Business Insider’s BI Intelligence reporters Daniel Keyes and Stephanie Pandolph spoke with Anodot’s Chief Data Scientist and Co-Founder, Ira Cohen, addressing the issue of how price glitches impact eCommerce sites.
What is a Price Glitch?
A typical eCommerce platform processes thousands of transactions every day. These platforms also undergo a host of other changes continuously — such as new product listings, changes in product prices and promotions, adding complexity. In a hyper-competitive marketplace, a single misstep in any of these activities can have a disproportionately large repercussion for the business. Now stories abound of websites whose sales systems have failed, allowing customers to place orders for goods at unintentionally discounted prices.
How Do Price Glitches Impact Revenue?
Price glitches price an item far below its actual price. As a result, word can spread and the item will get snapped up at below price. Online retailers may refuse to fulfill the orders, suffering bad publicity and possibly facing legal action by disgruntled customers who argue that the company had entered into a contract from which it could not withdraw. On the other hand, companies often feel beholden to honor the sales, but in the process absorb massive losses.
How Do Price Glitches happen?
As Ira Cohen told BI Intelligence, “They’re usually caused by human error, and can happen to anyone.” There are many frightening stories of price glitches hitting retailers, even the biggest. Amazon’s Echo Dot, a $50 in-home assistant, was once briefly offered for free on Amazon, because of an “Audible” discount added at checkout. After informing buyers that a “technical error” was responsible for the unbelievable discount, Amazon announced they were giving would-be buyers a $5 promotional credit.
Other jaw-dropping price glitches include:
- Limited edition Minecraft Xbox One S 1TB games console for just £89.99 (instead of £300!)
- Camera lens mistakenly priced at $500 (instead of $2,200 )
- Swarovski earrings marked as FREE (worth £40)
What Can Be Done?
As online retail has grown exponentially, so has its complexity. While glitches may be scaling down in size, they’ve grown in number, sophistication, and — especially — diversity. As the holidays approach, retailers should prepare to quickly handle such glitches.
Holiday eCommerce spending soared to new heights in 2018, raking in $126 billion in the U.S. alone, according to BI. That number is expected to rise yet again in 2019 between 14 and 18 percent, Deloitte analysts predict. This increase in volume could make any glitch catastrophic for a retailer, especially for those counting on the holiday season for a boost after a tough year.
To eliminate revenue-sapping incidents, companies need to prepare their web site infrastructure well in advance for the tremendous increase in traffic and sales volume. Companies need to sift through and stay on top of the massive amounts of data that drive decision-making, and find the glitches that leak revenue before they spiral out of control.
As the BI Intelligence reports, “Retailers should consider working with companies like Anodot, which use artificial intelligence (AI) that identifies glitches by noticing sudden changes in various metrics, or using in-house AI to do the same.”