Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Last fall, many big name sites jacked up their marketing budgets to attract holiday shoppers and were successful in their efforts.
However, thousands of Christmas shoppers were disappointed to find that the more they shopped, the more the sites became sluggish, or shut down altogether. For example, shoppers were frustrated when Toys R Us was offline for hours on three separate occasions because its servers were overwhelmed by the sheer number of shoppers visiting the site and looking to place orders.
And online auctioneer eBay’s site crashed three times in December because of software glitches and a faulty processor. The company has fixed the problems and insists the trouble wasn’t traffic- related. Increasingly, Web merchants are finding that they must develop better contingency plans for spotting and fixing technical problems or they risk losing their shoppers.
For instance, despite beefing up customer service and making sure the appropriate systems and technology were in place before the holiday rush, Barnes & Noble’s site still experienced a slowdown on Dec. 16 because of server problems.
Barnes & Noble, eBay and Toys R Us insist they are taking measures such as developing internal troubleshooting committees and acquiring more processing capacity to avoid future problems. But ongoing technical troubles are still plaguing Web merchants at the most inopportune times (see story on Victoria’s Secret) and those problems aren’t going unnoticed by consumers. New York-based Jupiter Communications says the top three reasons consumers were unhappy with their shopping experience in November and December were problems related to merchandise availability, shipping and handling costs, and slow site performance. Toys R Us is among the Web retailers taking contingency planning to heart.
As a result of its holiday problems, Toys R Us is overhauling its Web store and expects to roll out a more robust and integrated electronic commerce site in May.
The Internet site will feature more than two dozen servers to handle heavy traffic. Joel Anderson, vice president, Toys R Us Direct, Paramus, N.J., says his company now knows firsthand the importance of complete systems integration. “If your back end isn’t scalable and robust, it doesn’t matter how good the front end looks,” he says. “There’s greater interest in the Internet than we thought there would be.”