It’s a nice problem to have, in a way, but it’s a problem no retailer ever wants: a website crash due to heavy traffic.
Target sparked disappointment and faced a fierce social-media backlash this spring when customers attempting to get in on its limited-edition Lilly Pulitzer collaboration couldn’t complete their orders online when the retailer’s site was overwhelmed. The anger spilled into stores when shoppers who could get no joy online found racks and shelves had been ransacked, often by resellers who turned around to sell the limited line on eBay and other marketplaces.
Target hadn't taken its lesson from Best Buy, which last year saw its site crash twice during the Black Friday weekend. While the retailer attributed the issue to busy sales, and even some analysts sought to give the company props for being busy, shoppers were not so impressed. It can be an especially dire issue at the holidays, when tempers already run short, people are pressed for time, and retailers have rivals who might be offering the same items at highly competitive prices.
Wedbush Securities retail analyst Michael Pachter noted at the time that the Best Buy outages serve as a “testament” to the capabilities of Amazon, showing that Amazon can win at e-commerce even when it’s not the topic at hand.
“The fortunate aspect is that it means there’s a lot of activity and buying on the site,” says Jeffrey Neuburger, a partner with the law firm Proskauer and an expert on technology, media, and advertising-related business transactions including data and security matters. “But it’s a problem, and this year I think we’ll see an even higher incidence than last year because of the increase in mobile commerce.”
Neuburger told Retail Dive that there are a few things that retailers can do to ensure that their sites have the capacities they need this season. Asked if it wasn’t too late, less than a week from Cyber Monday, to check on this, Neuburger chuckled a bit.
“Look, like anything else, it’s better late than never,” he said. “Hopefully people have had these conversations with their vendors.”
What's at stake
A spike in mobile activity took Best Buy by surprise last season, and that caused its outages which lasted as long as an hour. While this would seem to serve as a logical warning to retailers, Neuburger believes that many are underestimating the impact that mobile commerce will have on shopping this year.
Indeed, the 4% or so lift in overall retail sales expected this holiday season will be dwarfed by the growth in online sales, according to Forrester Research. E-commerce will grow at three times the rate of in-store sales or some 11% in November and December, the research firm says. And while Black Friday as a shopping event is fizzling for many shoppers, Cyber Monday remains a big draw for online shoppers, according to Forrester. Mobile, by most accounts, will be a major holiday shopping portal.
Last year’s Cyber Monday saw $2.5 billion in online sales in the U.S. And there are even more incentives to shop from home or phone: retailers have stepped up their omnichannel game, de-emphasized “door busting” on Black Friday, tearing down free shipping minimums, and offering many deals online. Plus, leftover fears from the Paris attacks and bad weather, if it comes, could keep many home, many observers say.
That makes even just one hour down incredibly expensive.
Understand the tech
To avoid lost sales, retailers may want to be aware of how much they need the expertise of their vendors or their IT departments to determine what kind of technology and capacity they need.
“Suppliers in the past have looked to their clients to tell them what the capacity needs are, but things have changed because a retailer is not well positioned to understand how much capacity they need,” Neuburger says. “Retailers may understand how many shoppers they’ll have or what their sales will be on certain days, but they may not understand how much capacity. Communications capacity, memory for all processing, storage — all those things need to be on tap. Plus, if the system hasn’t been designed for mobile access, for the conversion that needs to occur, that needs to be expanded also.”
The cloud can go far in helping retailers ramp up capacity quickly, but communication about expectations, needs, and capability has to take place.
“This is a partnership between the retailers and the vendor to plan for these peak traffic periods,” he says.
Data security
With the urgency to ensure capacity, though, retailers should take care that they're not sacrificing security, which is also something of an untested area when it comes to mobile.
“Most of the newer mobile payments systems use a technique known as tokenization to avoid having to transmit users' real credit card numbers, which helps security enormously," Nicko van Someren, CTO of Good Technology, told Retail Dive earlier this year. "On the other hand, we are likely to see new attacks facilitated by these new tools and it will take a while for users, merchants, and banks to adjust to these new threats.”
Peak times in retail are peak times for theft, even in stores, and that realization should carry over to e-commerce, says Neuburger.
“On the data security point retailers have to be careful,” he says. “In the haste to accommodate the traffic, you don’t want to do anything to make sensitive information vulnerable. It’s always a consideration.”
And mobile wallets, for all the benefits they accrue to retailers, are even more of an unknown at this point in terms of security or capacity, he says.
“I think this is going to be the first time that vendors are going to be countering [the effect of mobile wallets], and I think there are going to be some lessons learned the hard way along the road.”
Dig out old contracts
The contracts that many retailers have forged with tech partners haven’t necessarily been dusted off to keep up with technology or the emerging importance of mobile.
That could be one reason why some 95% of retailers surveyed by the National Retail Federation now have mobile-optimized sites, but far fewer (80%) offer a seamless experience across platforms.
“A lot of people have contracts in place that are multi-year contracts and they may not have looked at them to anticipate the need,” Neuburger notes. “Take the contracts out of the drawers, look at them, run some ‘what if?’ scenarios. It may cost some money, but I think that’s a better outcome than experiencing a crash on Black Friday.”