One Year Ago: Any Outrage Over E-Commerce Outages?

Originally published on January 7, 2001 and brought to you today as a time capsule.

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

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

“Telephone systems go out, electrical systems go out, and now, as you cansee, Internet systems go out too,” eBay spokesperson Kevin Pursglove toldthe E-Commerce Times.

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

eBay won the war — but lost the last battle. Instead of a scheduled upgradeafter 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 hoursin June 1999.

“In hindsight perhaps we could have done something differently, but ourprimary concern was not to have downtime during the holidays, and weaccomplished 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 inthe 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. Whitmanapologized to eBay’s users, and outlined the extension of time beingprovided for auctions affected the most by the outage.

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

It is not likely that a great number of eBay users were pleased to find eBayout of service for any length of time, let alone 10 hours. Still, eBay’s attempt to mitigate the shutdown’s consequences no doubtaffected 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 theFriday after Thanksgiving — usually the busiest shopping day of the year.

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

“Considering the volume that Amazon does during the holiday season, anyoutages 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 thepost-Thanksgiving outage probably cost Amazon US$500,000 in sales.

On the other hand, Amazon still grabbed the most unique visits of anye-tailer 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 theamount of business an offline retailer loses for roughly similar reasons,such as long lines or poor customer service. In other words, the skirmishover 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 outagealso effectively shuts down the affected company itself.

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

As a result, employees with a million tasks to do are stuck, waiting for thered 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 siteis the business itself. When unscheduled outages hit e-tailers and onlineauctioneers, the internal response at the company can be a panickedscramble, even while the public relations campaign is pat and reassuring.

So the outages are not meaningless. The question is, should businesses bemore focused on trying to eliminate outages, or simply learning to live withthem?

In physics, the chaos theory refers to whether it is possible to makeaccurate, long-term predictions about the behavior of a system. Heavytraffic shackled e-tail sites during the 1999 holiday season, hackers tookdown major sites in February 2000, and this past holiday season sawtechnical glitches causing outages. The combined forces of crime, crowds andchaos are not likely to disappear.

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

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