Amazon's Outage: Maybe Not As Costly As You Think

Less than two weeks after an outage caused Amazon's (NASDAQ:AMZN) Seller Central to go down for 10 hours, it wasn't just sellers having problems on Monday (Aug. 19). The entire website was down for around 40 minutes, with the Puget Sound Business Journal estimating that the incident could cost the e-commerce giant as much as $5 million.

The outage appears to have begun shortly before 3 p.m. Eastern, when customers trying to access the site began getting an error message. About 20 minutes later, the Amazon Marketplace Twitter account tweeted a message to its followers.

"We are experiencing an issue that is causing problems on Amazon and Seller Central," it said. "Our engineers are actively working on a resolution."

Sellers were understandably upset, venting their frustration on Twitter having faced two outages in as many weeks. But for Amazon itself, the financial damage may not be quite as bad as some news outlets have estimated.

The Dick Wisdom blog pointed out that, based on Amazon's average revenue per second of $1,111, the upper limit of the loss was probably closer to $2 million. "Non-retail activities" are also part of Amazon's revenues, and Amazon's cloud services reportedly did not suffer an outage. The fact that the outage happened on a Monday morning (in some parts of the country) probably limited the amount of business Amazon lost, while it's also very likely that many didn't give up easily.

"Another important caveat is that many, probably most, would-be shoppers will simply return later to complete their purchase," he said. "In reality, Amazon's per-second-loss is likely much lower, and probably negligible." Amazon has yet to comment on the situation, but while the company certainly saw losses as a result of the outage, it isn't likely to be enough to engender much sympathy, especially from increasingly frustrated sellers. As for investors, at $35 billion net sales in North America in 2012, neither $2 million nor $5 million is likely to register as a material loss.

For more:

- See this eCommerceBytes story
- See this Dick Wisdom post

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