Black Friday Inventory Blowup Hits Target, Buy.com, Fry’s
Written by Evan Schuman and Fred J. AunSeveral major retailers—including Target, Fry’s Electronics and Buy.com—got burned on Black Friday by a hole in their inventory-checking functionality. The snafu tricked the merchants into selling products to consumers without actually having those products in stock. Among the many Black Friday glitches, this one exposed a flaw that may become increasingly common and might force retailers into a different way of checking inventory.
The problem materialized because this year, for the first time, several E-tailers tried to re-create some of the excitement that surrounds brick-and-mortar Black Friday consumers-wait-at-2 AM-and-then-stampede-for-half-off-an-HDTV sales. The idea was to announce some very enticing deals and then to not offer them until midnight while stressing that only a limited number of each item was available. The retailers’ campaigns were designed to force a huge number of consumers to hit their E-tail sites at the exact same moment and try to buy the exact same product. If you’re looking to stress test your inventory systems, this is an ideal way to do it.
The typical approach to online inventory checking is for the system to look up how many of any item is available after consumers have placed the item in their carts. If the inventory can fulfill the purchase, the consumer is allowed to proceed. But the inventory-availability count isn’t reduced until the order is completed and the customer has paid. That method works 99.9 percent of the time.
In this stress-test situation, though, the inventory count could change dramatically between the time the item is placed in a cart and the time the customer fills out address and payment data and then completes the purchase. The most obvious way to deal with this issue is to set up special rules for these high-volume-in-a-short-time sales situations, perhaps causing the inventory availability figure to be immediately reduced by one the instant the item is placed in a cart. The catch would be that a window would pop up telling the consumer something like, “This is a Red-Hot product. If you do not complete a purchase of it within 10 minutes, it will be removed from your cart and offered to other customers.”
Editor’s Note:
Although this approach may not be ideal, it certainly beats what happened on Black Friday and left large numbers of vocal customers alienated. All three chains sent their customers E-mail messages confirming their purchases and then not alerting those customers for many hours—in some cases, as many as 48 hours—that in fact no purchase was made. In addition, some consumers were charged for their non-existent purchases, although presumably those fees will be credited.
-Marc
December 2nd, 2010 at 10:21 am
In Brick and Mortar operations we called the time between customer selection and inventory update (ie. the time between the customer removing it from the shelf and the POS system deducting it from inventory) the “buggy factor”.
Something we all(should have)learned to address in warehouse and online systems long ago …..
December 2nd, 2010 at 11:29 am
This is NOT the first time that major retailers have included “doorbuster” black friday deals online. I have sucessfully purchased them online several times in the past. Fry’s has a history of “inventory glitches” on Black Friday year after year. More like, bait and switch to sabotage our competition.
December 2nd, 2010 at 11:29 am
Our warehouse software reduces the “on-hand” inventory and increases “committed” inventory when an order is placed, and then reduces “committed” and increases “pending” when the order is being picked. “Pending” is reduced when the order is shipped, and the sale is posted. If the order is canceled at any point, the quantity is “returned” to “on-hand”.
It would seem that using this technique would work for online shopping carts: “committed” means in the cart and “pending” means the shopper is checking out.
Perhaps the problem is that the software for managing website sales wasn’t designed by people with warehousing experience?
December 2nd, 2010 at 12:25 pm
Having managed a warehouse with only On Order/On Hand inventory, and no Work In Progress (WIP) flags I can’t begin to tell you the times that causes problems with overcommitment to meeting a customer’s needs, with the corresponding anger from both sales and the customer.
December 2nd, 2010 at 1:47 pm
These types of inventory “glitches” are much more common than the article implies. Doing a search for past snafus, you’ll eventually find many instances of these questionable practices where the customer receives nothing but poor treatment from the retailer. This is especially true with Frys.com.
December 2nd, 2010 at 5:16 pm
@Bob – Having to commit inventory when items are put in a online shopping cart is a bad practice as > 90% shopping carts are abandoned, and depending on the system, may not be reclaimed for up to several hours. That would lead huge opportunity costs. Additionally, it will allow a potential Denial of Service attack by someone adding a large amount of items in a cart and walking away from the browser.
December 6th, 2010 at 8:53 am
The more idiot retailers continue their gimmicks, the more they get burned. See what happens when people with IQ’s in the single digits try and think?
February 3rd, 2011 at 6:50 pm
isn’t this the same problem faced by vendors like ticketmaster for concert tickets? anyone who has ever bought tickets for a concert there gets the message, “complete your purchase in 3 minutes or else your seats get released.”
seems like a fairly easy solution, no?