Monday 15 December 2014 4:34 pm

As vendors count the cost of the Amazon 1p glitch, is more protection needed for sellers?

Tom Welsh is City A.M.'s business features editor.

Tom Welsh is City A.M.'s business features editor.

Stephen Palmer, managing director at TV Village, says Yes.

It is important to note that this is not Amazon’s fault – it’s down to the third-party repricing software, RepricerExpress.

But this has definitely made me more nervous about letting Amazon ship our goods, instead of us sending them directly. At least when we despatch them, we can control the stock. One customer in Kent ordered 59 mobile phones from us on Friday, each for 1p – that’s stock worth £1,500.

On the whole, I think we have definitely learnt that we need to put in place some kind of insurance to protect against any further glitches and other seller protection issues.

I also think this is something Amazon needs to look at, and it needs to be more proactive in the future regarding shipping orders at incorrect prices.

I would say a good idea is that Amazon should have a point of contact such as an account manager for each seller. For all our other suppliers, we can contact a particular person to raise an issue we might have quickly – so why not with Amazon?

Charlotte Bowyer, a digital policy researcher at the Adam Smith Institute, says No.

The RepricerExpress pricing glitch is a devastating and expensive error, but fortunately a rare one. Certainly, an hour’s glitch affecting third-party Amazon software is not enough to warrant new seller protection.

Ultimately, RepricerExpress customers voluntarily agreed to their terms of service, which state that vendors are liable for losses.

While outsourcing can reduce costs, it presents risks – especially when used for both pricing and fulfilment.

Requiring firms to insure against every hypothetical disaster would be prohibitively expensive. Increasing seller protections beyond the market level would reduce the choice and functionality of vendor software, while significantly raising the cost of these tools.

The best regulation here is reputation. Amazon has already gone beyond its obligations, averting a PR disaster by cancelling orders and protecting vendor feedback.

And if people no longer trust a service or disagree with its terms, they don’t have to use it.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.