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Brandon Mills
Manager,
ZS Associates
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Jason Bell
Associate Principal,
ZS Associates
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John DeSarbo
Principal,
ZS Associates
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Kyle Heller
Associate Principal,
ZS Associates

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Two Lessons From Amazon's Prime Day Fail

Posted by John DeSarbo on Mon, Jul 23, 2018

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Looking to save $44 on a Zojirushi five-cup rice cooker? How about paying $19 less for a Star Wars R2-D2 toy? Those were just a couple of the deals available for Amazon Prime Day, the retail goliath’s 36-hour annual sales bonanza, which took place last week. However, some shoppers missed out, when Amazon’s site crashed during the first hour of the sale, and at times throughout the evening, causing the retailer to potentially lose $72.4 million.

This year marks the fourth-annual Prime Day, and this year’s Prime Day was Amazon’s biggest shopping day ever, with shoppers purchasing 100 million products. With such high stakes, surely there are a ton of people tasked with making sure that the site’s infrastructure wouldn’t fail. I’m sure Amazon put resources in place and took steps to avoid this kind of problem, so what went wrong? Did they underestimate website traffic? Did they try to implement changes quickly without testing?

While we’re not sure exactly what happened yet, the real problem is how Amazon handled the issue. Mistakes happen. When they do, customers want information, not to be told to relax and be understanding. Downplaying the situation by showing cute pictures of dogs in its error messages only led to anxiety and cynicism. Amazon tweeted: “Some customers are having difficulty shopping, and we're working to resolve the issue quickly. Many are shopping successfully—in the first hour of Prime Day in the U.S., customers have ordered more items compared to the first hour last year.” If I was a frustrated customer not able to make a purchase, hearing that other customers were enjoying a better experience and that Amazon was doing more business than last year would not have helped me calm down.  

It remains to be seen what impact the problems will have in the long term. Will some customers be less likely to use Amazon in the future? Over the last four years, Amazon has created a “holiday” with Prime Day, and now competitors are offering sales on the same day. I wonder how many customers jumped to Walmart.com when the Amazon site was down?

Another thing to ponder is what, if anything, Amazon will do to compensate the manufacturers who were trying to sell their products on Amazon during the time the site was down. It highlights a risk that manufacturers incur when selling through an indirect channel: They’re dependent on their channel partner (in this case Amazon) to manage the customer experience.  Understanding how your channel partners plan to address these types of snafus ahead of time is critical.

Amazon’s Prime Day fail offers two lessons for technology companies: Keep your customers informed when dealing crises and proactively collaborate with your channel partners to develop a clear strategy for how to manage the customer service problems that all companies inevitably face.  And if you missed that Prime Day deal on R2-D2, better luck next year.


RELATED CONTENT 

BLOG POST: Three Lessons From Amazon Prime Day for B-to-B Sales and Marketing Leaders

BLOG POST: The 'Big' Reason Why Amazon Bought Whole Foods


 

Topics: Amazon, High Tech, channel partners, customer service, customer experience, online retail, Retail

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AUTHORS
Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
Jason_Bell_11099_headshot.jpg
Jason Bell
Associate Principal,
ZS Associates
John_DeSarbo_thumbnail
John DeSarbo
Principal,
ZS Associates
Kyle_Heller_thumbnail-1
Kyle Heller
Associate Principal,
ZS Associates
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