Small traders using the Amazon marketplace were left nursing losses as the RepricerExpress software mistakenly priced many items at 1p, leading to opportunist consumers buying up multiple items. In normal circumstances an online trader, spotting a pricing mistake, is within their rights to cancel an order as long as they offer a full refund. Unfortunately in this case many orders had automatically been marked as dispatched which meant that the traders had to honour the transaction and ship the item at a big loss in some cases.
Boxes of goods at an Amazon warehouse. Photograph: Graeme Robertson for the Guardian
Martin Le Corre, who sells toys and games via his MB Housewares store on Amazon, said that the glitch in software could have cost him more than £100,000.
“We got a call from a competitor to say ‘do you realise 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.”
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.
Amazon is working to cancel orders that have not been dispatched, but sellers complained that the cancellations were ruining their seller ratings on the site.
There have been many cases where an online retailer has mistakenly priced an item but found themselves under no obligation to honour the sale. Recently the Screwfix mistakenly priced everything on their website at £34.99 leading to a flurry of activity and one customers attempting to buy a sit-on mower worth £1,599.99 for just £34.99. Screwfix soon realised its mistake. It cancelled all orders that had not already been delivered or collected from stores and said it would issue refunds to customers. It said people who had already received their goods were unaffected.
Many customers who missed out were angry that the company is not honouring their purchases, especially as they had paid for the goods and the majority had received an email saying the product had been dispatched.
Consumer rights, online vs offline
The legal situation for pricing errors is clearer offline than for online but it is still clear: a legally binding contract is complete at an agreed price when a retailer accepts an order. However if an item is priced incorrectly on the shelf, or scans at the wrong price at the till, retailers are under no obligation to honour it, under the Sale of Goods Act. They can offer the item at the correct price or refuse your money and withdraw the product from sale.
For online retailers the Sale of Goods Act still applies. Acceptance of an order does not necessarily happen at the point of order. Even the confirmation email may not be an acceptance. Some retailers reserve the right to cancel an order up to the point of delivery. The problem in the Amazon marketplace case was that many were marked as dispatched which constitutes legal acceptance of the order.
Further reading here:
Do retailers have to honour pricing mistakes?
Amazon sellers hit by nightmare before Christmas as glitch cuts prices to 1p
