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April 18, 2014

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Website pricing mistake costs Zappos.com $1.6 million

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Zappos.com CEO Tony Hsieh poses with some of his company's merchandise.

A "big mistake" cost Henderson-based Zappos.com about $1.6 million Friday after a pricing problem surfaced on the company's sister website.

According to the company's Inside Zappos blog, the website 6pm.com capped prices on all items at $49.95 from about midnight to 6 a.m. Friday.

The sister site indicates it offers brand names up to 75 percent off. But some customers Friday morning got much steeper discounts, with Zappos.com citing a "big mistake in our pricing engine" as the cause of the problem.

The 6pm.com site was shut down while the problem was fixed, according to the blog.

"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," according to the blog post from Aaron Magness, Zappos.com's director of brand marketing and business development. "However, it was our mistake. We will be honoring all purchases that took place on 6pm.com during our mess up."

Zappos.com CEO Tony Hsieh posted his reaction to the news Sunday on his Twitter account.

"$1.6 million mistake on sister site," he wrote. "I guess that means no ice cream for me tonight."

Zappos.com was acquired last year by Amazon.com. The Henderson company, which reached $1 billion in annual sales two years ago, has some 1,300 employees.

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