From MediaWorld’s iPads to historical cases, what price glitches are, why they arise and what effects they have on companies and consumers.
This is an updated and adapted version of an article published in Evidence Network issue 394.
Recently the news of some iPads put on sale by MediaWorld at incredibly low prices have brought the topic of smartphones back to the center of attention price glitches (i.e. price errors due to system or data entry malfunctions, which create attractive offers to say the least) and reignited the debate on what companies are required to do in these cases.
Sensational errors also on the stock market
But what are price glitches? I am errors in setting product prices in online commerce systems: they can be linked to data entry errors, technical problems or confusion in discount calculations. Among the most sensational cases is that of 2005 which involved Mizuho Securities, a large Japanese financial brokerage company. The company should have placed the J-Com shares on the market at 610,000 yen each (around 5,000 euros), but due to an error the order started in reverse, with the sale of 610,000 shares at 1 yen each. The shares immediately sold like hot cakes, causing an estimated damage of around 300 million euros.
A pricing error by Alitalia was greatly appreciated!
Another glitch, this time entirely Italian, dates back to 2006, when Alitalia put flights from Toronto to Cyprus on sale online for 39 dollars instead of 3,900. To avoid image damage, the company decided to honor the purchases, earning the applause of consumers. Price glitches can have a significant impact on both customers and companies: in some cases, the latter even deliberately use them as a strategy to increase site traffic and attract new potential buyers.
