Any Outrage Over E-Commerce Outages?

The recent service outages at Amazon.com, eBay, and other e-commerce sites frustrated shoppers, lowered company revenues and raised media eyebrows. For e-commerce firms, downtimes are the worst of times.

However, some companies are fighting back by questioning why the Net is being held to higher standards than the rest of society. After all, every year during the holidays, shoppers count on the fact that malls will not have enough parking spaces and that post offices will be jammed with lines out the door.

“Telephone systems go out, electrical systems go out, and now, as you can see, Internet systems go out too,” eBay spokesperson Kevin Pursglove told the E-Commerce Times.

Internet, Interrupted

The suggestion being made is not that shutdowns are completely irrelevant.eBay, for example, did not want to suspend site operations for any length of time during the critical holiday shopping season. So the company put off needed upgrades to its systems and held its breath.

eBay won the war — but lost the last battle. Instead of a scheduled upgrade after January 1st, eBay was hit with a post-New Year meltdown of 10 hours, the company’s longest disconnect since the site went down for about 21 hours in June 1999.

“In hindsight, perhaps we could have done something differently, but our primary concern was not to have downtime during the holidays, and we accomplished that,” Pursglove said.

In any case, some kind of outage on eBay, scheduled or not, was inevitable. The remaining question for the company was how to address its customers in the aftermath.

Facts of Life

The letter posted on eBay by chief executive officer Meg Whitman after this month’s outage was both straightforward and conciliatory. Whitman apologized to eBay’s users and outlined the extension of time being provided for auctions affected the most by the outage.

Moreover, the company announced in Whitman’s letter that it would give refunds for all of the eBay fees associated with the time-designated auctions, including “final value fees,” one of the central ways the company makes money.

It is not likely that a great number of eBay users were pleased to find eBay out of service for any length of time, let alone 10 hours. Still, eBay’s attempt to mitigate the shutdown’s consequences no doubt affected the users’ willingness to accept outages as a fact of life.

Amazon or Amaz-off?

Of course, consumers are not the only interested party when it comes to downtime — investors need consolation as well.

Amazon suffered a 40-minute outage on December 5th and was also down on the Friday after Thanksgiving — usually the busiest shopping day of the year.

Amazon took the position that its outages had “no measurable impact” on business. However, the shutdowns do matter, according to Patrick Dorsey of Morningstar.com.

“Considering the volume that Amazon does during the holiday season, any outages are bad,” Dorsey told the E-Commerce Times.

Wider Scope

On the one hand, using Amazon’s own measure of units sold — theDelight-o-Meter displayed on the home page — Dorsey estimated that the post-Thanksgiving outage probably cost Amazon US$500,000 in sales.

On the other hand, Amazon still grabbed the most unique visits of any trailer during the holidays, according to both Nielsen//Net Ratings and Media Metrix.

The element of the debate that is missing, however, is a comparison to the amount of business an offline retailer loses for roughly similar reasons, such as long lines or poor customer service. In other words, the skirmish over outages cries out for a broader context.

Down for the Count

To be sure, that context should also include the ways, beyond lost sales, that a company’s operations can be hindered by a systems stoppage. An outage also effectively shuts down the affected company itself.

For example, in addition to locking out online customers, vendors, and partners, employees of a company who need access to Net-based services are shut out as well. Many e-commerce sites are connected to the core of a company’s data center, which houses all the information the executives and workers need to do their jobs.

As a result, employees with a million tasks to do are stuck, waiting for the red light to go green. Not a very effective use of resources, one supposes.

Chaos Theory

For many companies, the Web site is more than a marketing tool — the site is the business itself. When unscheduled outages hit e-tailers and online auctioneers, the internal response at the company can be a panicked scramble, even while the public relations campaign is pat and reassuring.

So the outages are not meaningless. The question is, should businesses be more focused on trying to eliminate outages or simply learning to live with them?

In physics, chaos theory refers to whether it is possible to make accurate, long-term predictions about the behavior of a system. Heavy traffic shackled e-tail sites during the 1999 holiday season, hackers took down major sites in February 2000, and this past holiday season saw technical glitches causing outages. The combined forces of crime, crowds and chaos are not likely to disappear.

So, while it’s hard to say with certainty, it is probably safe to say that outages are here to stay. Perhaps it will not be long before e-commerce responds to an outage less with a scramble than a shrug.