Incident: Amazon Pricing Glitch Causes Massive Losses to Sellers

Published Date: 2014-12-16

Postmortem Analysis
Timeline 1. The software failure incident happened on Friday evening [Article 56253]. 2. Published on 2014-12-14 08:00:00+00:00 [Article 56253]. 3. The incident occurred on December 12, 2014.
System 1. RepricerExpress software developed by RepricerExpress failed, causing the prices of products on Amazon to crash to 1p [56253, 56260]. 2. Amazon's automated pricing system or software failed to prevent the erroneous pricing caused by the glitch in RepricerExpress software [56253, 56255]. 3. Amazon's seller support system failed to provide adequate assistance or compensation to the affected sellers [56255].
Responsible Organization 1. RepricerExpress [56260, 56255, 56253]
Impacted Organization 1. Small family-owned businesses selling on Amazon, such as Just Catering Supplies, Go2Games, Baby Best Buy, MB Housewares, TV Village, and Kiddymania, who experienced significant financial losses due to the software glitch [56260, 56255, 56253]. 2. RepricerExpress, the third-party company responsible for the faulty software that caused the pricing error, faced backlash and potential legal action from affected sellers [56260, 56255, 56253]. 3. Amazon as a platform and online retailer, which had to deal with the fallout of the glitch and the impact on its sellers, although it declined to provide compensation to the affected sellers [56260, 56255, 56253].
Software Causes 1. The software glitch was caused by a third-party software developed by RepricerExpress, which led to the prices of thousands of items crashing to 1p on Amazon's website [56253]. 2. The faulty software used by third-party sellers to ensure their products are competitively priced went haywire, reducing prices to as little as 1p [56253]. 3. RepricerExpress, the company behind the faulty software, issued apologies but did not offer compensation to the affected sellers [56253]. 4. Amazon informed sellers that they would not be receiving any reimbursements for the issue and directed them to contact the third-party software responsible for the error [56255].
Non-software Causes 1. Lack of compensation from Amazon for the affected sellers despite significant financial losses [56260, 56255]. 2. Failure of due diligence by Amazon into the reliability of the third-party software, RepricerExpress [56255]. 3. Inadequate response and slow reactions from Amazon to address the issue and support the affected sellers [56255]. 4. Inability of Amazon to prevent the dispatch of 1p orders from its warehouses even after the glitch occurred [56260]. 5. Negative impact on seller ratings due to cancellations by Amazon, affecting the reputation of the sellers [56253].
Impacts 1. Small family-owned businesses suffered heavy losses, with some estimating losses of up to £100,000, leading to potential financial distress and even closure [56260, 56255, 56253]. 2. Sellers faced ruined seller ratings on Amazon due to order cancellations, impacting their reputation and potentially affecting future sales [56253]. 3. Sellers had to deal with a flood of orders, some of which were sold for significantly lower prices than their actual value, causing financial strain and potential bankruptcy for some businesses [56253]. 4. Buyers took advantage of the glitch, purchasing items at extremely low prices, leading to a surge in orders and potential financial losses for sellers [56253]. 5. Confidence in automated pricing software was severely undermined, highlighting the risks associated with relying on such systems, especially during critical business periods like the holiday season [56253].
Preventions 1. Thorough software testing and quality assurance procedures could have potentially prevented the software failure incident. Proper testing could have identified the glitch in the third-party software before it caused significant financial losses [56260, 56255, 56253]. 2. Implementing stricter controls and safeguards in the pricing algorithms or repricing software to prevent drastic price reductions like selling products for 1p could have helped avoid such a catastrophic incident [56253]. 3. Conducting due diligence on third-party software providers, such as RepricerExpress, to ensure their software reliability and performance standards meet the necessary criteria before integrating their systems with critical operations could have mitigated the risk of such failures [56255, 56253]. 4. Establishing clear communication channels and protocols for addressing software glitches promptly and effectively could have minimized the impact of the incident on sellers and customers [56260, 56255, 56253]. 5. Implementing fail-safe mechanisms or emergency protocols to halt automated processes, such as order dispatching, in case of unexpected software malfunctions could have limited the financial losses experienced by sellers [56253].
Fixes 1. Implementing stricter quality control measures for third-party software providers like RepricerExpress to ensure the reliability and stability of their software before integrating it into the platform [56260, 56255, 56253]. 2. Conducting thorough due diligence on third-party software providers to assess their track record, reliability, and potential risks before allowing them to operate on the platform [56255]. 3. Enhancing communication and support channels for sellers affected by software glitches to provide timely assistance and address concerns promptly [56260, 56255, 56253]. 4. Developing better monitoring and alert systems to quickly identify and rectify pricing errors or anomalies caused by software glitches before significant financial losses occur [56253]. 5. Establishing clear protocols and procedures for handling software failures, including compensation policies for affected sellers to mitigate financial impacts [56260, 56255, 56253].
References 1. Amazon sellers who were affected by the software glitch [56260, 56255, 56253] 2. RepricerExpress, the company responsible for the faulty software [56260, 56255, 56253] 3. Lawyers representing affected sellers [56260, 56255] 4. Various sellers who experienced losses due to the glitch [56260, 56255, 56253] 5. Amazon spokesperson [56253] 6. Neil Saunders, managing director of Conlumino [56253]

Software Taxonomy of Faults

Category Option Rationale
Recurring one_organization, multiple_organization (a) The software failure incident having happened again at one_organization: - The software failure incident involving the accidental sale of products for 1p on Amazon was caused by a technical glitch in software developed by RepricerExpress [56260, 56255, 56253]. - RepricerExpress, the company behind the faulty software, issued apologies for the incident but did not offer compensation to the affected sellers [56260, 56255, 56253]. - Sellers affected by the glitch have expressed frustration with Amazon's response and lack of compensation for the losses incurred [56260, 56255, 56253]. (b) The software failure incident having happened again at multiple_organization: - The software failure incident involving the accidental sale of products for 1p on Amazon was attributed to a third-party software glitch caused by RepricerExpress [56260, 56255, 56253]. - Sellers affected by the glitch have reported that RepricerExpress, the third-party company responsible for the faulty software, did not offer compensation for the losses suffered [56260, 56255, 56253]. - The incident highlighted the risks of relying on automated software for pricing decisions and raised concerns about the impact on affected sellers' profits [56253].
Phase (Design/Operation) design, operation (a) The software failure incident occurring due to the design phase: - The incident was caused by a technical glitch in the software developed by a third-party company, RepricerExpress, which led to products being sold for a penny on Amazon's platform [56260, 56253]. - Sellers who suffered losses due to the glitch demanded that Amazon take responsibility for the error caused by the third-party software glitch [56260]. - RepricerExpress, the company behind the faulty software, issued apologies but did not offer compensation to the affected sellers [56260, 56255]. - Sellers expressed concerns about the reliability of the software and the potential collapse of RepricerExpress if it pays out compensation claims [56260]. - The incident highlighted the dangers of relying on automated software for pricing decisions, with experts noting the catastrophic impact on profits and the severe undermining of confidence in the pricing system [56253]. (b) The software failure incident occurring due to the operation phase: - Sellers reported that Amazon was slow to respond to the issue and did not provide any reimbursements for the losses suffered due to the glitch [56255]. - Amazon directed sellers to contact the third-party software provider, RepricerExpress, for any compensation related to the error [56255]. - Sellers complained that cancellations of orders by Amazon were negatively impacting their seller ratings on the platform [56253]. - Sellers faced challenges in stopping items from being dispatched by Amazon's warehouses even after notifying the company about the pricing error [56253]. - Sellers expressed frustration with Amazon's handling of the situation, with some feeling that the company had failed to care about the financial situation facing its sellers during a critical time of the year [56255].
Boundary (Internal/External) within_system, outside_system (a) within_system: The software failure incident involving Amazon's pricing glitch was primarily caused by a technical glitch in the software developed by RepricerExpress, a third-party company used by Amazon sellers to ensure competitive pricing [56260, 56255, 56253]. This glitch led to prices of thousands of items crashing to 1p on Amazon's website, resulting in significant financial losses for small family-owned businesses. The failure originated within the system of the third-party software, impacting the pricing mechanism on Amazon's platform and causing chaos in the marketplace. (b) outside_system: The software failure incident was exacerbated by the response and actions of Amazon, the online retailer where the glitch occurred. Amazon's decision not to provide compensation to the affected sellers and instead direct them to contact the third-party software company for reimbursement contributed to the fallout from the incident [56260, 56255]. This external factor, related to Amazon's handling of the situation and lack of immediate support for the impacted sellers, added to the consequences of the software failure incident.
Nature (Human/Non-human) non-human_actions, human_actions (a) The software failure incident occurring due to non-human actions: - The software glitch that caused the prices of thousands of items on Amazon to crash to 1p was due to a technical glitch in the software used by third-party sellers, specifically the software developed by RepricerExpress [Article 56253]. - Amazon informed selling partners that they would not be compensated for the losses incurred due to the software glitch, directing them to contact the third-party software responsible for the error, which was RepricerExpress [Article 56255]. - RepricerExpress, the company behind the faulty software, issued apologies for the distress caused to customers but did not offer compensation [Article 56255]. (b) The software failure incident occurring due to human actions: - Sellers affected by the software glitch expressed frustration with Amazon's slow reactions and lack of concern for the financial situation facing the sellers, especially during a critical time of the year [Article 56255]. - Sellers criticized RepricerExpress for the software error that led to significant financial losses, with one seller mentioning plans to take legal action against the company [Article 56260]. - The chief executive of RepricerExpress acknowledged the error made by the company and apologized to customers, expressing a commitment to work on resolving the issue and restoring confidence in their product and service [Article 56253].
Dimension (Hardware/Software) software (a) The software failure incident in the articles was primarily due to contributing factors originating in software. The incident involved a technical glitch in the software used by third-party sellers on Amazon's platform, specifically the software developed by RepricerExpress. This glitch caused the prices of thousands of items to crash to 1p, resulting in significant financial losses for small family-owned businesses [56260, 56255, 56253]. (b) The software failure incident was not attributed to hardware issues but rather to a software glitch in the third-party software used by sellers on Amazon's platform. The glitch in the software developed by RepricerExpress led to the erroneous pricing of products at 1p, causing substantial financial losses for the affected sellers [56260, 56255, 56253].
Objective (Malicious/Non-malicious) non-malicious (a) The software failure incident described in the articles appears to be non-malicious in nature. The incident was caused by a technical glitch in the software used by third-party sellers on Amazon, specifically the software developed by RepricerExpress. This glitch led to thousands of items being sold for as little as 1p, resulting in significant financial losses for the sellers [56260, 56255, 56253]. However, there is no indication in the articles that the software failure was a result of malicious intent or actions aimed at harming the system. The incident seems to have been a unintended consequence of a technical error in the pricing software, rather than a deliberate act to cause harm or disruption.
Intent (Poor/Accidental Decisions) accidental_decisions (a) The intent of the software failure incident: - The incident involving the software glitch that led to products being sold for a penny on Amazon was primarily due to accidental decisions rather than poor decisions. The glitch was caused by a technical error in the software used by third-party sellers to ensure competitive pricing [56260, 56255, 56253]. - The third-party software company, RepricerExpress, responsible for the faulty software, issued apologies and expressed regret for the distress caused to customers, indicating that the error was not intentional but a mistake [56260, 56255, 56253]. - Sellers affected by the glitch expressed frustration and disappointment with Amazon's response, highlighting the unexpected and unintended consequences of the software failure on their businesses [56260, 56255, 56253].
Capability (Incompetence/Accidental) development_incompetence (a) The software failure incident occurring due to development incompetence: - The software glitch that caused products to be sold for a penny on Amazon was attributed to a third-party software glitch developed by RepricerExpress [56260, 56253]. - Sellers affected by the glitch have expressed frustration towards RepricerExpress, with some considering legal action against the company for the losses incurred [56260, 56253]. - RepricerExpress, the company responsible for the faulty software, issued apologies but did not offer compensation to the affected sellers [56260, 56253]. (b) The software failure incident occurring accidentally: - The software glitch that led to products being sold for 1p on Amazon was described as accidental, with the software used by third-party sellers going haywire and reducing prices to as little as 1p [56253]. - The CEO of RepricerExpress apologized for the mistake and expressed deep regret for the distress caused to customers, indicating that the incident was unintentional [56253]. - Sellers affected by the glitch reported sudden and significant losses, with some estimating losses of tens of thousands of pounds due to the accidental pricing error [56253].
Duration temporary (a) The software failure incident in the articles was temporary. The glitch that caused the prices of thousands of items to crash to 1p on Amazon's website lasted for about an hour on a Friday evening [Article 56253]. Sellers reported that the software used by third-party sellers to ensure their products are competitively priced went haywire during that specific time frame, resulting in significant financial losses for the sellers [Article 56253]. Additionally, Amazon and the third-party software company, RepricerExpress, were working to address the issue and cancel orders that had not been dispatched to prevent further losses [Article 56253]. Sellers were also concerned about the impact of the glitch on their seller ratings on the site due to the cancellations [Article 56253].
Behaviour crash, omission, value, other (a) crash: The software failure incident described in the articles can be categorized as a crash as it led to a significant malfunction in the system, causing prices of thousands of items to crash to 1p, resulting in massive losses for sellers [56253]. (b) omission: The software failure incident can also be categorized as an omission as the system failed to perform its intended functions correctly by omitting to maintain the correct pricing of products, leading to items being sold for as little as 1p [56253]. (c) timing: The timing of the software failure incident can be considered a factor in the failure as it occurred during a crucial period - the pre-Christmas shopping season, causing severe financial losses for sellers at a critical time of the year [56253]. (d) value: The software failure incident can be attributed to a failure in the system's value calculation as it incorrectly priced items at 1p instead of their actual values, resulting in significant financial implications for the sellers [56253]. (e) byzantine: The software failure incident does not exhibit characteristics of a byzantine failure where the system behaves erroneously with inconsistent responses and interactions. The failure in this case seems to be more straightforward in terms of the impact and the nature of the error [56253]. (f) other: The software failure incident can also be described as a system glitch that caused unintended consequences, leading to products being sold for a fraction of their actual prices, resulting in chaos for sellers and significant financial losses [56260, 56255, 56253].

IoT System Layer

Layer Option Rationale
Perception None None
Communication None None
Application None None

Other Details

Category Option Rationale
Consequence property, theoretical_consequence (d) property: People's material goods, money, or data was impacted due to the software failure The software failure incident caused significant financial losses to small family-owned businesses that sell products on Amazon. Sellers reported products being sold for as little as 1p due to a technical glitch, leading to losses of tens of thousands of pounds for some sellers [56260, 56255, 56253]. Sellers like Martin Le Corre estimated losses of more than £100,000, while others mentioned losing £10,000 to £30,000 [56253]. Additionally, sellers expressed concerns about potential bankruptcy and financial ruin due to the glitch [56253].
Domain sales, finance (a) The failed system was related to the sales industry, specifically affecting small family-owned businesses selling products on Amazon. The incident involved a technical glitch in the software used by third-party sellers on Amazon, causing their products to be sold for as little as 1p, resulting in significant financial losses for the sellers [Article 56260, Article 56255, Article 56253]. (h) The incident also had implications for the finance industry, as the affected sellers were seeking compensation for their losses and considering legal action against the third-party software provider responsible for the glitch [Article 56260, Article 56255, Article 56253]. (m) The incident could also be related to the technology industry, as it involved the malfunction of software developed by a third-party company, RepricerExpress, which was responsible for the pricing errors on Amazon's platform [Article 56260, Article 56255, Article 56253].

Sources

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