The Holiday Shopping Crisis Impacting E-Commerce Companies: Downtime
Are you ready for the holiday shopping season? While it may seem like it’s still a ways off, the reality is now is the time to put in place one of the most important tools you have for keeping your e-commerce business alive and well: a network contingency plan.
Even the Big Retailers Feel the Hit
In 2019, Costco was hit with downtime that lasted 16.5 hours. During that time, the connectivity disruptions cost the company $11 million in sales. Other companies, including The Home Depot, H&M, and Nordstrom Rack, have faced similar perils. It’s estimated that, for larger retailers, a loss of $5 million per hour of downtime isn't unheard of.
Larger companies may be able to withstand the financial blow this causes. Still, for smaller and midsized e-commerce companies, even a few hours of downtime can create a high risk of financial loss and reputation damage for the brand.
The indirect cost of downtime for all retailers is significant and often includes damage to the brand that’s far harder to recoup.
What is Internet Downtime?
Most e-commerce platforms promise 99.99 percent uptime, but that means there’s still the risk of some downtime (about 45 minutes throughout the year). However, these are hard downtimes when the platform isn't working.
Soft downtime is more impactful and less talked about (and planned for) by e-commerce companies. This type of downtime refers to any situation in which your online store suffers from any kind of limitation or issue that impacts your customer experience. This ultimately leads to shoppers moving on to the competition and causes a loss of sales for your business. This type of downtime is even more impactful because it’s not easily recognized (i.e., your store is likely still up and accessible, but you’re not seeing the lack of performance for some time).
Preventing Costly Downtime
As a merchant, you can prevent e-commerce downtime this holiday season by taking the following steps right now. Doing so can significantly impact your business’s ability to remain competitive in the months going forward:
1. Monitor your current performance and spot issues.
Don’t wait until there's a problem. Implement performance monitoring tools that allow you to see concerns now as traffic begins to ramp up due to the holiday shopping season.
2. Put in place internet contingency planning now.
Internet contingency planning will eliminate these moments of financial loss, which potentially lead to millions of dollars of money sent to your competitors during the holiday season. A contingency plan will identify potential risks and threats to your business, such as a cyber attack, a power outage, or a server issue. Once it determines the risks, you can then put in place tools to support those situations to eliminate the impact on your customers.
Develop a downtime response plan and invest in network redundancy. Create, test and monitor your contingency plan over time. You also need to have a training plan in place that helps your employees to know how to manage these situations in real time.
A Robust Contingency Plan is Essential
Internet connectivity is critical for your business, but without a contingency plan in place this holiday season, you're putting your brand on the line. Retailers must start this planning process now, especially the most at-risk e-commerce merchants which are counting on the holiday season to help them meet ongoing costs throughout the year.
Greg Davis is the CEO of Bigleaf Networks, a leading provider of network optimization solutions.
Greg Davis is the CEO of Bigleaf Networks, a leading provider of network optimization solutions. Davis has a record of scaling businesses through revenue growth, operations, and strategic acquisitions. He has 25+ years of tech leadership, leading start-ups to $100M+ in annual revenue. He has been on the board of directors for Bigleaf Networks since 2020.