Mis-pricing online – Amazon suffers today; tips to protect your WebSite

Date: 18th July 2012
Author: Deri Jones

Amazon in the news today, this time because a bunch of their savvy customers took advantage of a pricing glitch to buy goods for just a penny.

Luckily it was spotted within 20 minutes, so that kept small both the financial loss on orders already shipped, and the pain of having to handle unhappy customers receiving Order Cancellation emails. The root cause it seems was more in the AppEagle repricing tool.

There’s a sensible small step you can take to reduce the risk of price errors causing real losses on your website, with some proactive early warnings.

Of course, even apart from the customer who stumbles across a price that seems too low and goes for it, there are even folk who actively seek out mis-pricing, like this area of the HotUKDeals.com site !

AmazonBut as has been pointed out elsewhere “The rapid increase in both niche e-stores and huge online retailers stocking more and more products mean that mispricing errors are as high as ever, with both genuine human errors and database issues causing products to be incorrectly listed”.

Since human error is not going away anytime soon, and software bugs and database issues are also due to the same root cause, it’s clear that an online store can never be free of product mis-pricing errors. Really, it’s just a  question of time until they’ll occur again: with the variable being just how much cost and hassle will it be to unravel them this time?

The solution is to use an approach we’ve called online retail Inventory Monitoring.   The principle is take a bunch of your existing 24/7 User Journeys that are monitoring your website store like automated mystery shoppers, and have them keep a record of the prices that they are seeing for each product.

That way, you can set price change thresholds and be proactively alerted when they are breached.

It sits in our thinking alongside the Unbuyable product  side of Inventory Monitoring, where Journeys search and navigate for products, but from time to time select products which are valid choices on the live site, but which are in fact not buyable when you reach checkout – a very frustrating experience for buyers.  Again, the root causes can be human errors in merchandising databases and software and inventory system bugs, both of which are impossible to test for other than ‘Doing what the Customer Does’ as an automated mystery shopper.

This is a new niche area in the website 24/7 monitoring arena, and if there any keen eCommerce folks out there interested in working with us on some pilot projects, I’d be interested to hear.

Lastly, thinking laterally,  there ought to be a niche for an innovative insurance company here, to at least give the online retailer compensation !  Even it won’t help with the potential unhappy customers and brand impact.

Really lastly, the Amazon glitch seemed to revolve round the AppEagle tool – and it’ll be interesting to see how it’s usage changes over time as Amazon try to get control over the dynamic pricing  partners use, as the partners vie with each other for the top Best Buy listings etc.

Amazon have pushed the re-pricing vendors to use Amazon’s own gateway ‘Marketplace Web Service’ for that: Amazon has a track record of playing pretty firmly with partners, as some in the book publishing sector have commented over time – and there’s even recently some conflict as some parties are not happy that Amazon is becoming a publisher ; as the Moby Lives blogger of Melville House books reported this month.