Two different ways to deal with a pricing error: Zara vs Zappos
Posted: Wed Dec 18, 2024 5:55 am
E-commerce does not present any substantial differences compared to our regular establishments in the treatment of prices, returns of items and guarantees that we have to offer to customers.
However, the use of online platforms to market our products and services through a technological channel and with a more complex face-to-face intervention can generate errors in our product catalogues. The most common errors that we can find in any online store are prices and differences between the product displayed on the website and the real product. If we look at price errors, the most striking error is placing very low prices for some items.
Two ways to deal with a pricing error
Focusing only on the error in price well below the usual selling price of our articles, we can take the form of action of two companies, both very well known and with a very different final outcome regarding the error.
For example, Zara had a computer problem in its online store consulting email list and placed some of the items from its new catalogue at a price of one euro for a few hours . The company contacted the buyers of these items during this period and cancelled their purchase, citing a computer error as the cause of these low prices.
Zara has acted correctly , there has been no bad faith and therefore the company cannot be accused of misleading advertising, so cancelling these orders is correct. But even though Zara acts with the law in its favor and anyone can have an error in its systems, I think it is preferable to act with Zappos' policy in these cases.
Own the mistake in pricing, it is an investment in marketing
Zappos, for example, had a similar experience some time ago . On its website, all items were priced at $49.95 for six hours. During this period, it made sales that caused it a loss of 1.6 million euros.
Zappos could also have cancelled these purchases, but instead of “pissing off” these customers, it took responsibility for the error and achieved good coverage in online and offline media around the world. Proof of this impact is enough to look at the traffic on its website during the period of the error and afterwards. We cannot evaluate the conversion into sales of this increase in visits and we cannot evaluate the degree of loyalty of these new visits to the Zappos website, but in the case of a pricing error over a short period of time, it may be more positive to take the heat and accept the financial losses created, rather than rectify these purchases, if we accept the linearity of visits to the website with the sales made.
However, the use of online platforms to market our products and services through a technological channel and with a more complex face-to-face intervention can generate errors in our product catalogues. The most common errors that we can find in any online store are prices and differences between the product displayed on the website and the real product. If we look at price errors, the most striking error is placing very low prices for some items.
Two ways to deal with a pricing error
Focusing only on the error in price well below the usual selling price of our articles, we can take the form of action of two companies, both very well known and with a very different final outcome regarding the error.
For example, Zara had a computer problem in its online store consulting email list and placed some of the items from its new catalogue at a price of one euro for a few hours . The company contacted the buyers of these items during this period and cancelled their purchase, citing a computer error as the cause of these low prices.
Zara has acted correctly , there has been no bad faith and therefore the company cannot be accused of misleading advertising, so cancelling these orders is correct. But even though Zara acts with the law in its favor and anyone can have an error in its systems, I think it is preferable to act with Zappos' policy in these cases.
Own the mistake in pricing, it is an investment in marketing
Zappos, for example, had a similar experience some time ago . On its website, all items were priced at $49.95 for six hours. During this period, it made sales that caused it a loss of 1.6 million euros.
Zappos could also have cancelled these purchases, but instead of “pissing off” these customers, it took responsibility for the error and achieved good coverage in online and offline media around the world. Proof of this impact is enough to look at the traffic on its website during the period of the error and afterwards. We cannot evaluate the conversion into sales of this increase in visits and we cannot evaluate the degree of loyalty of these new visits to the Zappos website, but in the case of a pricing error over a short period of time, it may be more positive to take the heat and accept the financial losses created, rather than rectify these purchases, if we accept the linearity of visits to the website with the sales made.