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Ensuring the Price is Right


Pricing mistakes are not new to retail. But e-commerce has upped the ante considerably when it comes to the consequences of these errors: Thousands of orders can be placed online before the problem is detected. Word about a great deal can spread in seconds on Twitter and other social networking sites, leaving merchants forced to choose between honoring the too-good-to-be-true price as a goodwill investment or trying to invalidate the sale under the doctrine of unilateral mistake.

Consumer electronics retailer Best Buy experienced such a dilemma in August when it mistakingly advertised a 52-in. Samsung flat-screen TV on its Web site, , for just $9.99. Online shoppers immediately cashed in on what seemed the deal of a lifetime, many ordering up to 10 TVs at once.

When Best Buy caught the mistake several hours later, the listing was updated to the TV’s regular price: $1,699.99. The retailer had experienced a similar issue just a month before by listing a Palm Pre mobile device on its site for $99.99 instead of its intended $199.99 price. Best Buy honored the incorrect Palm Pre price, but after the second incident, it issued a statement that said it would not honor the error in price for the TV orders.

“This created a huge uproar among the online community,” according to Charlie Lawhorn, senior VP business development for Atlanta-based Stibo Systems, a provider of product information management solutions. “Best Buy had set a precedent that it would honor the mistakes it made on its site, and this change made people very unhappy.”

The news spread like wildfire throughout the Internet, creating havoc on message boards, Twitter and other social community sites. Consumers blasted the company for not honoring the price error, and some even threatened a class action lawsuit for false advertising. However, the site’s Condition of Use policy reserves the right to cancel orders if errors are made on its Web site.

Pricing mistakes on e-commerce sites are not that uncommon, Lawhorn noted.

“Since retailers are managing various multichannel efforts now more than ever—from brick-and-mortar locations and e-commerce sites to catalogs, kiosks and even product vending machines—many struggle with disjointed data silos, making it difficult to keep information (including price) consistent across all channels,” he explained. “Retailers often don’t have that visibility across all channels, and this is where they run into trouble.”

As a result, many retailers are implementing systems to manage, share and publish product master data across all areas of business. Sears Canada, for example, is using Stibo Systems’ STEP solution to facilitate a synchronized combination of product information management and publication management. Stibo Systems manages its data in a single, central repository for delivery across multiple channels.

“We use our site, , as a hub for customer interaction, and in order to do this, we need to engage the consumer with the right information they need to make a purchase,” said Simon Rodrigue, assistant VP e-commerce for Sears Canada, Toronto. “Part of this is having the best product data possible to support the consumer in the decision process.”

Sears Canada implemented the STEP solution to integrate its e-commerce site with all other areas of the business, from brick-and-mortar locations and store signage to print advertising and customer service.

“Maintaining accurate product information across all of our channels not only helps shoppers make informed purchasing decisions, it also reduces returns and customer-service costs,” Rodrigue said. “And, of course, makes customers want to visit us again in the future.”

According to Rodrigue, data management can be a massive competitive advantage.

“If you have the right tools—and we believe we do—it will make for a very agile player in the marketplace,” he said.

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