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StumbleWebsite pricing mistake costs Zappos.com $1.6 million
Sunday, May 23, 2010 | 3:45 p.m.
Zappos.com CEO Tony Hsieh poses with some of his company's merchandise.
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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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This is why Zappos.com is so incredible. I've seen pricing mistakes happen on other websites (cough, bestbuy.com) and rather than owning up to their errors and honoring the orders, they just cancel them.
1) Wish I knew to check 6pm.com for that deal!
2) Zappos just got at least $1.6 million worth of advertising from all the news reports on this, especially by making the decision to honor their prices.
1.6 million in advertising, as you mentioned, is not that bad of a bargain! Great move for them to honor this pricing and I am going to check out their websites right now! Somebody right now in another company is probably saying "I wish i would have thought to use my marketing budget that way" haha
Truly a class outfit. Not many companies would do this. Tells you what kind of organization they are. And with this mistake they did get 1.6 million in advertising.
Good marketing patting themselves on their own back for owning up to this mistake.That should pull in EVEN MORE orders.
i work in marketing and i'm going to tell you something. these "accidents" are getting to be a very common marketing ploy.
remember that leaked iphone a few weeks back?
think of how many times you heard the word "apple" on the t.v. that week. all free ads.
and THIS week when apple told that lady she couldn't buy an ipad with cash...once again apple got millions of dollars worth of advertising and of course...they finally let that lady buy her ipad with cash.
there's a huge urban legend in the ad world that the whole "new coke" disaster was totally planned. take old product away, bring in inferior new product, people want the old product more than ever and of course...the old product is brought back.
good marketing - it will be all over the media tommorow
I had never heard of 6pm.com until now, so I guess the mistake will drive at least one customer to the sister site.
Even if it's just part of the grand illusion of layers of lies upon lies - isn't neat just thinking that there's still some honest people in business out there?
Sort of makes you feel all warm and fuzzy all over doesn't it?
I no longer trust any of them! I don't trust either political party, nor my any of the banks, or anyone in real estate, nor investments, mortgages, nor the utilities - none of them are worthy of our trust anymore!
Not that I'm becoming a little skeptical, just to avoid becoming jaded - I look at the facts over time - history is the only guide to the truth folks!
Maybe those WMD were hiding in Henderson all along?
He really got 'Zapped' on that one!
I just checked them out. Some deals to be had, a lot of junk. No western clothes to be found.
Encore! Olease do an Encore!
They are not such a class operation. Years ago when they had the outlet stores in Vegas, an employee was trying the hard sell to me on a pair of shoes. He told me the brand was exclusive to Zappos and make in Italy. When I researched the brand online, they were sold elsewhere and were made in South America.
OF COURSE this is nothing but a marketing ploy,and anyone thinking different is ignorant in business
When this was discovered that day,the talking heads met in a conference room,and said to the ceo we honor this mistake,and avoid the backlash of the consumer, media, thereby upping our stock in the business world.
Everyone will report that we are so honorable,and think of the free airplay we would recieve.Why pay 200,000 to advertise for a couple minutes,when we can eat 1.6 mil but get a good week run in the media
peace out
And like the above poster who stated 1299 employees
that is right on the money,you dont sell 2,000 gps units for 49.95,and still retain your job,GUARANTEED
peace out
being in henderson they will probably have 4,000 applicants for that 1 spot
good luck future prospects
Interesting that everyone's talking about business ethics, but no one mentions that the customers could, in good conscience, opt to either cancel their orders or be willing to pay the appropriate price.
Yah right. All nice and fluffy. Wait until Amazon bookies go through the audit, they'll be coming down in suits and turning that place into an IBM shop in no time.
Comment removed by moderator. Speculation.
another company that refused to hire me yet I have a degree/ drug free/ criminal free and I have health insurance!!!!......i wasn't even asking for 1.6 million. I would have been happy with $10/ hour.....haha Karma will get you in the end!!!!!
"Comment removed by staff. Speculation."
No Las Vegas Sun staff, it's the truth. My son works there.
This sounds like an advertising mistake-event to promote Zappos.
Now if the City Center subcontractors get paid a negotiated settlement for their work, there will be two white knights doing business in the valley.
Right?