Efficiency Gone Wild: Target's Easy Way To Screw Up Prices

Pricing mistakes are still the bane of E-Commerce, and now Target seems to have come up with a much more efficient way of creating them. Last Sunday (Jan. 16), Target began offering a Sony PlayStation 3 (list price: $350 to $500) for $39.99 on both Target.com and the retailer's Amazon store. What's interesting, though, is how the foul-up appears to have happened. It looks like there really was a new product Target intended to sell. But instead of creating a new page for that product, a Web site designer decided to modify an existing page—and before that new page was completed, it somehow hit the sites.

The clues are in the mismatched description on Target.com for the product, which the small print describes as the "PlayStation Move sharp shooter." It turns out there is a new add-on for the PlayStation with that name. According to Sony, its list price is $39.99 (which matches the Target.com page) and it is scheduled to be available in February (which matches the description on Target's page that reads, "Arriving soon! Order now for shipment in 2 to 4 weeks").

The price, delivery date and small-print description all match up with the yet-to-be-released product. But what wasn't changed from the outdated page were the headline, picture and customer reviews (which are all dated 2007).

Apparently, halfway through the process of editing the page for the new product, it was sent to the production system and automatically turned into a live page on the Target.com site. And that apparently triggered a revival of the outdated page in Target's Amazon store, which included none of the inconsistent details except the $39.99 price.

That's an E-Commerce nightmare: A few wrong keystrokes, plus the automation that's designed to make an E-Commerce site easy to manage, resulted in an absurd price for a product that the retailer doesn't have in stock anyway.

When the mismatched Target PlayStation description went live, alert customers quickly jumped on the deal and spread the word across the Internet, even though both Web pages contained a mishmash of contradictory information—for example, Target.com's description was for a machine-gun-like game controller, not the PlayStation itself—and both sites listed the product as "out of stock."

Target and Amazon both have policies published on their Web sites that let them cancel orders because of pricing errors, and the next day customers received E-mails with the bad news.

This incident is reminiscent—although not as spectacular as—what happened with a pricing-engine error last year at Zappos, which resulted in the E-tailer honoring mistakenly low prices and losing $1.6 million.But last week's snafu created plenty of customer buzz for Target—all of it bad.

At Zappos, the pricing engine was too hard for the E-tailer's staff to use. At Target, the software made it too easy to generate a new product page. There were, it seems, no approvals required, no final OK before the pages went live, no checks and balances.

And because the Target mistake was made on a Sunday afternoon, no one at the retailer moved to fix the problem until well into Monday. The pricing error that probably took half a second to create required almost a day to reverse out.

The E-Commerce lessons from this incident may seem obvious: Don't let anything go live on your site without final approval. Monitor your E-Commerce site (and feedback about your site) for unexpected problems. Have a procedure in place to handle pricing weirdness that's generated by out-of-control automation. Those aren't exactly brilliant insights. And yet, somehow those controls weren't built into Target's systems and processes.

Yes, it's true that you need some employees to be able to change online-store content without a dozen layers of approvals. But Target seems to have made it possible to make a mistake quickly—and impossible to spot or repair it anywhere near as fast. That's the wrong way to do it. You want to make mistakes slowly, and fix them fast.

Now Target has another problem to fix: angry customers. No payment cards were charged, and all the customers received notification that their orders were canceled. But customers who complained through the customer-service chatbot on Target's site got vouchers for $10 or $15 for their inconvenience. Naturally, those customers reported their experience on the same Web sites, discussion boards and Twitter feeds that originally spread the word about the pricing glitch.

Result: Customers who were already angry that they didn't get a $39.99 PlayStation got even angrier that they didn't get a voucher, either.

If Target's PlayStation snafu sounds like a quintessential E-Commerce problem, it is. But if you think nothing like this could possibly happen in a brick-and-mortar store, just ask Best Buy. In 2009, a data-entry error put the wrong price for the Palm Pre smartphone into Best Buy's POS system. Lots of customers walked away with new phones after paying $99 instead of $199 until the error was caught and corrected.

At least with E-Commerce pricing errors, the order can be canceled.