EP070 The Price Is Wrong - Navigating Ecommerce Pricing Pitfalls
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[00:00:00] Darin Newbold: Well, and good day and welcome to Commerce Today we have a very exciting episode here, hands-on e-commerce 

All right. Good day and welcome to Commerce Today. My name is Darin. And as always, here is Josh with Commerce Today, giving you the insights you need for, for your merchant site

[00:00:16] Joshua Warren: For your Commerce Today.

[00:00:18] Darin Newbold: your Commerce Today, as opposed to yesterday or tomorrow, those are just right out. And like today, this isn't the price is right.

This is the price is wrong. What do you do? What do you do when that happens on your website, Josh? I can't wait for this. It's going to be fun because you have a great, great story to tell. So T is up.

[00:00:37] Joshua Warren: Yeah, this is a great one. So, the news reported just a couple of days ago that Cartier had a nice pair of 14, 000 earrings listed on their website for 14.

someone purchased said earrings. Actually it was smart enough. He purchased two pair. Exactly. And, He is actually, it was a guy that lives in Mexico and under Mexican law and the Mexican consumer finance protection things, they had to honor that. They had to ship him two pairs of very nice gold diamond earrings.

He paid 28, the equivalent of 28, for 28, 000 worth of products.

[00:01:18] Darin Newbold: That's amazing. So, and unfortunately it's never happened to me because as we were talking earlier, you know, I've been wanting a Corvette and you know, I'd pay 70 bucks for a Corvette. But anyway, back to Cartier and, and this story, what, Josh, what do you think kind of happened from a technical standpoint or the, you know, what are the mechanics that caused something to

[00:01:39] Joshua Warren: Yeah. And that's exactly why I wanted to talk about this today because so many people I feel like when they're scaling their e commerce site, there's these little gotchas that, well, I guess they're not very little, they can be 28, 000 gotchas. But there's these gotchas in your, your technical infrastructure that people don't really like to think about.

It's not the fun. You know, pretty part of e commerce, but it's so important. And in this case, I believe it was a currency conversion error. And specifically, they were listed at 237 pesos. They were supposed to be listed at 237, 000 pesos. That really feels like somewhere in the currency conversion process.

There was an error. I don't know if it was a algorithmic error or a human error, but someone made an error. Dropped three zeros and now we have a rather large loss for that business. and I see this, unfortunately, I've seen this before, either with currency conversion or just with automated pricing updates.

I've actually seen back a few years ago when algorithmic pricing got big for third party sellers on Amazon, different people, their automatic pricing update system would basically be like, I'm going to go to the lowest price minus a penny. within someone else's system would say, I'm going to go to the lowest price minus a penny.

And you would watch the prices just drop by one cents, two cents, three cents, four cents, until they were selling it at a loss because these systems either didn't have the profitability data baked in, or they just weren't even checking it.

[00:03:05] Darin Newbold: They didn't put any thresholds in for it to stop at some point. There is a, a low bar in this. A question around the technical, as you're saying on currency conversion, do we know? If someone from, say, Europe as opposed to Mexico or even the United States would have looked at it, do you think that the currency would have been wrong there too?

Or was it only happened to be? For the Mexican

[00:03:27] Joshua Warren: Apparently it was, the U. S. site and so it was all based on U. S. dollars. So the U. S. price was correct, in U.

S. dollars, but then the, exchange rates that it was calculating. So for instance, in Mexico was incorrect. And that's something that again, kind of behind the scenes, a lot of people don't realize is that, e commerce sites, typically, even those that support multiple currencies, they will ask you to define what is your base currency or your main currency.

Thank you. And in this case, this site was set to the US, and it was then converting into other currencies. So if it had been the European site and converting, and using a base currency of the Euro, then maybe here in the US we could have gotten a deal after all.

[00:04:08] Darin Newbold: Or it'd have been 25, 000 as opposed to 14, 000, so yeah, could go either way.

Well, let me ask you this, as we look at kind of the broader impact, what are some of maybe the repercussions from customer service and the brand and all of that? Cartier is a High end brand for sure.

[00:04:27] Joshua Warren: Yeah, and that was the interesting thing because when I saw this news article, the first thing I thought of is every e commerce website has a pricing disclaimer saying, hey, in the event of a pricing error, we'll cancel your order.

And that's just what people do. now, is that the best thing for your brand? It depends. If you're, a brand that's known for having excellent customer service and you repeatedly have pricing errors and you keep canceling the orders, it's probably not going to be. Good for your brand, but from a legal standpoint, that's where it gets real interesting because I believe if this had been in the US, chances are they would have gotten away with just canceling the 

[00:05:01] Darin Newbold: Right. 

[00:05:01] Joshua Warren: because this was in Mexico.

And because they have different laws there, similar in some cases to some of the things that you does. this customer was basically able to push the issue and say, no, no, no, no, no. I have a confirmed order and a payment stating that for this dollar amount or this peso amount, you're going to give me these products.

I expect it. And he was able to get that enforced. And, it is interesting from a customer service standpoint. Apparently the first thing they did was reach out to him and say, you know what? We want to celebrate with you this great deal that you found with our error. We will send you a very nice bottle of champagne if you will just cancel this order.

[00:05:38] Darin Newbold: Right. Well, yeah, apparently the champagne didn't work. And, you know, I'm not sure how much the bottle of champagne was, but I'm pretty sure it wasn't 14, 

[00:05:50] Joshua Warren: not. and something that's interesting to me is, not to get too political, but as we look at the differences in the laws between the countries, there's also differences in the laws between the states.

And I don't think California is there yet, but I could see a law like this or a regulatory framework like this in California. around pricing accuracy. I think that would probably be one of the first states that would do it. And so you really have to be aware of where are you selling and what are the laws and the expectations in those areas.

And it's not always just, am I selling to Europe? Am I selling to Mexico? It could be, am I selling to California?

[00:06:24] Darin Newbold: Wow, yeah, it is almost like another country at times.

Well, okay, as we, as we kind of went through some of the broader impacts that, that are out there, How do we learn from some of these mistakes, and And move forward and what are the merchants that are listening today? What, what can they do to mitigate this?

[00:06:46] Joshua Warren: this? Yeah, so I've mentioned the pricing updates that I've seen on Amazon. and I've also seen errors like this with currency conversions before. The other thing that no one ever expects or thinks about, because I think we don't think about shipping as often as we ought to, is shipping quotes.

and basically anything that impacts the total cost of a customer's cart. You really got to be careful with and I have seen cases where even recently the FedEx API went down. And most platforms are better about this now, but previously when that would happen, I've seen opportunities where you can go and you can get express FedEx priority overnight shipping for free because the site wasn't handling the fact that the FedEx API was down correctly.

And that one is an easy fix. so our friends over at ShipperHQ, if you're using ShipperHQ and the platform that you're pulling shipping rates from goes down, They actually have backup rates that they insert, and that is, one really good way to mitigate things like this. So same thing with currency conversion, you need to know, okay, if my currency conversion API provider goes down, do I have a second provider already lined up?

Does my site automatically switch to it? Do I just halt any orders that are in different currencies? you have to have those sort of fail safes or checks in place.

well 

[00:08:01] Darin Newbold: always good to have, no matter, no matter what you're doing.

But I would not have thought of having a backup necessarily for shipping. That's a, I think that's a great idea. And to be able to pull from. So what are some other solutions around just kind of overall the e commerce stability of all of this?

[00:08:20] Joshua Warren: Yeah, I actually been working on a article about this issue and I have a post that's going to go up on LinkedIn on Monday talking about it.

And it's interesting as I was researching and thinking about it, something I didn't put in the notes yet is, our friends at New Relic that you actually did an episode with one of our colleagues last week about, tools like New Relic can be a really good way to detect things like this, simply by having some type of error monitoring and reporting and alerting.

because I suspect somewhere in the code, an error was thrown saying we're about to give away 14, or actually 28, 000 worth of merchandise, but it was probably logged somewhere that no one ever looked at, no one ever saw, so tools like New Relic, different log aggregation services, things like that, having ways that you are aware of.

Monitoring your site more proactively for errors can really help not only with issues like this, but with anything that's going to negatively impact the customer experience and

[00:09:21] Darin Newbold: Well, and the other piece of that, even from the New Relic side, is, is,

the performance and how that can be monitored, even in some of these cases, because we know even the old, I say old.

I mean, I know it still happens. The denial of service, you know, those kinds of things that when performance goes down or when you have that. That can also cause some of these APIs, some of these other things to just either no longer work or they're working properly.

[00:09:47] Joshua Warren: Yeah, yeah. And even knowing how long it's taking your different, API providers to respond. there's definitely U. S. P. S. Versus U. P. S. Versus FedEx kind of have different service levels for how quick they return those rates.

currency providers can bury a lot. Some of the sites out there I've seen that are experimenting with cryptocurrency payments when they want to calculate out cryptocurrency values. I mean, that's all over the place. And so being able to monitor and get an alert that says, Hey, This API call usually takes, you know, a split second, and now it's taking multiple seconds.

it's really important, especially, we look so much at the performance of the kind of the front end of the user experience, but lots of times people aren't performance testing their checkouts. And the biggest impact on checkout performance is going to be those integrations and those APIs.

[00:10:36] Darin Newbold: So what would be some, best practices to look at around? Let's say first and foremost, avoiding the pricing issue. And then I follow on to that question as I was thinking about all this is it's great to have alerts, but it's kind of like if a tree falls over in the forest and nobody's there to hear it, does it actually make any noise?

So if there's an alert, but nobody ever sees it, was there really a problem?

[00:11:04] Joshua Warren: And now you're, you're actually, reading over my shoulder, I think, of that, that guide I'm going to release on Monday.

I think it's really important on the policy side to know where those alerts go. Like, let's say an alert went to someone at Cartier and said, Hey! About to sell some earrings at a 28, 000 loss. What do we do? Do you have someone that can receive that alert and have the authority to either disable a product on production or to disable a specific currency or country on production?

Because I'm guessing most of the retailers out there that are listening don't have that. That maybe somebody gets the And they have to send an email, they have to make a call, they have to get permission, and I think it's really important to talk about these things in advance and kind of have a contingency plan of if these things behave unexpectedly on our site, these people will be notified about them within a certain number of minutes, and they're given the authority to make a decision and make a change on the production site, and,

[00:11:59] Darin Newbold: site.

And that's a, that's a really important distinction, Josh. And as you were saying that, one of the things I was thinking of is

companies,

even a, Cartier's high end. And I don't, I don't know how large they are. They may be monumental, but. I'm kind of guessing that they're, they're not a Walmart sized type of, you know, fortune five company, if you will.

So they may not have the ability to have somebody constantly monitoring and watching this. So it could be a third party they'd reach out. But the key you brought up was they have to have the authority to make a decision and do something. And that's where I think a lot of times, many times the ball is dropped if you go back and root cause analysis this situation that maybe somebody saw it, they didn't have the authority, and by the time something could be done, 28, 000 worth of earrings were at least in the books.

[00:12:55] Joshua Warren: Exactly.

And I think so often we get so excited about technical solutions and how we can purchase this software, implement this system. And we forget that at the end of the day, at least for now, people have to be involved and you have to give those people guidelines and the authority to take the right actions.

[00:13:12] Darin Newbold: I know you're bummed by that. AI is taking over everything.

I know

[00:13:15] Joshua Warren: it. Hey, I didn't say it

[00:13:17] Darin Newbold: it

[00:13:17] Joshua Warren: So I was AI for an episode, But now that you mention it,

[00:13:23] Darin Newbold: Now that I opened it up. 

[00:13:24] Joshua Warren: it's interesting because, you know, 10 years ago, 15 years ago, even I think going back 20 years ago, kind of when I was starting an e commerce, there were already ways that people would use kind of rule based systems.

hey, if I have an order that is way above or way below my average order value, flag it. we even actually built a module at creativity for Magento that would do that, that would actually move the order into a flag status with certain rules. yeah. that works. That still works. You don't have to go for super fancy AI solutions.

However, it is interesting the world we're in now with AI, you know, there is the possibility of you could have an AI. And I think even some of the open source, free AI models that you could run on your server could do this. Just monitor carts. As people are adding things to carts, just monitor them and say, Hey, If anything looks weird, alert us.

And I think this could have been caught, you know, again, depending on did they have a person that would receive the alert and act in time, but this could have been caught when he added it to the cart. AI could have said, here's a product that has diamond and gold in the title, and yet it's 14. This doesn't seem right.

Let's throw up an error. Let's pause this. Let's alert this somehow so that someone could fix it before he actually completed checkout.

[00:14:38] Darin Newbold: Definitely would have made a huge difference in, in this scenario. Well, as we, as we kind of wrap this, Wrap this episode together. I wanted to ask you, maybe normally I kind of summarize some of the key points, but I wanted to ask you maybe what are the, what are the key takeaways that you'd want to have merchants walk away from if they heard nothing else?

What would those be for this episode?

[00:15:03] Joshua Warren: I think for this, I've talked a lot about pricing. I think this applies just as much to inventory. it's not as, well, it can be as costly, but it's just as frustrating for a customer to order something that you promised them is in stock and then you have to cancel the order because it's out of stock.

So making sure that you're All your systems that are touching pricing, inventory, everything related to getting the right product to the right customer at the right price. you really need to think through those more than you probably have, and you need to have some checks and balances on them. And then again, you need to have someone that.

Receives an alert if something's off and has the authority to take some sort of action. and I think that you put all that together and you can provide a lot better user experience and you can, you know, not give away 28, 000 worth of fine jewelry.

[00:15:49] Darin Newbold: Yeah, and not have your, board of directors or, or investors coming after you saying, Why are you giving away the farm?

[00:15:55] Joshua Warren: away the farm?

Exactly.

[00:15:56] Darin Newbold: Well, as always, we appreciate you being here to join us for Commerce Today. Definitely want to, invite you to share your experiences. If you've had an experience like this, we would love to hear about it. Love to take that information. How can we use it? How can we help improve both your experience online as well as anyone else's experiences online?

Definitely come find us on LinkedIn and Josh, your LinkedIn, as always.

[00:16:22] Joshua Warren: Yep. And I have some fun stuff coming out on LinkedIn. I already mentioned, kind of that guide and those seven steps to look at to prevent this from happening. That goes up next Monday. Actually tomorrow as we live stream this, I have a new checklist around site stability.

basically when you have big, sales, especially new product launches, things like that. What you need to be doing to make sure your site is secure, stable, performant. and that one is completely ungated. It will just be out on my LinkedIn profile for everyone to enjoy. So definitely check that out.

[00:16:54] Darin Newbold: So definitely find Joshua Warren on LinkedIn. We'll have it in the show notes here as always, but definitely find Josh, Joshua, Joshua Warren on, on LinkedIn so that you can find those guides. Well, again, thank you so much for joining us today for Commerce Today. Look forward to catching you next time.

Until then, take care. 

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