Holiday Shoppers Encounter Glitches at Amazon.com

14 Dec 2004

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NEW YORK (Reuters) - Recent technical glitches have stopped some holiday shoppers from completing purchases at Amazon.com Inc. (Nasdaq:AMZN - news), but the Web retailer's sales are unlikely to be hurt unless the problem persists, analysts said.

The biggest problem occurred last week, when the popular Web retailer had an outage that lasted for more than half a day and made its site virtually unavailable to one in five users, according to Keynote Systems Inc. (Nasdaq:KEYN - news)

"There have been a number of glitches," said Donna Hoffman, a management professor at Vanderbilt University and co-director of its Sloan Center for Internet Retailing.

Amazon is considered "the gold standard in the industry. The concern is that if they're having problems, then what does that mean for the rest of the industry?" she said.

Hoffman said, however, that even if Amazon shoppers have encountered technical problems, most of them would be likely to come back to the site and complete their shopping after the glitches are resolved.

The site experienced an outage a week ago, Amazon spokesman Craig Berman said. "We have very sophisticated complex systems that have problems from time to time."

However, no further problems have come up since then, he said. Berman declined to comment on whether sales were affected by the outage.

Stock analyst Martin Pyykkonen, of Janco Partners, said the recent outages have "probably been more than just insignificant" but that he does not see the problem as being a drag on the company's overall sales at this point.

"Obviously the whole volume still remains to be seen," he said of the holiday shopping season.

Another analyst, David Garrity of Caris & Co., said he is not surprised that Amazon would encounter some "stresses on the system" during the busy holiday shopping season. He said the problems suggest many people are using the Web site.

"It indicates very strong demand on the part of consumers," he said. "These are the growing pains of the Internet."

Industrywide, online holiday spending so far this season is on track to meet estimates, according to comScore Networks, an Internet research firm. The Internet retail tracker said last week that holiday shopping on the Web, excluding travel and auctions, totalled $8.41 billion between Nov. 1 and Dec. 5, up 23 percent from a year ago.

Amazon Chief Executive Jeff Bezos has said that the online retailer is poised for record holiday sales, with MP3 players and digital cameras leading the way as this year's hot gift items.