Yesterday, Wal-Mart’s online shopping system experienced what was described by the global retailer as a “technical error”. A pricing glitch caused items costing hundreds of dollars, such as computer monitors or treadmills to be temporarily priced in ranges of $10-$35 dollars. Later in the day, the issue was resolved, but the site had to be taken offline for a certain period.
News of the pricing glitch spread rather fast across social media with friends telling friends about the opportunity to purchase expensive items at ridiculously low prices. Consumers seeking bargains flocked to Wal-Mart dot com.
Various media reports quote a Wal-Mart spokesperson as apologizing for this glitch, but refusing to honor any purchases made under the pricing error. Instead, Wal-Mart cancelled specific online purchases and is offering the affected customers a $10 gift card that can be redeemed for future purchases. This was not exactly the response that many affected consumers were expecting.
In its reporting of the incident, the Wall Street Journal disclosed that the pricing snafu came in the midst of a pre-Black Friday, Cyber Monday holiday promotion that Wal-Mart’s online unit had launched last Friday. A Wal-Mart spokesperson is quoted in the WSJ article as indicating no knowledge as to whether the pre-holiday promotional event had triggered this problem.
While we can only go on the information that was reported, by our lens, it certainly is plausible that some promotional pricing software code may have hiccupped.
The timing of this glitch is the obvious takeaway from this incident.
On the one hand, the glitch did not occur during the upcoming Black Friday or Cyber Monday shopping days, where the media amplification would be extreme. The Wal-Mart Ecommerce technical teams have the window of time to fix any inherent technical glitches and avoid future visible glitches.
On the other hand, and possibly more impactful to Wal-Mart’s aggressive plans to expand its online presence and compete with the likes of Amazon, refusing to honor the online transactions, in spite of an acknowledged pricing glitch, is not going to help to build the long-term loyalty of online shoppers. The core Wal-Mart shopper is highly sensitive to price. Expanding that base implies the ability to offer both attractive price and broader selection. By our view, for both online consumer profiles, Wal-Mart may have shot itself in the foot by responding in the culture of a brick and mortar retailer catering to high volume, cost conscious shoppers.
This author recently penned a guest blog contribution that cited a recent New York Times published article (paid subscription or free metered view sign-up) indicating how aggressive Wal-Mart’s Global E-Commerce division has become in recruiting talent to support its online strategies. “The country’s largest retailer, which for years didn’t blink at would-be competitors, is now under such a threat from Amazon that it is frantically playing catch-up by learning the technology business, including starting @WalmartLabs at Walmart Global E-Commerce, its dot-com division.” However, this latest incident may be an indicator that sometimes Wal-Mart’s inherent brick and mortar business culture can get in the way of its online growth needs.
Only time and learning will outline the final outcome.