Black Friday Inventory Blowup Hits Target, Buy.com, Fry's

Several major retailers—including Target, Fry's Electronics and Buy.com—got burned on Black Friday by a hole in their inventory-checking functionality. The snafu tricked the merchants into selling products to consumers without actually having those products in stock. Among the many Black Friday glitches, this one exposed a flaw that may become increasingly common and might force retailers into a different way of checking inventory.

The problem materialized because this year, for the first time, several E-tailers tried to re-create some of the excitement that surrounds brick-and-mortar Black Friday consumers-wait-at-2 AM-and-then-stampede-for-half-off-an-HDTV sales. The idea was to announce some very enticing deals and then to not offer them until midnight while stressing that only a limited number of each item was available. The retailers' campaigns were designed to force a huge number of consumers to hit their E-tail sites at the exact same moment and try to buy the exact same product. If you're looking to stress test your inventory systems, this is an ideal way to do it.

The typical approach to online inventory checking is for the system to look up how many of any item is available after consumers have placed the item in their carts. If the inventory can fulfill the purchase, the consumer is allowed to proceed. But the inventory-availability count isn't reduced until the order is completed and the customer has paid. That method works 99.9 percent of the time.

In this stress-test situation, though, the inventory count could change dramatically between the time the item is placed in a cart and the time the customer fills out address and payment data and then completes the purchase. The most obvious way to deal with this issue is to set up special rules for these high-volume-in-a-short-time sales situations, perhaps causing the inventory availability figure to be immediately reduced by one the instant the item is placed in a cart. The catch would be that a window would pop up telling the consumer something like, "This is a Red-Hot product. If you do not complete a purchase of it within 10 minutes, it will be removed from your cart and offered to other customers."

Editor's Note:

  • Page 1 of this Inventory Glitch Special Report covers The Overview And Impact of this inventory hole.
  • Page 2 covers What happened at Fry’s Electronics.
  • Page 3 covers what happened at Target.
  • Page 4 covers What happened at Buy.com.
  • Although this approach may not be ideal, it certainly beats what happened on Black Friday and left large numbers of vocal customers alienated. All three chains sent their customers E-mail messages confirming their purchases and then not alerting those customers for many hours—in some cases, as many as 48 hours—that in fact no purchase was made. In addition, some consumers were charged for their non-existent purchases, although presumably those fees will be credited.The bigger issue, though, is consumer missed opportunities. Had those unlucky consumers been told right away, "Sorry. We're now sold out," they could have potentially visited other Black Friday sales (from competing retailers) to try and buy the items. Even though there is no indication of any nefarious intent, consumers might be left with the feeling that the multi-hour delay was a deliberate bait-and-switch, designed to deprive them of the ability to shop a rival's sale.

    The irony behind this situation is that it reflects a maturing of the E-tail environment. These glitches could only have happened now that servers can effortlessly handle tens of thousands of simultaneous visitors.

    It's like a great line from a very early Lucille Ball TV show. Her son tells her that he has to stay after school. "For penmanship again?" she asks. "No, my penmanship is really good now." She asks, "Then why?" He replies, "Now that the teacher can read my writing, she discovered I can't spell." Now that these sites can handle this intense a simultaneous load, merchants are discovering problems with inventory systems that were hidden by the site crashes of earlier years.

    As in other cases on Black Friday—such as hiccups with Borders and an unusual price-match statement from Wal-Mart—how the retailers reacted to the inventory-checking problem is more important than the initial glitch.

    Fry's Electronics
    Fry's offered a $600 30-inch LCD television for $200. After receiving confirmation E-mails, cancellation messages were received some 18 hours later. Said one of Fry's E-mails: "After running out of stock of the LG32LD350 32" LCD HDTV, our Web site encountered a technical problem allowing your order to be accepted in error."

    One consumer who said she was caught in this headache was Mountain View, CA, resident Arundathi Gururajan.

    She said she was able to order the unit at 11:06 PM California time on November 25 and received a confirmation E-mail from Frys.com that said the purchase went through but the TV was on backorder. Two days later, Gururajan found out at a local Fry's store that the company was planning to cancel some of the online orders. "I started searching online and found that some people had been notified of their cancellation by the next day. Since I hadn't heard anything, I assumed mine would be arriving after some time and let it be," Gururajan said.

    But the next day, she received an E-mail from Frys.com canceling her order. In the midst of an unsuccessful attempt to get Fry's to "offer any sort of compensation, replacement item or anything," Gururajan called her credit card company to ensure Fry's was telling the truth about not charging her card.

    Editor's Note:

  • Page 1 of this Inventory Glitch Special Report covers The Overview And Impact of this inventory hole.
  • Page 2 covers What happened at Fry’s Electronics.
  • Page 3 covers what happened at Target.
  • Page 4 covers What happened at Buy.com.
  • "My credit card company informed me that the charge had gone through on November 26 at 1:30 AM and Fry's had received the cash for the transaction," Gururajan said. "This was deceptive on the part of Fry's. My card had been charged though they claimed it had not."

    Fry's representatives did not return E-mails and voicemails seeking comment.Target
    At Target, the sale in question was a Lord of the Rings trilogy on Blu-Ray disk for $7.99, an powerful deal for a product that regularly sells for nearly $80.

    One consumer who got caught up in Target's situation was Omaha, NE, resident Scott Krusemark, who happens to work as a product manager at a payments processing company. (Krusemark, as did other consumers interviewed for this report, shared with us E-mails and copies of receipts.)

    Editor's Note:

  • Page 1 of this Inventory Glitch Special Report covers The Overview And Impact of this inventory hole.
  • Page 2 covers What happened at Fry’s Electronics.
  • Page 3 covers what happened at Target.
  • Page 4 covers What happened at Buy.com.
  • Two days after receiving confirmation of his order, Krusemark got an E-Mail from Target that didn't cancel the order but informed him there would be an "unexpected delay" in shipping, a lag that might mean the movies would not show up before Christmas Eve. The cancellation didn't become clear until Sunday (Nov. 28) evening, when Target.com sent Krusemark an E-Mail informing him that, "Unfortunately, due to the high demand for the following item" it was no longer available from any of Target's sources.

    "So now it's Sunday evening," Krusemark said. "And since they took so long to cancel the order, the sale is over. I'm wondering if I can price-match the copy that I bought on Wednesday." After a lot of back-and-forth, Krusemark got a Target store manager to give him the product at the $7.99 price.

    Target spokeswoman Jenna Reck provided a short statement from the company that blamed the whole mess on a pricing misprint. "The Lord of the Rings Trilogy, rather than the individual DVDs, was incorrectly featured during the 2-Day Sale last week in stores and online at $7.99 instead of the actual retail price of $74.99. Target.com honored the lower price for our guests for as many units as were in stock, but unfortunately had to cancel additional online orders when the product quickly oversold our supply."

    But that's the key issue. The Target system never should have confirmed any orders once its stock was emptied, making this not a pricing glitch but an inventory-checking glitch.Buy.com
    Of the three retailers, Buy.com appeared to be the most responsive to consumer complaints about after-the-fact Black Friday order cancellations. As it began receiving angry comments relating to cancelled orders for a Panasonic 42-inch TV, the pure-play online retailer used its Facebook page to respond by ensuring embittered customers that their concerns were heard and that everyone who successfully ordered a TV would eventually get one.

    In a statement, Buy.com Director of Marketing Jeff Wisot said customers who received cancellation notices after successfully placing orders were first told they would receive $50 giftcards. Apparently, Buy.com changed its mind about that deal and decided to do better.

    "We've been working hard since Friday to ensure that everyone who actually placed orders will receive the TV," said Wisot's statement. "Buy.com is spending several hundred thousand dollars below our cost to ensure that each of those customers who still want the TV will receive it. Or if they prefer, they can keep the giftcard. We've been notifying each customer affected, and their account status should be fully updated by the end of this week."

    Editor's Note:

  • Page 1 of this Inventory Glitch Special Report covers The Overview And Impact of this inventory hole.
  • Page 2 covers What happened at Fry’s Electronics.
  • Page 3 covers what happened at Target.
  • Page 4 covers What happened at Buy.com.
  • Buy.com spokeswoman Elaine Ordiz said about 650 customers "ultimately benefited from this Black Friday deal," which had the TV listed at $298. "Regarding the Panasonic Viera TV deal on Buy.com, we experienced a surge of customers on the page when the deal launched after midnight, and the product page received more than 220,000 page views alone on Black Friday," she said. "Though we worked hard to obtain additional units, we unfortunately could not meet the overwhelming demand due to limited inventory."

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