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Technical Glitches Lead to Prime Day Meltdown for Amazon.com

Brad Moon

Jul. 16 marked the start of Prime Day 2018, Amazon.com’s (NASDAQ:AMZN) biggest non-holiday sales event. With predictions the company would rack up record sales over the 36-hour run, retail rivals were scrambling to offer competing deals.

But Amazon.com suffered ongoing technical glitches that left many shoppers unable to complete purchases. At this point, those issues appear to be resolved, but those Prime Day sales records are going to be tough to hit after the website meltdown. In reaction, AMZN stock dropped 1% in after-hours trading.

Prime Day 2018

Amazon created Prime Day as a way to boost sales during the summer doldrums and to add yet another benefit to paying for an Amazon Prime membership. Deals are exclusive to Prime members, and many are timed so they’re available for a few hours only — or until the available quantity runs out.

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This is the company’s fourth Prime Day. In a press release, Amazon said shoppers could expect over one million deals worldwide, in addition to timed Lightning Deals.

Analysts predicted AMZN could rack up $3.4 billion in sales over the 36-hour period. That would break the company’s own record, making Prime Day 2018 its single biggest shopping day, ahead of the numbers set by Cyber Monday 2017. And it would undoubtedly be a boost for AMZN stock.

Rivals including Target (NYSE:TGT) have been preparing competing sales — what have become referred to online as “Anti-Prime” events — in an attempt to keep Amazon from totally dominating on Prime Day. However, as it turns out, Amazon itself may have helped drive bargain shoppers to those competing websites more effectively than any promotion or marketing campaign.

Amazon.com Suffers Prime Day Glitches

AMZN promised “an epic day (and a half) of our best deals,” but not all customers were able to take advantage of the sale, at least for the first few hours.

I was one of the millions of shoppers who hit Amazon.com at 3 p.m., looking to see what those Prime Day deals were like. And like many other online shoppers, I immediately ran into technical glitches.

Links to sale categories would get caught in a loop and ultimately an error page — showing a rotating cast of Amazon employee dogs — would be display. I ran into the same issue with Amazon’s Canadian website.

There may have been some great Prime Day deals, but I couldn’t see them, let alone click to buy anything. And all the while the clock was counting down on those timed Lightning Deals.

After several hours, AMZN took to Twitter, acknowledging the technical problems and assuring customers, “we’re working to resolve this issue quickly.” Clearly aware of the potential impact of the website glitches on investors and AMZN stock, the company added, “In the first hour of Prime Day in the U.S., customers have ordered more items than the first hour last year.”

Despite that reassurance, there are fears that frustrated bargain shoppers may have grown tired of error messages and turned to the “Anti-Prime” sales being offered by the competition instead. That possibility helped to shave as much as 1% off AMZN stock in after-hours trading, instead of the expected boost.

The glitchy website was also negative advertising for Amazon Web Services (AWS). Amazon’s cloud infrastructure business quietly accounts for nearly three-quarters of Amazon’s operating income.

At this point, Amazon appears to have addressed the technical issues, so the final leg of Prime Day should be free of drama. The big question will be how much business the meltdown ended up costing the company, and whether it will have to wait until Prime Day 2019 to set its new sales record.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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