The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Despite jolly commercials and rosy sales predictions, unprecedented Web traffic and site outages are bringing out the inner-Grinch in some frustrated online consumers. Popular Web stores (www.toysrus.com) Toysrus.com, (www.kbtoys.com) Kbtoys.com, and even Internet workhorse (www.amazon.com) Amazon.com have all experienced several hours of site crashes or delays since the holiday season began in November.
One of the first lessons of Holiday 1999, according to (www.jup.com) Jupiter analyst Cormac Foster, is admitting to the public when there are problems. "By admitting failure when it happens," he says, "you build trust with users, which is tough to do online."
Although customers want a smooth shopping experience, with an unprecedented 20 million people online this year, that just isn't possible, Foster notes. While every site can expect to go down at one time or another, the important thing is to manage the crisis. "You need to fail gracefully," he says.
Foster cites Internet giant Amazon as a good example of "graceful failure" when its site was down for a few hours earlier this month. Amazon put up a sign on its site informing customers which areas were down, which were still up, and notified consumers when it was operational again.
Toysrus.com, on the other hand, did not fare so well during the traffic-overload delays it experienced in November. Offering no apologies or admission of failure, Toysrus.com simply posted a picture of its mascot, Jeffrey Giraffe exclaiming, "Wow!" over the traffic volume and asked customer to come back later.
But Foster adds that some site problems go beyond heavy traffic. "A disproportionate amount of money gets spent on advertising, instead of the flip side of site performance--customer service," he says. Companies compound the problem when customer service is understaffed and only an email address is provided as a means of communication.
Web stores need to be honest with the public when they experience problems, even though negative publicity may make them reluctant to do so, Foster says. "If your site keeps crashing and you don't talk about it, someone else will," he says.