Internet retailer 6pm.com says it erroneously capped the price of everything in their store at $49.99 on Friday and lost $1.6 million in a matter of hours. And someone got a $1,400 GPS system cheap.Updated with comment from Zappos.
6pm, which is owned by giant Internet shoe store Zappos, said in a post on their blog:
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.
Update: Aha! A reader says that this is not true:
6pm did NOT have everything capped at $49.99. I was one the site Friday morning and purchased two items at $49.99. However, I saw scores of items priced higher than $49.99. I would have broke the bank if everything was at $49.99.
The reader provided a genuine-looking invoice that showed his purchase was at 5:30am, PST. 6pm.com says that their error lasted from 12am-6am, PST. Still, seems hard to believe they would just blatantly lie about this. On the Internet, no less! Could it possibly be a devious viral marketing scheme? We will contact 6pm.com, which is owned by famous Internet shoe store Zappos. If any readers scored $50 GPS systems from 12am-6am PST on Friday, May 21, please email us.
Zappos CEO Tony Hseih detailed what led to the $49.99 cap in an email. He also explains why some prices may still have been above $49.99. Only products sold exclusively on 6pm.com were capped, which meant that some products sold on both Zappos and 6pm.com were unaffected by the mixup:
We have a pricing engine that runs and sets prices according to the rules
it is given by business owners. Unfortunately, the way to input new rules
into the current version of our pricing engine requires near-programmer
skills to manipulate, and a few symbols were missed in the coding of a new
rule, which resulted in items that were sold exclusively on 6pm.com to
have a maximum price of $49.95. (Items that are sold on both 6pm.com and
Zappos.com were not affected.)
We already had planned on improving our internal pricing engine so that it
will have a much easier-to-use interface for our business owners. We are
also planning on adding additional checks and balances to hopefully
prevent this type of thing from happening again.
Nobody was fired - this was a learning experience for all of us. Even
though our terms and conditions state that we do not need to fulfill
orders that are placed due to pricing mistakes, and even though this
mistake cost us over $1.6 million, we felt that the right thing to do for
our customers was to eat the loss and fulfill all the orders that had been
placed before we discovered the problem.