By Abby Hardoon, CEO & Founder of Daily.co.uk
With worldwide e-commerce on the rise year after year, experiencing website downtime can be an expensive problem for business. But what are the real costs and is there anything that can be done to avoid it?
While perfection may well lie all around us in the natural world, unfortunately in the world of electronics, wireless networks, computer hardware and software, we all have to acknowledge that ‘perfection’, in its truest sense, will, alas, always remain unobtainable.
That’s not to say it’s not close. Take the web hosting industry. In order to keep websites up and running, commonly, every possible precaution is taken, emergency power generators on standby in case of power failures, the most technologically advanced hardware stored in the highest security facilities imaginable, backups taken of backups and so on, but yet the facts remain that for a website owner, there can only ever be the promise of 99.99% uptime. Anyone who says they can offer 100% is but a glitch in the unreliable network between the client and server, away from eating a large slice of apology pie.
And downtime can be costly. For the biggest web retailers such as Amazon, who reportedly had a turnover of just over $34 billion in 2010, if we make an assumption that traffic is uniform over a 24 hour period just 1 hour of downtime equates to $3.88 million in potential lost revenue alone.
The pain doesn’t stop there. After a 2 hour glitch taking the site offline in 2008, not only did Amazon suffer the lost sales but the share price then tumbled 4.1% by that afternoon. For a company valued at $78bn, that 4.1% equates to $3.12bn being wiped off their value within a matter of hours.
Other web goliaths for which just a seemingly insignificant .01% downtime can mean millions of dollars slipping from their fingers are the search engines, biggest of which undoubtedly remains Google. So what happens if Google’s potential customer types their address into a browser only to get nothing but that sad black and white message telling them it’s unavailable? Do visitors wait patiently until the site is back up and running? Given the tolerance of many of today’s web users, they might hang around for another 4 or 5 feverishly annoyed seconds, but the likelihood is that they will then simply go to another rival search engine and go about their business.
Search engines derive their revenues by pay-per-click or cost-per-impression advertising. If the site is down, the clicks or impressions don’t occur. With Google’s revenues from AdSense alone at $2.48bn in the second quarter of 2011, again making an assumption that traffic is uniform over a 24 hour period, a .01% downtime would equate to a staggering $24.8million in lost revenue – and that’s just for one quarter!
It’s not just lost sales that need to be considered. Downtime can lead to lost customer confidence or, worst of all, customers being forced to try out competitors and liking what they find. When food retailing giant Sainbury’s website went down in 2008, web traffic analyst Experian Hitwise recorded a massive 8.36% of their traffic going directly to their biggest competitor, Tesco.com, and a further 1.38% going to ASDA.
While these figures are obviously based on a fair few assumptions and approximations, it’s worth noting that they are also specific to particular areas of internet business.
Companies providing products or services which have few competitors, or don’t sell directly to customers over the internet, wouldn’t expect to see such direct dips in revenues during and after a website failure. For example, those wishing to peruse the Bentley Motors website are unlikely to be so bothered by the website being unobtainable that they would instantly go and buy a Mercedes – although of course it’s not impossible!
And the same applies for companies which inspire high levels of brand loyalty such as, for example, Swedish one-stop furniture provider IKEA, whose customers would likely ride out website glitches, so keen to deal with IKEA that they would keep trying (within reason) until the site was back on its feet.
So what is a normal SME, whose income comes in part or wholly from their website, to learn from the downtime horror stories of the internet’s biggest players? Downtime can haemorrhage precious brand loyalty. It can be disruptive, disturbing and expensive.
What can you do about it? Well, the short answer might unfortunately remain ‘not very much’.
The longer answer is that while you may well never experience downtime on your website, it is worth being sure that those protecting it are taking every possible precaution they can – using emergency power supplies, technologically advanced hardware stored in the highest security facilities, the backups of backups. And then it’s worth remembering that 99.99% uptime, while not perfect, is pretty darn close.