How should brands react to an online pricing error?
Brands and manufacturers are constantly expanding their online distribution channels. As a result, the bigger the distribution channels get, the more complicated they become to manage. It takes more staff-hours to manually check across all the online channels, often causing frustration when something goes wrong.
If your brand has experienced price glitches on online retail platforms, continue reading to find out if your sales team has the right strategy in place to react quickly and efficiently.
If this is the first time you’ve heard about price glitches, this article covers everything you need to know to tackle the issue head-on.
Price mistake – How serious can it get?
On a day just like any other, and for no apparent reason, a brand-new BenQ 27′ LED PC screen suddenly retailed for €6.99 on Darty, a famous French e-tailer. The MSRP for this product is around €400. Obviously, BenQ never intended to sell their product at this staggeringly low price. The pricing error actually occurred at a marketplace store called Cybertek, where the same seller offered this same deal to several e-tailers. The mistake was quickly caught, and after a few hours, the product returned to the correct price.
This is just one example of a single product price glitch that was corrected shortly after it happened. In the past, however, there have been more serious cases of the wrong price being displayed on online retailers. For example, in 2013, Walmart’s website (US) experienced a massive price glitch that affected hundreds of pricey items that were suddenly marked down to anywhere from $8 to $30. Even the online giant Amazon (UK) was subject to a similar event, caused by an error in the software used by third-party e-tailers, that saw hundreds of items go on sale for just one penny. Unsurprisingly, these price mistakes have created a trend among savvy consumers who enjoy hunting for pricing errors on e-commerce sites.
However, it’s not only e-tailing giants and marketplace sellers who have had to deal with incorrect display prices or price glitches. Big brands and manufacturers who run their own e-commerce sites have also been affected. In 2016, HP apologized for a pricing error that saw one of their laptop models go on sale for less than £2. This incorrect display price had stayed under the radar for a whole weekend, creating a social media buzz and resulting in a tsunami of orders for the brand.
What caused these price glitches?
There are many possibilities for what that led to the incorrect price being displayed; it could have been human error, miscommunication, or even a technical error in the internal or external “smart” pricing software used by the companies.
In the case of Walmart, the company explained that its website had experienced a computer glitch, and it refused to honor any online purchases made at the erroneous prices. In Amazon’s case, they emailed their selling partners saying, “as of now, Amazon will not be providing any reimbursement for this issue.” The company called out its “smart” pricing software provider to take responsibility for the problem. This could be the downside of automated dynamic pricing, where the price is adjusted automatically, off-notice of sellers or vendors. Last but not least, “a processing error” was the cause of the incorrect pricing in HP’s case. However, in most cases, the companies were able to act quickly enough to cancel or refuse any unshipped orders as there is no specific law that requires companies to honor the price mistake.
Regardless of the causes of these price mistakes, solving the issue requires quick and efficient action to prevent further brand damage. There are social media groups and websites that specialize in hunting for such price mistakes. When a pricing glitch goes unfixed for even a short period, as in the case of HP, news of the mistake could travel around the internet in the blink of an eye.
First-line solutions in the event of an online price mistake
Here are a few first steps you can take when you see a pricing mistake with one of your e-commerce distribution partners:
- Take a screenshot – for the sake of tracking and record-keeping for future analysis
- Alert your team – make sure you notify the sales team who are managing the e-commerce channels. They need to make sure that the incorrect price point is not spreading to other partners, and they should also be prepared to answer their customers’ questions.
- Contact your account manager at the e-tailer – explain the issue to them, provide the exact product information with the screenshot you have taken, and urge them to look into the matter
- Get your PR team on board – if the glitch becomes serious, like in the case of Walmart and Amazon, you might want to communicate directly to the consumers to prevent unnecessary future conflicts.
How can you prevent price mistakes for your brand?
No online business wants to deal with a price mistake, but it is not a rare occurrence among online retailers. In many cases, vendors and sellers are unaware of the issue until they notice their sales numbers have suddenly increased, but their revenue has not. It can often take days for the problem to be noticed.
The key to preventing such price errors is to be aware of the potential for this problem and monitor your online distribution channels frequently. Set up a list of online retailers that your brand is selling to, and then set yourself a reminder to check all links at least once a week. It’s even better if you can do it daily, but that takes a lot of time! Many big brands use e-commerce monitoring software to keep track of their online distribution channels in real time. The automated notification sends alerts whenever it detects a significant price drop, so e-commerce managers can be informed of such an issue the moment it occurs and take quick action to fix the problem.