Beginning Friday night and continuing through Saturday, many customers found and ordered items that were marked down 50 percent or more off Amazon's regular prices. Some customers posted the discounts on message boards such as those on MyCoupons.com, which led to more orders.
The Internet retail giant has since moved to cancel many of the orders. "We are very sorry to report that, due to an error on our Web site, the toys you ordered were incorrectly priced," Amazon said in an email to affected customers. "You will be receiving instructions on how to either complete your order with the corrected prices or cancel your order. We regret any inconvenience this error may have caused you."
Although many customers took the cancellations in stride, others were upset with how the company handled the pricing problem. Pam Fountas, a computer systems architect in Worcester, Mass., said that when she placed her order, she did not know that the prices were inaccurate.
Fountas said she ordered about $33 worth of merchandise, including a Fisher Price nursery monitor that normally sells for between $35 and $50. Amazon has since canceled her order, and Fountas said as a result of her experience she might not order from Amazon again.
"I was pretty upset because I order from Amazon all the time," she said. "I spend thousands of dollars there. To me, it just seemed like they should be more careful about their prices. I just think it was misleading to the consumer."
Indeed, Fountas was not the only Amazon customer who felt misled. In the wake of the Seattle-based company canceling orders, several customers filed complaints about Amazon with the Better Business Bureau Serving Oregon and Western Washington. Despite the complaints, Amazon remains in "satisfactory" standing with the organization, spokeswoman Tiffany West said.
"They've always been responsive to complaints," she said.
Amazon spokeswoman Kristin Schaefer said the pricing glitch affected a small percentage of orders placed over the weekend and was caused by a system "hiccup" that happened while the company updated its toy catalog.
Schaefer said Amazon's response to the orders was part of its pricing policy, which is posted on its site. Although the company canceled many of the orders, it has offered the customers that were affected a $5 gift certificate to apply to their purchases.
"Unfortunately, these things do happen," Schaefer said. "That's why we have a policy in place."
Amazon is only the latest Internet retailer to experience a pricing glitch. Last month, pricing errors at Buy.com, Staples.com and Amazon-backed crafts retailer eZiba.com allowed thousands of orders for free or nearly free to be placed on goods.
The pricing problem follows Amazon's latest quarterly report in which it posted lower-than-expected revenue that grew only slightly from the previous quarter. In the wake of the report, several analysts downgraded Amazon's stock, with one analyst saying she was "throwing in the towel" on the company. Amazon's stock responded, tumbling to a 52-week low last week on news of the reports and downgrades.
The company has had other system problems in recent days, including a 40-minute site outage last Wednesday.
The pricing glitch comes during what is typically a seasonally slow time for toy sales. To drum up business, Toysrus.com is offering discounts of up to 75 percent off many of its toys, and eToys also has a sale on some of its merchandise in a summer promotion. Several customers said they figured Amazon was trying to match its competitors' prices.
"I know that Amazon has had high price reductions on limited items for a limited time," said a Charlottesville, Va., woman named Janet, who declined to give her last name. Janet said she ordered $250 worth of merchandise that normally would have cost her about $1,500. Of the 18 items she ordered, Amazon has told her it has shipped about 11 of them.
"You wouldn't believe some of the things that I've gotten for cheap money or almost free online. That's competition," she said.
In its email, Amazon notified some customers that it will launch its own toy sale Aug. 8.
Not all of Amazon's customers were upset by the cancellations. A Chepachet, R.I., woman, Betsy Baranski, said she ordered eight items over the weekend for her children after seeing a message on MyCoupons.com about the low prices. The items would have cost her about $640 at Amazon's normal prices, but they ended up totaling about $67 because of the pricing glitch.
"Amazon's been having some business problems, so I thought maybe they're just doing a really hot clearance sale," Baranski said. "I figured I'd order a few things and see what happens."
Amazon has since canceled most of her items but sent Baranski an email saying it did ship two items to her, including a radio-controlled toy car that normally sells for $79.99. Baranski said she ordered the car for less than $20.
"I'm not going to quit shopping at Amazon," she said. "You're lucky if you get it to start with. If you get it, you're way ahead of the game. I'll be happy I got my two things at ridiculously discounted prices."