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The Secret World Of... | Internet


THE BAD THINGS THAT HAPPEN WHEN ALGORITHMS RUN ONLINE SHOPS

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(Image credit: Getty Images)

By Chris Baraniuk20th August 2015

Smart software controls the prices and products you see when you shop online –
and sometimes it can go spectacularly wrong, from causing offence to destroying
livelihoods.


ALGO-SHOPPING

INSIDE INTERNET RETAIL

This is the second part in a two-part series about the algorithms in online
shopping. Read part one, about the software that runs Amazon’s warehouses – and
their workers.

It was a warm, breezy Saturday morning in Melbourne, two years ago. Michael
Fowler had just shut down his laptop after spending a few hours checking up on
his business. He was the owner of a T-shirt company called Solid Gold Bomb,
which sold a wide variety of garments online via, among other outlets, Amazon.
Fowler was looking forward to getting back to his weekend, but then his phone
buzzed. A notification from the company’s Facebook page. It buzzed again – and
again. When he went to read the messages he saw a stream of abuse directed at
his firm. The memory is still clear in his mind. “I knew instantly what had
happened when I read what people were saying,” he says. “I couldn’t reply fast
enough.”

Fowler had set up an algorithm to upload thousands upon thousands of T-shirt
designs to his online stores. The designs were based on the infamous “keep calm
and carry on” catchphrase, a slogan which was originally dreamt up as a way of
preserving morale in the event of a Nazi invasion of Britain. Fowler had decided
to “parody” it by getting a computer programme to come up with random variations
such as “keep calm and dance on” or “keep calm and play football”.


> FOWLER’S EMPLOYEES WERE ALL OUT OF JOBS AND A ONCE THRIVING FIRM WAS GONE. ALL
> BECAUSE OF A HORRIBLE T-SHIRT THAT NO-ONE WORE, NO-ONE BOUGHT, AND WHICH NEVER
> MATERIALLY EXISTED.

But the huge list of word choices that he fed in included less savoury options –
which he says he had no knowledge of. In particular, a T-shirt emblazoned with
the imperative “keep calm and rape a lot” had been published. No-one had bought
it. In fact, it sat on the web for more than a year before anyone even noticed
it. But eventually it was discovered – and the internet went crazy. Twitter was
ablaze with condemnation. “Solid Gold Bomb is crouching behind its
algorithmically generated excuse,” said Gizmodo. Others pointed out the
stupidity of using an unexamined word list to automatically generate slogans for
a commercial product.

Software used to create T-shirt slogans similar to this one generated offensive
results (Credit: Michal Huniewicz/Flickr/CC BY 2.0)

Fowler admits he made a “big mistake” and within a couple of months, Solid Gold
Bomb folded. His employees were all out of jobs and a once thriving firm was
gone. All because of a horrible T-shirt that no-one wore, no-one bought, and
which never materially existed.

But that’s the trouble with algorithms. All sorts of unexpected results can
occur. Sometimes these are costly, but in other cases they have benefited
businesses to the tune of millions of pounds. What’s the real impact of the
machinations of machines? And what else do they do?

To really understand the sorry mess that ended things for Solid Gold Bomb, one
has to consider the instant success that Fowler’s scripts and computer tricks
had once brought him. Years before he ever experimented with the “keep calm and
carry on” meme, he had devised an automated T-shirt design process which
published over 22 million different versions of sports-related designs to a web
store. These included icons and, crucially, people’s names. Finding the shirt
with your name or your friend’s name on it made you much more likely to buy it,
discovered Fowler. “It was about a 100-to-one ratio. For example, a picture of a
car would sell once whereas a picture of a car with a name below it would sell a
100 times,” he says.


> I’VE REALISED THAT YOU HAVE TO HAVE AN ELEMENT OF SCRUTINY – MICHAEL FOWLER,
> ONLINE SELLER

When Fowler first launched this technique in 2011 he received 800 orders over
the first weekend. He was blown away and the effect on his business was
profound. Soon he was processing thousands of orders a day. The problem was that
a huge proportion of the designs weren’t vetted for suitability by human eyes
before they went live on the web – an oversight that would lead to the problems
two years later. “I’ve realised that you have to have an element of scrutiny,”
he admits.

Fowler has now returned to selling T-shirts – after a spell as a traffic warden
and as a ranger catching stray dogs – but today he is more careful. His current
company, Big Texas, also uses an algorithmic process to create designs for
aprons, but he uses published lists of the 1,000 most common names, not random
assortments of words.

Algorithms play a role in much of the shopping you buy online (Credit: Getty
Images)

Errant algorithms can also cause human headaches when it comes to prices. The
costs of products that appear on retail websites are constantly fluctuating
thanks to software that sets them competitively. The frequency at which these
changes happen is so great that dedicated websites have been set up to “watch”
the pricing on websites like Amazon. Daniel Green has been running one of these
sites for years. He explains that prices don’t just change daily – but sometimes
several times in one day.


> PRICES DON’T JUST CHANGE DAILY – BUT SOMETIMES SEVERAL TIMES IN ONE DAY

“They will drop the price of a product every few days or every few hours until a
product is purchased by someone and then the price goes back up,” he says. “We
know that they keep prices low on a lot of their most popular products to give
the impression that they have great deals and then for less active product
categories or less popular products they may have a bit more of a profit margin
there.”

Sometimes this can produce amusing and unexpected results, however, in what
Green calls a “race to the bottom”. Two retailers selling the same thing on
Amazon’s marketplace will re-price their product against their competitor, but
the re-pricing can occasionally continue unabated until absurdly low or high
price points are reached. “It just goes back and forth,” says Green.

A recent glitch briefly made prices on Amazon crash to a penny (Credit: Getty
Images)

In 2011 a blogger discovered that a biology textbook about flies was priced at
the bewilderingly high price of over $23 million. Why? Two sellers, profnath and
bordeebook, had set up algorithms which would watch each other’s prices and then
reset their own. “The prices would remain close for several hours, until
bordeebook ‘noticed’ profnath’s change and elevated their price,” explains
Michael Eisen on his website. The pattern continued perfectly for the next
week.”


> ALGORITHMS WATCH OTHER’S PRICES AND RESET THEIR OWN

Sometimes the most damaging prices are the lowest – as low as you can get, for
example. This was what blighted the Christmas sales of a string of Amazon
marketplace sellers in December last year, when automated re-pricing software
RepricerExpress erroneously changed the price of thousands of items to as little
as one penny or one cent. The glitch, which happened two weeks before Christmas,
hit sellers running small retail businesses extremely hard.

Businesses on tight margins have suffered when pricing software went wrong
(Credit: Getty Images)

Part of the trouble was that once orders had been placed, they were almost
instantly processed by Amazon’s automated warehouse systems under the “Fulfilled
by Amazon” (FBA) programme. Sellers asked the FBA team to stop sending these
orders out but were told it wasn’t that simple. Amazon says that nothing about
the operation of this system has changed since the December incident.


> IT ALMOST FELT LIKE SOMEBODY BROKE INTO YOUR HOUSE - RICHARD BURRI, ON AN
> ALGORITHMIC GLITCH


“It almost felt like somebody broke into your house or your personal life and
started to take things away from you,” says Richard Burri, whose office
stationery store was affected by the error. He and his wife estimate that the
various computer algorithms working together would have cost the business
between $100,000 and $150,000. Fortunately, the majority of the firm’s human
customers who had bought one penny items agreed to return them when contacted.

The costs of products that appear on sites like Amazon are constantly
fluctuating, thanks to software (Credit: Getty Images)

Others found that buyers weren’t always so obliging. Shamir Patel sold
pharmaceutical products via Amazon. He also asked customers to return one penny
products, but he says about half of them refused to do so. The cost to his
business, he calculates, was around £60,000. “You were a bit powerless to do
anything about it,” he recalls. “You were literally just watching your money
flush down the drain.”


> IT’S MADE ME NOT REALLY WANT TO GO ON WITH THE BUSINESS – JUDITH BLACKFORD,
> ONLINE SELLER

Yet another seller, Judith Blackford, who marketed dolls and babies’ gifts, says
she suffered sleepless nights and adds that she has been forced to close her
business completely. “I’m selling off any stock that’s left now. Pretty much
most of it is going out half price just to get rid of the stock,” she says.
“It’s made me not really want to go on with the business.”

RepricerExpress has apologised for what happened, though the firm has never
explained exactly what went wrong. CEO Brendan Doherty declined to provide
comment for this article.

All of these stories demonstrate how acutely online retail is defined by the
machinations of decision-making software hiding behind the scenes. For Michael
Fowler, he learnt the hard way that algorithmically derived success can quickly
turn into spectacular failure. “You can scale up and have hundreds of orders
overnight. Hopefully you’ll have a process to know how to do that but I think
that’s the biggest problem – you have to be ready for it and know how to handle
it,” he says, reflecting on his experiences. “I don’t think it’s a long-term,
sustainable solution unless it is really properly executed and done
conservatively – with a lot of auditing in place.

“If I wanted to I could scale my current business up tomorrow but I think I just
have a more conservative approach now. I’m just trying to survive.”

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