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Dell Axim mis-pricing sparks customer furore

Tags:
E-commerce,
Pricing Gaffes,
Pricing Errors

Matt Loney ZDNet.co.uk

Published: 26 Nov 2003 18:00 GMT

Dell has been deluged with complaints after cancelling orders for an Axim PDA that it mistakenly priced at $79 on its US Web site. The Axim X3i, which normally sells for $379, is the latest victim of pricing errors -- apparently the scourge of e-commerce sites.

Dell pulled the listing at about 1.30 p.m. Eastern Daylight Time on Monday, according to one customer, and then reposted it -- at the same incorrect price -- before finally fixing the error.

Hundreds of postings have been made to Dell's forums from angry customers who ordered the Axim at the knock-down price on Monday, only to later receive an email from Dell saying that the erroneous offer would not be honoured.

"This is to notify you that, regrettably, we need to cancel your recent order for an Axim handheld PC," Dell wrote to its customers in an email. "Due to our error, the system was shown online at an incorrect price, well below the correct price." Dell noted that it specifically indicates on its Web pages, its catalogues, and in its advertising that "Dell cannot be responsible for such errors."

Dell added that its email acknowledgement of orders does point out that it cannot be responsible for typographical or other errors, and reserves the right to cancel any orders resulting from such errors.

But for many, that does not seem to be enough. "I received numerous order confirmations yesterday, but today received the email," one customer told ZDNet UK. "You would think Dell would offer some sort of a discount to make up for this, but they did not offer a thing." Dell was not immediately available for comment.

This is the latest in a string of pricing errors that have plagued e-commerce sites, including those of Dell, its competitors and other big brand names, and sparked a public relations nightmare. In March, Amazon.co.uk was lambasted by customers when it said it did not intend to fulfil the orders of customers who took advantage of a pricing mistake to buy iPaq handheld computers for less than £10. The company temporarily took its entire UK site offline while the error was fixed.

Amazon said its terms of use strictly state that no contract for sale has been formed until customers receive an email stating that their order has shipped, meaning it had no obligation to hand out iPaqs at rock-bottom prices.

The company appeared to have the legal right to cancel the incorrect orders, judging by the way past incidents proceeded. At the end of 2001, when Kodak mistakenly offered a £329 digital camera for £100, legal experts argued that Kodak's automatic confirmation email formed a contract with the buyer, mainly because of the way it was worded.

"The legal consensus was that Kodak had formed a contract with the customers at the point when the confirmed acceptance of the customer's order, unless the company said something to the contrary," said Struan Robertson, a solicitor with law firm Masons, at the time.

Amazon's terms of use, on the other hand, specifically stated that the confirmation email does not form a contract: "No contract will subsist between you and Amazon.co.uk for the sale by it to you of any product unless and until Amazon.co.uk accepts your order by email confirming that it has dispatched your product."

Online pricing mistakes are increasingly common on retail Web sites. Previous incidents include Compaq Australia selling a laptop computer for one penny, Kodak's digital camera offer and Dell's offer of a set of high-end $229 speakers for $24.95. Dell and Kodak honoured the sales, but Compaq merely refunded buyers their penny.