This week we saw two events where the automated nature of processes lead to major business failures.
On Friday, a number of Amazon retailers were affected by a pricing problem. Those that had chosen to subscribe to the third-party RepricerExpress service that automatically adjusts prices to match or better competitors, found their products were being sold for as little as 1 pence. Those organisations that despatched their own goods were able to spot the problem themselves, but those that used Amazon to stock and ship product, were affected more seriously because Amazon simply carried on regardless for some time.
The cause of the hour-long issue has been fixed. RepricerExpress's clients are outraged, and of course for some of them this could put them out of business. I am sure RepricerExpress will be reminding its clients what they agreed to in the RepricerExpress end user licence agreement (partial screenshot in the image above). Including for example that the maximum liability "shall be limited to a sum equal to the total Licence Fees paid to the Licensor in the period of 12 months considered retrospectively from the date the cause of action arose". So, how much would you pay for something that can reduce your product prices by almost 100%? £20-70 per month apparently seems to be the answer.
Then on Monday, taxi-like company Uber, which had another PR disaster last month, managed to incense everyone by rapidly escalating its prices in Sydney as "demand increased" i.e. people attempted to leave the city during the dreadful cafe hostage event. Later reacting to pressure, Uber cancelled the change and offered some free services instead and a refund to those affected by its pricing.
These have a common factor of automated software making unmoderated changes to pricing that would clearly be perceived as unreasonable to a human. And doing it fast.
Automation is good — but enumerate all the possibilities, and implement limits, checks and alerts. And monitor these. And more importantly, check your contracts and who is liable for what. Then do a risk assessment and make sure someone senior reviews this and makes some decision about the risks. Can you survive the unexpected?
Posted on: 17 December 2014 at 17:23 hrs