Reference no: EM133087307

An example of an artifact from the culture is the story that at midnight on Friday, May 21, 2010, Zappos created a problem that required a significant financial cost to deliver that "WOW." Due to a programming error in its pricing engine, Zappos accidentally capped the sales price at $49.95 for all products sold on its subsidiary site (Link will open in new tab.) (Links to an external site.). The mistake was not discovered until 6 a.m., and Zappos pulled down the site to correct the pricing problem. Once fixed, there remained a question of what to do about the products sold with the erroneous prices. Zappos' terms and conditions clearly state that the firm is under no obligation to fulfill orders placed due to pricing mistakes. However, Zappos decided to honor every sale made in the time frame between midnight and 6 a.m.-resulting in a loss of over $1.6 million.

That's putting your money where your "WOW" is! Amazon, which owns Zappos, had its own pricing mistake just two months prior to the Zappos incident. Best Buy and Dell have also both had online pricing errors. None of these firms handled the situation as smoothly as Zappos. How else does Zappos deliver WOW to customers? Zappos has a 365-day no-hassle return policy, free upgrades to express shipping, and courteous and helpful customer representatives, all of which help make customers very happy.

Question

How does the Zappos business strategy match its organizational structure and with their decision to honor every sale, despite its explicit business terms and conditions that would allow it not to do so, was that a sound decision? Why or why not?