You now that amazing time of the year when your online store sells more than any other month in the year? For most businesses that time is now during the holiday and new years break. While gifts and gift vouchers are flowing free most online and retail stores are flat out cashing in but this year there’s one big problem. Myer’s online store has been down the past 5 days. To suffer downtime during one of the busiest times of the year is bad, but to be offline for multiple days is just plain expensive.
Myer have said little, but what they have announced is that they are working hard to rebuild the site. While most larger sites in Australia have evolved to scalable backend infrastructure from the likes of Amazon EC2 or Microsoft’s Azure platform, it seems Myer didn’t get the memo. Delivering a fast, reliable ecommerce website can be challenging, especially with severe peaks in traffic at periods like Christmas, but that’s where the cloud comes in. Gone are the days of running websites on beige boxes under your desk, instead sites now leverage georedundancy to ensure they can make sales 24/7 and don’t go down, even if parts of the internet do.
Myer’s online store is powered by IBM WebSphere software and CEO Bernie Brookes told Fairfax Media that its IT team was “working furiously” with IBM staff internationally and in Australia to get the site back online. It’s hard to imagine anything else than a team of developers surrounded by suited execs, arms crossed and yelling profusely at the damn internets.
“There will be no impact at all on our profitability or our overall sales,” he said, noting that online sales accounted for less than 1% of its business.
While that may be true, last year Myer made 127.2 Million dollars which means even 1% leaves Myer risking more than $1.2 Million in profit. The story gets even worse when we look at the revenue numbers. Last year Myer turned over $3.14 Billion, so if we’re talking 1%, then the website facilitated more than $31 Million in revenue for fiscal year 2012/2013.
While the above figures are annual numbers and the website downtime currently sites are almost a week so far, the actual losses will be a lot less if we just look at these 7 days. Realistically sales spike throughout the months, but if we average the $31M over 52 weeks, it equates to $603,846.15 in revenue per week. If we apply some conservative estimates, that number could double or triple over the xmas and new year break, which would leave the figure well over a million dollars in lost sales.
What can’t be calculated accurately is the opportunity cost, the reputation damage and generally shopper frustration with shopping online at Myer. In a highly competitive space these critical miss-steps could have a serious impact for the company, in particular the quarterly year on year numbers and share price.
It is possible the extended downtime isn’t due simply to sever capacity issues, but rather a significant security issue that was discovered. I don’t have any information to support this theory, only that for a website of this size to be offline for so long, the reason has to be substantial. With a talented web team you could at least get a limited offering up in a matter of hours, even if you had to start from scratch. Really looking forward to the debrief after all this is over.
If you want to share your outrage online, then use #myerfail, it looks to be gaining traction with everyday the site is down.
More information at Business Insider.