Despite the Glitches, Shoppers Can’t Quit Amazon

The promotions started more than a week ahead of time: Amazon, the world’s biggest e-commerce site, was launching its annual Prime Day on July 16, with 30 hours of deals online and in Whole Foods markets. The company issued five press releases promoting Prime Day, during which shoppers who pay $119 for a yearly Prime membership are offered flash sales and discounts on various products. Consumers gleefully prepared for the deals, and competitors planned their own sales to lure in buyers, with Target, eBay, and Macy’s launching their own events.

And then, at noon eastern time on Monday, as Prime members sat down at their computers and tried to shop, the site failed. Shoppers were redirected to pictures of dogs, with captions like “Sorry. Something went wrong on our end. Please go back and try again.” The hashtags #PrimeDayFail and #DogsOfAmazon started trending on Twitter. Other retailers tried to lure away customers. Office Depot, for example, sent out an email, “Tired of looking at dogs? Our deals are still up.”

Gotta catch them all! #DogsOfAmazon @amazon #Primeday pic.twitter.com/mbcWDyZCMB

— Jerry Witman Jr (@JerryWitmanJr) July 16, 2018

Yet customers still kept trying on Amazon. Amanda Taylor, a blogger and mother of two who lives in St. Louis, sat down when Prime Day started and tried to buy an air fryer. By the time she got through, the item was sold out. She estimates the site failed 50 separate times—that’s 50 pictures of dogs—as she tried to shop throughout the day. “It was such a frustrating day yesterday,” she told me. She eventually ended up buying school supplies for her kids, some discounted sandals, and Star Wars salt and pepper shakers—on sale for $11.99, a 70 percent sale.

Although Taylor was frustrated, she didn’t try to shop on other sites, even though there were deals, and she didn’t really think about giving up, she told me. As a Prime member, Amazon is just more convenient than other sites: It guarantees free shipping on many items, whereas other sites often only offer free shipping on orders of $35 or more. “It’s just the free shipping and convenience. Instead of fighting people up in the department store, I can go there and it comes right to my door,” she said. This despite the fact that, as an affiliate marketer, Taylor was losing money every time someone clicked a link on her blog, tried to buy a product, and then couldn’t complete the sale.

Amazon was caught flat-footed by the site’s failure on Prime Day, and it’s surprising that a company that talked up the promotion for days ahead of time was so unprepared, especially a company that is growing a large part of its business based on selling cloud computing through Amazon Web Services. But if Amazon learned anything from its Prime Day experience, it’s probably that people will keep shopping on the site, no matter how much it fails. The Prime Day failures, rather than highlighting an opening for other retailers, suggest that Amazon’s competitors are going to have a very hard time breaking its hold on retail, where it accounts for nearly half of all e-commerce sales in the United States.

“I would view this as negligible,” says Daniel Ives, the chief strategy officer and head of technology research at GBH Insights in New York, about the glitches. GBH estimated, before Prime Day, that Amazon would generate $3.6 billion in sales on Prime Day, up from $2.4 billion last year, when the event was six hours shorter. Ives still thinks Amazon is on track to hit those numbers, despite the glitches.

Amazon also uses Prime Day to sign up new Prime members, hoping to get more people to shell out $119 a year for the club, up from $99. The company surprised analysts earlier this year by revealing it had 100 million Prime members globally. Ives said he thinks Prime membership will grow a further 25 percent in the next 18 months, helped in part by the Prime Day push. “This was another shot in the arm for Prime Day sign-ups,” he says.

Amazon said in a release that Prime Day sales were higher than ever. Though it did not provide numbers, estimates by Feedvisor, an intelligence platform for online retailers, suggested that orders on Amazon Marketplace were up 69 percent from a year ago. Rather than providing specific numbers about sales, or explaining why the site had crashed, Amazon downplayed the problems with dog puns: “It wasn’t all a walk in the (dog) park, we had a ruff start—we know some customers were temporarily unable to make purchases. We still have hundreds of thousands of new deals today.”

Amazon’s website wasn’t the only part of the company experiencing difficulties on Monday. Some drivers for Amazon Flex, the delivery service that lets workers deliver packages from their cars, weren’t able to access the app. Businesses whose sites rely on Amazon Web Services (AWS), the cloud-computing platform that hosts Amazon’s website and thousands of others, reported problems. And some consumers said they had issues with Alexa, Amazon’s virtual assistant. Some Amazon employees also used Prime Day to protest Amazon’s low wages and what the employees believe to be a harsh workplace culture; workers went on strike in Spain as Bernie Sanders held a town hall featuring Amazon and other workers and the hashtag #CEOsVSWorkers.

Some analysts speculated that the glitches were caused by AWS, which has provided a growing portion of the company’s revenues by signing up new customers; cloud revenue jumped 45 percent in the fourth quarter of last year. Companies use AWS to develop artificial-intelligence and machine-learning applications, which heavily tax the system. Josh Olson, an analyst at Edward Jones, speculated that AWS was not prepared to handle that increased capacity alongside millions of shoppers logging on to Amazon. “If you’re getting to where you already have the most compute power in the world, and it’s still not enough to handle the demand, that’s surprising,” he says. After this story was published, an Amazon spokesperson wrote to say that AWS was not the cause of the outage, but did not offer any support for this claim, or an alternative explanation. Yet Olson, like Ives, sees this as a mere hiccup for Amazon, and a lesson for Amazon that it needs to build out its computing power.

The glitch came a day after Goldman Sachs reported that Microsoft’s Azure, a cloud provider that competes with AWS, is gaining on Amazon. It’s possible that the Prime Day glitches may send more companies to Azure over AWS, which could be a bigger blow to Amazon than some frustrated shoppers. Yet Ives, the analyst, suggests that it would take more than a few glitches to get companies to change their cloud strategy.

Juozas Kaziukenas, the founder of Marketplace Pulse, which researches selling trends, tells me that despite the Prime Day glitches, sales were up 50 percent over the average day for some Amazon sellers. Amazon sells about $1.5 million a minute on Prime Day, he said. “Despite the website suffering outages, customers were willing to try again and again,” he said.

Colin Ganley, the owner of Twin Engine Coffee, which exports coffee from Nicaragua and sells on Prime, said that Monday was about triple a normal day for his sales on Amazon. He also bought ads on Amazon to direct people to his product, and impressions were up about 30 percent. This is Twin Engine’s first year on Prime, but, he said, it’s been worth it so far, because Prime customers only seem to shop on Amazon. “The Prime customer is this super loyal Amazon buyer, and if we’re not there, they’re not going to buy it,” he said.