Amazon Stumbles Into Blunder on Prime Day

(Bloomberg Opinion) -- Amazon.com Inc.’s fake shopping holiday started off on the wrong foot, unless you love dogs. Adorable canines doubling as error messages greeted at least some people who tried to surf Amazon’s vast shopping mall in the early hours of Prime Day on Monday.

The technical glitches, and Amazon’s lackluster response to them, were an embarrassment for a company that was making itself the center of attention. Amazon’s Prime Day failures won’t mar the company’s financial results, but they do leave a mark. A company that’s trying to be the starting point for the world’s shopping displayed how fragile it could be, just like any fusty old retailer. And worse, the company’s reaction to its setback exposed Amazon as tone-deaf to its customers’ problems. 

One research firm estimated sales were stronger than the same stretch for Prime Day last year, though the gimmick shopping holiday doesn’t matter, with or without glitches. Amazon might sell something like $320 billion to $380 billion in total merchandise this year, based on analysts’ estimates, which works out to an average of as much as $1.5 billion in purchases on Amazon in any given 36-hour period — the length of this year’s Prime Day.  That makes Coresight Research’s estimate of $3.4 billion in Prime Day sales not much grander than similar time periods throughout Amazon’s year.

The growth rate in the number of individual items sold on Amazon in the third quarter, which includes Prime Day, also isn’t much different from the pace of items sold in the other months of the year. 

Amazon Stumbles Into Blunder on Prime Day
Prime Day may provide Amazon a lift by helping the company lure more members to its Prime shopping club. But Amazon has never been specific about how much its fake shopping holiday pads the company’s Prime subscriber rolls or whether someone who signs up for a trial Prime membership to land a discounted vacuum cleaner in July is likely to continue paying long-term.

Even though the blip won’t put a real dent in Amazon’s sales, we shouldn’t dismiss it as meaningless.

Amazon let down some of its customers on a shopping day it hypes more than almost anything else all year. That impression may be lasting, and the frustration could prompt some of them to check out competitors’ sites during this sale event and on future shopping occasions.

It’s similar to the consequences large retailers face when their sites buckle under the weight of Black Friday or Cyber Monday traffic: It doesn’t by any means indicate that their Christmas sales season is doomed, but it does mean they whiffed on a powerful opportunity to show customers why they should shop that site year-round.

The Prime Day problems weren’t limited to Amazon’s vast shopping mall, either. A company that keeps tabs on internet failures also reported some glitches with Amazon’s web-video offering, the Amazon Web Services cloud-computing service for businesses and the operation of home devices with Amazon’s Alexa digital assistant.

The timing of Amazon’s Prime Day hiccups couldn’t be worse. The company is trying to persuade the U.S. Department of Defense to give it a lucrative cloud-computing contract, and it’s tough for Amazon to trumpet the stability and reliability of its computing systems for government use when those same Amazon computer systems suffered a high-profile flop under pressure. But it was business as usual for Amazon hours after its Prime Day fail as the company spit out multiple materials trumpeting new customers for AWS just on the heels of its embarrassing technical hiccups. It was poor timing for marketing department bragging. 

Amazon’s response to shoppers also left a lot to be desired. It took the company about two hours to acknowledge the obvious problems people were having with Prime Day shopping — a pretty long wait for customers seeking an explanation. The company didn’t apologize, either, and minimized the problem by saying plenty of people were able to surf Prime Day deals without interruption. A company that wants to be America’s friendliest retailer instead showed it was arrogant and unapologetic about its customers’ problems. 

Amazon could learn a lesson from Nordstrom Inc., which experienced website problems last week as it kicked off its popular annual anniversary sale. Nordstrom apologized to customers and also promised them something to make up for the inconvenience.

Plus, it’s worth noting that while these kinds of site issues aren’t terribly uncommon — Macy’s Inc. had issues on Black Friday in 2016, Target Corp. customers had trouble accessing the retailer’s site when it introduced its hit Lilly Pulitzer collection in 2015 — we don’t expect them from Amazon.

Amazon prides itself on being leaps and bounds ahead of traditional retailers at all things digital. It should be humbled, at least a little, by the fact that it suffered from a problem that has bedeviled those old-school challengers.

Shira Ovide is a Bloomberg Opinion columnist covering technology. She previously was a reporter for the Wall Street Journal.

Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

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