When eBay went public, many analysts called it the perfect business. It had no physical warehouses, no storefronts, and no need to produce content to draw customers. And its stock price reflected this business model.
But recently, even eBay's perfect business model began experiencing challenges, and it's likely due to growing pains. The company's short-lived attempt to roll out a new version was scrapped. Although eBay's server challenges are already well known, recently its application database started becoming corrupted. Because sales couldn't be completed accurately, eBay's revenue was cut -- and the company's ongoing loss just got bigger.
eBay has had every classic system problem in the last month. The greatest problem it had was that its main server experienced three unplanned shutdowns. On May 3, the five-hour outage was tied to hardware; the outage on May 20 resulted from CGI script mismatches. And its shocking 22-hour outage on June 11 resulted from database challenges associated with its new version.
While an individual IT professional could comprehend these situations as challenging, collectively, they are inexcusable. Can you imagine Christie's or Sotheby's closing their auctions down for a day because their buildings didn't have the basic infrastructure? For a traditional auction house, it would be because of the physical basics, such as lights or heat; for a virtual service, it would be access and databases.
But the most difficult challenge for eBay was the fact that its users began to lose confidence in the service. Although many Internet-commerce users are already skittish about the online adventure, unacceptable system performance will definitely squash any initial enthusiasm. And we all know the challenges of overcoming a bad customer experience. The fleeting loyalty was clearly seen last weekend, when many other auction sites, such as Amazon.com and Yahoo, experienced a dramatic increase in traffic because many auction shoppers were quick to try another site while eBay was down.
But I shouldn't hold eBay as the industry's only example -- only the most recent and most blatant. I personally experienced a problem with eToys, in which a server database indicated that I hadn't completed my order. After reordering the same products, I learned later that I had two orders placed that day. My e-mails to the customer service group were ineffective, because two days later I learned that my orders -- yes, both of them -- were en route. When I called an eToys customer service representative, I learned that the only way to correct the double order was to reject one of the packages. I did, and eventually got the credit.
Many of today's leading Internet-commerce companies need to learn that they need to be overly responsive in the customer service department. Many people feel good because they can go to a real person at a real store to complain about recent service, but they can't do the same with eBay or eToys. Sure, they have real people (well, except for those automated replies confirming an e-mail), but you rarely get to meet them in real life.
In a lot of ways, that's why Amazon.com has such a loyal following. From the beginning, Amazon.com has known how to do that little extra; many customers feel endeared to the service although they have never talked with a real person.
But even Amazon.com's loyal customers would begin to visit other Web sites if Amazon.com started having the uptime challenges that eBay faced. Although Amazon.com has started challenging eBay in the auction space, I don't think eBay's management was planning to force both buyers and sellers to the competition.
In today's overly competitive I-commerce market, it is often easy for these sites to rationalise the need for more exposure through ads or banners. They should take those high-priced marketing costs and first ensure that they have reliable service that will keep the current customers from wanting to defect.
Have you had a recent challenge with a major I-commerce site? Is your site loyalty able to sustain poor server response or outages?
(Mark Tebbe (email@example.com) is the president of Lante, an electronic-commerce consulting and integration company that serves clients worldwide, including several high-tech companies.)