Impact of the March 2016 Amazon Outage
Amazon Outage Costs Marketplace Millions
If Amazon has taught the retail world anything during its reign, it’s that no retailer is perfect and never will be.
On Thursday morning I got a message saying Amazon was down. I quickly clicked on to the site, but it was up for me. This outage was much more short lived than the downtime the company has had in the past, but it was no less important.
Amazon takes the lion’s share of the online retail market, bringing in 24 cents for every dollar of adjusted retail growth and accounts for 50% of overall online retail growth.
Even a momentary outage costs them a pretty penny, as it’s estimated that Amazon generates $1,084 per second in revenue.
It was reported the 20 minute outage cost Amazon about $3.75 million.
Amazon Outage: A Risk for Sellers
Online retail is often seen as a safer route for merchants, but it certainly isn’t a perfect selling channel. Instead it’s susceptible to different kinds of technical difficulties.
A physical store can have a power outage or have stock damaged by a natural disaster that depletes sales for anywhere from minutes to days. For online retailers, this can also happen to warehouses and prolong shipping times, on top of site outages.
Many merchants—Amazon included—are adopting a multichannel retail strategy to get the best out of brick and mortar and online channels to drive sales and have them work together to fulfill orders faster.
At the end of the day, even Amazon can’t be perfect all the time. But while outages like last week’s impact their bottom line, they have much less of an impact on their image and brand value than they could, thanks to everything else they bring to the table.
For example, on Cyber Monday last year I tried diligently to buy a pair of headphones on Amazon. I was sure that my inability to check out was temporary, but after a few tries I was frustrated and gave up.
The next morning I checked back to see if I could finally checkout, but the price had gone up.
While dynamic pricing is becoming more popular in online retail, I hadn’t ever seen prices change so quickly on Amazon before. But of course, the days around Thanksgiving are known for their great deals to start the holiday shopping season on a good foot.
Eventually raising prices back to the original is the only way to stay out of hot water, as class action suits are often brought against retailers that list “original prices,” but only ever price items at an artificial discount to appeal to the discount mania, known to retailers as psychological pricing.
As anyone who has been a loyal Amazon customer for years, I voiced my concern and as usual they hit the ball out of the park with their customer service and will keep me as a loyal customer.
So what does this mean for other retailers?
Mistakes and outages happen, even on big shopping days like Cyber Monday. Amazon’s little hiccup is the latest example of the risks involved in online retail. Not even the biggest name in retail can avoid some pitfalls, but it’s a matter of acknowledging mistakes to drive home added value and really stand out.