Shoe retailer eats $1.6 million after pricing screwup

by Shea Gunther

Zappos, the well known online shoe retailer, ate $1.6 million in losses this weekend when someone at their sister site screwed up something in their backend sales system and capped all prices on the site at $49.95. Over a six hour period from midnight to 6am scores of orders went through at the reduced price, ultimately adding up to $1.6 million in loses for Zappos.

Zappos’ CEO Tony Hseih broke the news on the Zappos Blog:

Hey everyone – As many of you may know (and I’m sure a lot of you do not), is our sister site. is where brandaholics go for their guilt free daily fix of the brands they crave.  Every day, the site highlights discounts on products ranging up to 70% off.  Well, this morning, we made a big mistake in our pricing engine that capped everything on the site at $49.95.  The mistake started at midnight and went until around 6:00am pst.  When we figured out the mistake was happening, we had to shut down the site for a bit until we got the pricing problem fixed.

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 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.  We hope you continue to Shop. Save. Smile. at

Zappos is well known for their great customer service so it’s not out of character for them to honor the prices, even if some more cynical online commentators think it’s all part of a below-the-radar viral marketing campaign.

They could have a point- the internet has been a buzz with the news and Zappos is drawing a lot of attention to that would otherwise cost a lot more than the $1.6 million they claim to have lost. Even still, it’s pretty cool that they gave so many people such deep discounts as part of their campaign, assuming that it wasn’t an honest mistake. Either way it turns out it was a cool move in my book.

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