Supemarket giant Tesco made a pricing cock-up on its website yesterday, offering an Xbox 360 bundle, normally priced at around £350, for just £33.

Quite the bargain, but rather weird when you consider that Virgin and Woolworths both replicated the exact same mistake…

Links to these super-generous offers were soon spread around the web, and, judging by sites like MCV, hundreds of Christmas shoppers thought they had grabbed the bargain of the season.

Unfortunately for these shoppers, the retailers woke up just in time to spot the problem, and have cancelled the orders. Harsh, if you’re a bargain hunter. Oh cruel winter!

How did the retailers get away with the mistake?
Here’s the thing with buying stuff online. It is commonplace for online retailers to cover their backs in the case of errors like this. They do this by, it seems, signing up to ‘The Postal Rule’.

In law, The Postal Rule states that contracts become valid once they’ve been sent through the mail. Online retailers appear to have adopted this for their terms and conditions, with the contract formed once goods are despatched, rather than at the point where a shopper pays for it. And since Tesco et al spotted the error before despatch, they managed to swerve a bullet.

According to Struan Robertson, a technology lawyer with Pinsent Masons and editor of www.out-law.com:

“Pricing errors will happen occasionally. It doesn’t automatically follow that consumers can take advantage of the incorrect prices, though. The smart retailer will protect itself against pricing errors by dealing with them in the terms and conditions and the automated order acknowledgement and making sure the conditions form part of the contract with shoppers.”

All three retailers involved in the Xbox screw-up have terms and conditions which state that orders can be cancelled in the case of pricing errors. Smart.

In Tesco’s case, its conditions include this (pretty clear) statement:

“There will be no contract of any kind between you and us unless and until we actually dispatch the goods to you. At any point up until then, we may decline to supply the goods to you without giving any reason. At the moment that the goods are dispatched (and not before), a contract will be made between you and us, and you will be charged for the goods.”

For other retailers, Robertson reckons “this is the right way to protect against pricing errors in a set of terms and conditions”.

Damage Limitation
‘Customers’ who thought they’d bagged a real bargain will be disappointed, but presumably the retailers will have let them down gently…? Actually no, the messaging seems a bit harsh.

In the case of Woolworths, customers were sent an email to advise that the order would not be processed. However, the email started off by informing customers that:You will be unable to reply to this email’, which is the first thing I’d have wanted to do after being told that I hadn’t saved myself £300 after all. 

Secondly, the email didn’t even address the specific mispricing issue. It was a standard email outlining seven possible reasons why their order had been cancelled, none of which mentioned a pricing error. Poor show.

Tesco’s press office, meanwhile, refused to discuss the issue or how it intended to respond to purchasers. Also poor show.

The reason
Nevertheless, it’s clear that three retailers wouldn’t have chanced upon making the exact same error, so what was the link?

The link is Entertainment UK, which distributes entertainment products to several large UK retailers (presumably that includes product page copy / pricing / metadata / images etc). Woolworths, which owns Entertainment UK, confirmed that it was the source of these pricing errors.

Such mistakes, as well as the kind of discount voucher errors made by Littlewoods and Hamleys in the past year, are bound to happen, but it is important to deal with the PR fallout that can result from so many disgruntled customers.  

We’ve yet to see how Virgin and Tesco have informed buyers of the Xbox bundles, but Woolies’ email is not a great example. An apology, and perhaps a discount off the next purchase would have been a much smarter way of dealing with this kind of issue.

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Littlewoods hit by latest discount mishap