Amazon Endures Third Holiday Outage

The main shopping site of Amazon.com (Nasdaq: AMZN) suffered a 40-minute outage on Tuesday, the third and longest shutdown for the site since Thanksgiving.

While Amazon has downplayed past outages, saying they would have "no measurable impact" on business, Morningstar.com analyst Patrick Dorsey told the E-Commerce Times that the outages do matter.

"Considering the volume that Amazon does during the holiday season, any outages are bad," Dorsey said.

Using Amazon's own measure of units sold -- the Delight-o-Meter displayed on the home page -- Dorsey estimated that the post-Thanksgiving outage probably cost Amazon US$500,000 in sales.

"That ain't chicken feed," Dorsey said.

Longest Outage of Season

The latest crash began just before 4 p.m. PST in Seattle, Washington, where the e-tailer is based. Unlike previous outages, which Amazon blamed on internal "glitches," Amazon spokeswoman Kristin Schaefer said that this time a software conflict took down the site.

"We ran two programs at the same time that will not run together," Schaefer said. "The combination of the two brought the site down, and we identified the problem and analyzed it."

The site was also down for approximately half an hour on the day after Thanksgiving -- when other e-tailers had similar problems -- and for about 15 minutes last Thursday. Both of the earlier outages occurred around noon Seattle time.

Visiting The Crash Site

Shoppers attempting to visit the site during the crash Tuesday received a different message as well. At one point, the site displayed a note saying: "System Error. We're sorry. We have encountered a technical problem, which we will investigate."

Amazon's Schaefer said outages are inevitable given that the e-tail site runs around-the-clock, year-round. She labeled the three outages coming so close together a "coincidence."

Other Fronts Watched

The outages come amid other public relations woes for Amazon. Earlier this week, leading online privacy groups asked the U.S. Federal Trade Commission (FTC) to investigate the firm's privacy practices.

However, many analysts have come out in support of Amazon in recent days, saying that the company will benefit from a strong online holiday shopping season and that it remains on track to stop burning through its sizeable cash reserves -- now placed at about $800 million -- and turn cash-flow positive sometime in 2001.

For his part, Dorsey said he is closely watching the impact of the outages, as well as how Amazon's free shipping offers will affect the company's margins. His long-range prediction is for the company's once-soaring stock to fall into the same price range as traditional retailers, which would mean falling another $10 from its current level of about $25.

Amazon Extends Promise

On a separate front, Amazon announced Wednesday that it has reached an agreement with the United States Postal Service that will enable it to offer delivery by Christmas.

The e-tailer said that customers can now make purchases up until one minute before midnight on December 23 and still receive their packages on Christmas Day. Special shipping rates will apply.