Ecommerce sites need best practice

Amazon pricing error highlights value of emergency procedures

Written by James Watson

Ecommerce web sites must have adequate operational processes in place as well as clear terms and conditions to avoid the sort of high-profile pricing mistake experienced by Amazon last week.

The online retailer accidentally posted a £200 HP handheld computer for less than £8, prompting hundreds of customer purchases that forced Amazon.co.uk to close for nearly an hour and cancel all the orders.

The company was protected by terms and conditions that stated its contracts are not binding until an order is despatched.

But ecommerce sites need more than just clearly worded contracts, says Andrew Stokes, senior solicitor at law firm Tarlo Lyons.

'It's just as important to have appropriate procedures that prevent errors cropping up, and to contain them when they do,' he said.

Another consideration is how the online order confirmation process works.

For a contract to come into effect, a customer needs to make an offer to the retailer, and the retailer needs to accept that offer. For ecommerce sites, the acceptance is typically an email at a certain point in the order process.

'A binding contract is only formed when the retailer confirms that it will accept the order and deliver the goods,' said Stokes.

Once IT directors have the correct procedures in place, they still need to react appropriately when incidents occur, says Tony Northcott, a spokesman for the Trading Standards Institute.

'Amazon's reaction, which informed customers that no contract exists before it confirms that it is despatching their order, was probably the best route for it to follow,' he said.

And Jeffrey Mann, vice president at analyst Meta Group, says web developers should ensure there are built-in software checks.

'Companies should look at adding business logic to the front-end of their ecommerce sites that perform automated checks on product pricing,' he said.

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