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Zappos takes the high road once again, bites a $1.6 million bullet

May 24, 2010 by James Bickers — Editor, Networld Alliance

For some companies, a mistake is an opportunity to shirk responsibilities and start passing blame around (*cough* BP *cough* Transocean), but for others, it is an opportunity to display your true mettle.

Zappos, once again, falls into the latter camp with their response to a recent pricing glitch that cost the company more than a million dollars.

As announced in the Zappos blog, a software glitch on the company's closeout site 6pm.com last week caused every product to sell for a maximum price of $49.95 – even products that cost a great deal more than that. The glitch lasted for just over six hours.

While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $1.6 million - ouch) selling so many items so far under cost.  However, it was our mistake.  We will be honoring all purchases that took place on 6pm.com during our mess up. We apologize to anyone that was confused and/or frustrated during out little hiccup and thank you all for being such great customers.

Please pay careful attention to just how amazing that paragraph is. Let us count the ways it is amazing: (1) The company honored the prices, despite the massive expense; (2) The company apologized for the glitch; and (3) The company concluded with a thank-you to the people who just got an amazing deal at the company's expense.

Later, that same blog entry addresses the human angle of the incident. Again, the company is proactive and puts the issues out there and answers them, leaving no room for doubt that they are above-board:

To those of you asking if anybody was fired, the answer is no, nobody was fired - this was a learning experience for all of us. Even though our terms and conditions state that we do not need to fulfill orders that are placed due to pricing mistakes, and even though this mistake cost us over $1.6 million, we felt that the right thing to do for our customers was to eat the loss and fulfill all the orders that had been placed before we discovered the problem.

I see people talk about Zappos as a great example of focusing on customer experience more than any other company. There's good reason for that.

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