A software glitch on Friday night (Dec. 12) in the U.K. caused "thousands of items" sold by third-party vendors on Amazon to be prices at one penny—and holidays shopped grabbed the bargains. This caused huge problems for many smaller merchants who are paying the ultimate price for the glitch.
"Scores of small family-owned businesses (are) nursing heavy losses, with some warning they could enter the new year facing closure," reported The Guardian. "From 7-8pm on Friday, software used by third-party sellers to ensure their products are the cheapest on the market went haywire and reduced prices to as little as 1p. 'Amazon is all kinds of broken,' one observer tweeted. 'Mattress 1p. Headphones 1p. Batteries, clothing, games all 1p. Someone messed up big time.'"
It wasn't initially clear who was responsible for the software glitch—whether it had been something Amazon had put in place or an independent service. But Amazon said it was trying to assist. "We responded quickly and were able to cancel the vast majority of orders placed on these affected items immediately and no costs or fees will be incurred by sellers for these cancelled orders. We are now reviewing the small number of orders that were processed and will be reaching out to any affected sellers directly," an unidentified Amazon spokesperson said.
The Guardian story quoted one retail specialist as predicting this glitch could cause industry-wide changes. "The situation demonstrates the dangers of relying on automated software to determine pricing. Coming at one of the busiest times of the year, it could have a catastrophic impact on the profits of those affected. Confidence in this pricing system will now be severely undermined."
One good example of the problem was experienced by Martin Le Corre, who sells toys and games via his MB Housewares store on Amazon. He told the Guardian that the glitch in software developed by RepricerExpress could have cost him more than £100,000.
"We got a call from a competitor to say 'Do you realize all your listings at a penny?’ By the end of the hour, we had 1,600 orders," he said. "People were buying 10, 50, 100 copies of everything. It is £50,000, £60,000, £100,000 of stock; we can’t even work it out." The story reported that Le Corre immediately took his store offline, "but more than £30,000 worth of orders had already been marked as dispatched by Amazon, meaning they could not be cancelled and shoppers would be able to keep the goods."
The problem gets even worse. Amazon was able to cancel many of the penny orders, but those cancellations, merchants noted, "were ruining their seller ratings on the site," the Guardian said.