Will Costly Mistake Translate Into Future Customer Loyalty?
Mistakes happen, but the snafu that 6pm.com, a sister company of Zappos.com, made in the early hours between midnight and 6 a.m. on May 21st may just reach legendary status. Due to an internal error, 6pm.com accidentally marked down nearly all of its stock to $49.95. Items that typically would have sold for $1,857.85 were sold at over 97 percent off! This wasn’t part of any marketing strategy and the error will cost the company an estimated $1.6 million in revenue.
The costly mistake occurred when an employee accidentally triggered an incorrect action using new internal price management software. Apparently a few symbols were missed in the coding of a new rule which resulted in the over-writing of nearly all products to the new, erroneous price. It was several hours later before the the 6pm.com team noticed the mistake and took down the website to fix the problem. Coincidentally, this same pricing engine also powers the pricing algorithm for Zappos.com.
Aaron Magness, Director of Brand Marketing & Business Development, mentioned this on 6pm.com’s blog.
“This was a great deal for customers, it was inadvertent, and we took a big loss 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.”
As far as I know, the employee who made this blunder was not fired and Tony Hsieh, CEO of Zappos.com, called it a “learning experience” and a costly $1.6 million lesson for the company.
In light of the current economic condition and the lean times, I am surprised that the 6pm.com and Zappos.com team decided to honor the pricing error and take such a major hit. Zappos.com, which was sold to Amazon in July 2009 for $928 million, could have easily refuse or canceled all of the orders placed during that time based on the Terms of Use description found on their website.
“In the event a product is listed at an incorrect price or with incorrect information due to typographical error or error in pricing or product information received from our suppliers, we shall have the right to refuse or cancel any orders placed for product listed at the incorrect price.”
However, from a customer service standpoint, honoring the mistake is an excellent move. The “sale” created a lot of positive buzz and served as great a PR piece for the company in regards to honoring their customers, sticking to their word, and owning up to their mistakes. Obviously, it was the customers profiting from such amazing deals on so many items who came out ahead, but affiliates of 6pm.com undoubtedly benefited from the surge in sales, as did other business partners and price comparison portals.
But the questions remains if the goodwill generated from this positive buzz will translate into repeat customers. Either way, at $1.6 million this was an expensive lesson.
