Amazon Crashes on Prime Day

Amazon experienced periodic disruptions on Monday afternoon with the launch of one of its biggest online sales. Users resorted to social media to express their outrage.

Background

Amazon is an American electronic commerce and cloud computing company that was founded on July 5, 1994. It started as an online bookstore and later diversified to sell various commodities like electrical appliances and apparel. Today, it also produces consumer electronics like the Kindle e-Readers, tablets and more. Its market value had exceeded $500 billion by July 2017.

Jeffrey Preston Bezos is the founder, chairman, and chief executive officer of Amazon.com. He is now the richest person in history with a net worth of $105.1 billion as of January 2018. He has replaced the old record, which was held by entrepreneur Bill Gates whose net worth had surpassed $100 billion in 1999.

Amazon Prime Day refers to the sale during which the e-commerce giant offers large discounts on a wide variety of products, ranging from gadgets to gift cards. It is among the busiest shopping days of the year, often being compared to the Black Friday sale of USA. The first ever Prime Day was on July 15, 2015. This year’s Prime Day, which begins on July 16, will last for 36 hours across the globe, and is open to Amazon Prime subscribers only. Amazon Prime is a yearly paid service that gives its customers a few distinct advantages, such as free shipping and various discounts. During the Prime Day Sale, Amazon offers two different types of sales deals – regular and lightning deals, a promotion offered in a limited quantity for a short period of time.

Analysis

Shoppers across the globe struggled to access Amazon’s desktop site and mobile application after Prime Day commenced on July 16. Many stated that the e-commerce platform had crashed, showing them only an error message that read: "sorry, something went wrong on our end". The issues began mainly in USA but were reported in Europe, Africa, South America, Russia, Asia and Australia.

It was unclear how widespread the technical glitches were, with users reporting different problems. Some people reported seeing the “dogs of Amazon” notification that the website wasn’t working, while others said they could add items to their shopping carts, but the Prime Day discount price wasn’t reflected at checkout. Many shoppers did not face any problems at all. Amazon's video streaming services and its virtual assistant Alexa were also affected.

“Some customers are having difficulty shopping, and we’re working to resolve this issue quickly,” Amazon said Monday on Twitter, adding that “many were shopping successfully.” The event is projected to break records again this year with industry analysts estimating the company could make at least $3.4 billion in sales, up more than 40 percent from last year’s Prime Day. However, the glitches might make it hard to achieve these numbers. "The outage is especially problematic as many of Amazon's Prime deals are promoted for a set window of time - something that could cause a great deal of frustration for potential customers," said Neil Saunders, MD of GlobalData Retail.

On an average, shoppers spent 54 percent more in the first three hours of this year’s event than in the first three hours of the sale in 2017. The glitches had limited sales in only the first hour of the event, when sales were down by 5 percent. “I’m candidly shocked that they’re not prepared for the traffic,” Forrester analyst Sucharita Kodali said. “Unless this is way beyond their wildest expectations, it’s just odd.” By Monday afternoon, there were 4,670 social media posts about the Prime Day crash, the majority of which expressed anger and sadness.

This is not the first time that Amazon has experienced a notable website error. During Prime Day 2016, a computer glitch had prevented people from checking out their purchases online in the early hours of the sale. Amazon also faced labour issues with nearly 1,800 workers in Spain going on strike on Monday for three days seeking new contractual agreements and a salary increase. Thousand more employees in Germany are expected to strike on Tuesday to protest lack of health benefits.

Counterpoint

The crash was received positively by many retailers such as Target, the second-largest department store retailer in the US. They developed strategies to combat Amazon’s sales and win over shoppers looking for better deals.

Assessment

Our assessment is that Prime Day offers significant challenges to Amazon as the sale is consolidated for a very short time period. We feel that Amazon is well equipped to handle high traffic volumes at the height of holiday shopping. We believe that it is important for Amazon to fix outages very quickly. A successful Prime Day sale will serve as a good marketing opportunity for signing up new customers.