The Bandwidth Shortage That Stole Christmas

They have been making their lists and checking them twice. As a result, consumers will soon learn which retailers have been naughty or nice in planning for their most important part of their year: the holiday rush.

“So much of retailers’ business rides on the holiday season that they want to be sure that their Web sites are ready to handle the extra traffic,” said Heather Dougherty, an analyst at Nielsen//NetRatings, an Internet media market researcher.

Even though e-commerce has migrated from a novelty act into a widely accepted technology, performance problems still arise during that time of year. Last year, Wal-Mart, and Best Buy all experienced system outages during the holiday season.

Problems Arise

“E-commerce vendors are getting better at preparing for the holiday season, but there still are some cases where problems arise,” said Craig Smith, managing director at Trinity Insight, an e-commerce consulting firm.

The downtime tends to correspond with key peak buying periods, such as Thanksgiving week and the middle of December. For example, in 2006, experienced problems from Dec. 14 to Dec. 16.

The site had intermittent outages, response time slowed during those days and the site was down from 11:19 p.m. on Dec. 14 until 8:30 a.m. the following morning. The company never provided details about the source of the problem, but outages like this can cost retailers like it as much as $1 million per hour.

The List Gets Longer

To ward off such problems, retailers have put together long — and ever-growing — checklists, trying to make sure that their systems are ready to handle the big holiday push. The challenges start with the system and network infrastructure.

The retailers have to understand that the amount of bandwidth and processing power required is continuing to climb, and that could slow site performance. “E-commerce companies need to service a customer’s request quickly,” Smith told the E-Commerce Times. “If not, the customer will click away to a competitor’s site.”

Delivering quick response times has become a problem because retailers are working with new types of content. Many Web sites now feature video content to display products. This approach is now possible because many consumers now have the broadband connections needed to support these applications.

Also, the underlying software — including multimedia players and video editing software — required has become more commonplace. While this option helps the retailer engage with the customer, it consumes more bandwidth and requires more processing power than other programs.

Another issue is e-commerce sites are becoming more dynamic. “Companies used to prepare for what they thought would sell during the holidays and then kept their sites static throughout the season,” Dougherty told the E-Commerce Times. “That is no longer the case. They now change their strategies dynamically — weekly, even daily — in response to consumers’ purchase patterns.”

Passing the Test

That change in approach means that the underlying infrastructure is more dynamic and ever-changing. As a result, problems can arise from internal glitches, instances where a company’s IT team may make a change and it impacts items that had been functioning. Testing has becomes more important for e-commerce companies; they need to make sure that any changes they make do not negatively impact their existing infrastructure.

Yet even after a company goes through such testing, problems may arise. A corporation may deduce how users will work with a new Web page but find that their customers interact with it in a different manner. Consequently, some consumers get caught in endless cycles where they continually return to the same page.

If they are too successful, special promotions can create problems. Last year, Amazon had a special offering for Microsoft’s Xbox 360 systems during Thanksgiving week, and that led to some of the company’s performance issues.

Wal-Mart’s glitches stemmed from customers desperately trying to purchase a hard-to-find Elmo doll. The company mailed out a special promotion for the doll in the middle of December. Because the response was greater than expected, performance problems arose and the Web site crashed. The retailing giant had to revamp its server configuration to fix the problem.

Hunting for Bargains

The evolution of the way consumers communicate with each another is one reason why retailers have trouble judging how well their promotions will be received. For example, if consumers find out about a good deal, some will quickly spread the word virally, often via e-mail or text messages.

“A company did a mass mailing and the response was twice as high as normal,” Geoff Galat, Tealeaf’s vice president, marketing and product strategy, told the E-Commerce Times. “The company was happy about the results until management realized that the firm had sent out a mailer with the wrong price.”

Such mailing campaigns are becoming more common. “The number of new online buyers is slowing, so companies are focusing on having their existing customers come back and buy more from them,” noted Nielsen//NetRatings’ Dougherty. Companies are using e-mail newsletters and special notifications to drive up traffic at their sites.

Meanwhile, new sources are generating traffic. For instance, consumers are increasingly using price comparison sites to determine where they can get the best deal. Also, an item from a blog may also spark a great influx of traffic.

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