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Costco's Thanksgiving Day Website Crash Cost It Nearly $11M
- mogadsheu 7y ago$11M isn’t trivial, but for a company that’s got billions in turnover it’s not significant either. Top brass will say “Let’s fix that” and move on.
- hinkley 7y agoHow many people do you suppose can all get a promotion off of figuring out to make Costco an extra $11M?
- fma 7y agoThe key part to this article is at the very end, and not addressed in the title (of course)....they extended their sales till the next day. Anyone who couldn't place an order (like me) did it later. So I'd argue it did not cost Costco $11 million...
- trav4225 7y agoyeah, i always think the same thing when i see loss figures in situations like this...
- purple-again 7y agoMost likely only a small fraction of the people who were going to make a purchase heard this news and only a fraction of them decided to follow through and purchase the next day.
- jhwhite 7y agoI was looking at one of their fridges that was on Black Friday sale and couldn't get the page to load. I had no idea they extended until today.
- arcticfox 7y agoThat's not actually true, since the website had a message saying it while suffering. I also finished my purchase the next day.
- orev 7y agoYou can’t really say “it’s not true” since you need facts to make that kind of statement, and I doubt you have access to the data one would need to come to that conclusion. It’s very easy to postulate that people would go to another site (e.g. Amazon) immediately instead of waiting around to see if the Costco site would recover, especially since most BF deals are limited by both time and quantity. That alone makes the loss estimates feasible.
- arcticfox 7y ago> Most likely only a small fraction of the people who were going to make a purchase heard this news This is the part I was referring to as "not actually true". Fact: the site itself, which was loading although not working entirely, displayed a big banner saying this during the problem periods. It was hard to miss. The rest is indeed just speculation either way. I doubt the losses are as high as estimated, but there's no way to say without inside data.
- orev 7y agoIt took a lot of patience and persistence to get something added to my cart and complete the checkout, so I can easily see many people abandoning the process. Though they did send a reminder email about the abandoned shopping cart, so that might have helped get some people back.
- cududa 7y agoWhen I’m doing Christmas shopping I have no tolerance for malfunctioning websites, I just jump over to some similar service with similar pricing
- lol768 7y ago> When I’m doing Christmas shopping I have no tolerance for malfunctioning websites, I just jump over to some similar service with similar pricing I suppose the difference with Costco is the sunk cost (membership fee) that means you're probably more likely to want to get your money's worth.
- ianai 7y agoCostco members are pretty loyal and known to be so. They offer cash back as an incentive.
- FussyZeus 7y agoIt's not just sunk cost fallacy. Everything I've bought from Costco has been at least "good" with most of the products pushing into "great" territory. The curation is one of the benefits of the membership. Especially in the era of Amazon shoving counterfeits every which way for every conceivable product, it's nice to have at least one retailer that isn't just hawking shelf space to anyone with a dollar and crap to sell.
- ChuckMcM 7y agoI certainly resonate with this. In California the CostCo membership pays for it self with gas purchases so there isn't as much 'sunk cost' as you might think. Their product quality, and return policy has consistently impressed me as Amazon has gotten worse at this.
- bsder 7y agoIf you need to replace your car tires, you sink that membership several times over in one shot. Everything afterward is just a plus.
- PretzelFisch 7y agoSince they had the same issues running the site the next day as well It may still be close to that 11 million.
- Reedx 7y agoExactly. Stories about websites losing $N per minute tend to be examples of how to lie with statistics.
- takeda 7y agoYeah some people determined like me probably tried over and over until it succeeded, it was a bit scary clicking refresh during the actual payment (although was monitoring my credit card charges, was prepared to cancel extra orders and at worst return extra stuff) , fortunately it went only once despite multiple refreshes until I saw the confirmation page. Other people probably just went directly to stores.
- kyllo 7y agoIt's a cost model, they probably have a coefficient for what % of people they think will wait vs. go elsewhere while the website is down. When you're running a retail company, you have to at least attempt to quantify lost sales in order to model your business. There's no way to measure lost sales with high accuracy, but that's not really the point, because it's most useful for modeling decisions and policies in a forward-looking context. Future revenue forecasts, the other term in the equation you're optimizing, are also inaccurate. These functions are also generally "bathtub" shaped, and with the amount of money at stake, you can save quite a lot by being a little closer to the optimum, so they're worthwhile.
- leetcrew 7y agothis might be true for products where costco was offering a much better price, but I'm sure there were also plenty of annoyed customers who just bought the item somewhere else for a slightly lower discount. presumably there is some way of approximating this ratio and using it to adjust these kinds of loss estimates. I guess lovethesales.com might choose not to adjust the figures in order to report a juicier story.
- trunc 7y agoThere doesn't even have to be a 'the item'. If someone spent their budget, or spent enough to feel guilty about spending more, they're a lost sale.
- deleted 7y ago[deleted]
- KallDrexx 7y agoAnecdotally, my step mom was trying to buy 2 apple watches from Costco and gave up after an hour of trying to get through the cart. I realized that Amazon had them for the same price, so she bought it from there instead. So there are at least some lost sales by people shopping elsewhere. It's rare that a specific price is only offered by only one retailer for a product.
- o-__-o 7y agoProblem is Costco high price products came with 5 year warranties so it’s a nobrainer to just first try going to the store then ordering online. I suspect a lot of people did that prompting even more sales (I bought house stuff I didn’t even need, I was just mad they didn’t have my tv and I drove all the way out there)
- chiefalchemist 7y agoPerhaps. But I'd argue they lost more. That is, next time, many of those people will go elsewhere first and then Costco as a last choice option.
- m463 7y agoI suspect a lot of problems are like that. Store too crowded? Website slow or down? Something out of stock? Business not lost, people just come back later.
- aaron695 7y agoGive it would be a loss leader. Given they get extra PR. They might have made money? Not sure this is great schadenfreude.
- cududa 7y agoAmazon being down would be extra PR. Costco’a instore credit card machines went down. Costco’s website, nowhere near a leader in e-commerce, and you already have to be a Costco customer - their site doesn’t generate new customers. The site going down, doesn’t generate enough press for the name recognition increase to increase amongst of new customers (infact it does the opposite) offset the negativity around dedicated customers not being able to access Costco accounts.
- tssva 7y agoDoesn't really affect the point you are making but you don't have to be a Costco member to purchase most items at their website. You will pay 5% more than non-members which can sometimes still be worth it.
- fpgaminer 7y agoThe website says that, but I've never seen them actually charge the 5% for me.
- gamblor956 7y agoThey list the public price unless you're logged into your member account.
- fpgaminer 7y agoI've cross checked using a member account before; the price has always been the same.
- llamataboot 7y agoI would bet that quite some of these people came back later. When people want Costco prices, they will come back. So prob not that harmful. Still never a good day to be an engineer and imagine there will be some difficult post-mortems.
- PretzelFisch 7y agoThe problem was that is was a one day sale. And even though they extended the sale, that message was only posted on the website the next day.
- _nickwhite 7y agoSmall sample size of my household, be we bought nearly everything we were going to buy at Costco elsewhere due to them being basically offline all of Thursday AND into Friday. Seems like they host all of their web infrastructure in-house and need some major help on scale-ability.
- PretzelFisch 7y agoCostco's site has never been a role model in fact it can hardly handle most weekend traffic. This annoys me on multiple levels since it puts a bad name to asp.net's ability to scale as well as the fact weekends are my main shopping window and I just can't use the site.
- paranoidrobot 7y agoDoes ASP.NET have a bad rep for poorly scaling? I'd have thought it was just the licensing/overhead costs of running Windows that turns folks off. This should, hopefully, change for the better with .NET Core getting wider adoption.
- gabrielrdz 7y agoIt should not. StackOverflow.com, for example, runs on ASP.NET MVC and is one of the websites with most traffic in the world. Also blazing fast and rarely goes down. Even in Black Friday!
- flavius29663 7y agoalso, once you open a web browser with the website, it keeps an open connection to the server. Their servers handles all the open concurrent connections
- tedunangst 7y agoSo 0.00755% of their annual revenue? Do you think they'll ever recover from the loss?
- maaaats 7y agoOne of the biggest electronic stores in Norway knew their web page couldn't handle the load, so they had some kind of queue system im front. When I checked, my spot in line was estimated to have to wait more than an hour. They got a lot of flak for it, all other web shops worked fine.
- fpgaminer 7y agoI wonder how much engineering effort went into building that queuing system, versus what it would have cost them to just fix their site so it could scale properly...
- dannyw 7y agoI’ve seen queue-it.com a few times. It’s a managed system that’s like Cloudflare: it sits in front of your site so you don’t need to integrate.
- hombre_fatal 7y agoOn the other hand, how much hype and commitment does it build for people who decide to sit in queue? Maybe by the time you sit in queue for an hour, you're more likely to make more purchases than you would have otherwise. Or people feel like they're missing out by shopping on Amazon when they can claim a spot in queue. We're not all that rational.
- mips_avatar 7y agoNow I see why microsoft is building so many Nordic data centers.
- deleted 7y ago[deleted]
- vinniejames 7y ago$11 million based on what metric, they can't exactly quantify all the people who tried to shop when the site was down, then simply came back later to make the same order
- ram_rar 7y agoWould love to see some postmortem from the tech folks @ Costco. What really got them down. Also, does anyone know if they use any cloud services or run their own DC?
- 9nGQluzmnq3M 7y agoCostco is an Azure customer, but I'm not sure where the site in question is hosted. https://www.reuters.com/article/brief-microsoft-says-costco-recently-cho-idUSFWN1N11XX https://www.reuters.com/article/brief-microsoft-says-costco-...
- badrabbit 7y agoTIL: people buy stuff from costco's website. I alwayd thought since you buy in bulk shipping would be insane or not at the value point of amazon.
- OrgNet 7y agoBought my mattress online from Costco and I'm not even a member...
- badrabbit 7y agoNice! I gotta check it out sometimes
- fma 7y agoNo one is buying 50 rolls of toilet paper on black Friday LOL. They have electronics, tools, appliances like any other store...for great prices and lifetime return period (for non electronics). But I do buy diapers and formula in bulk from online if I can anticipate I need it in a few days. The price is $1 or $2 higher online, but cheaper than elsewhere and more convenient if I don't need anything else from the store.
- friedman23 7y agoI was browsing Costco.com when I saw this happen and the thing I was most thankful for on Thanksgiving was not being on-call on the responsible team at Costco.
- drak0n1c 7y agoDuring one of the sudden logouts on Costco's website yesterday there was a complete stranger's email address prefilled in the login screen. Disconcerting, but at least there was no password.