Here's How Much Yesterday's Outage Cost Amazon

Yesterday, both Amazon.com's (NASDAQ: AMZN  ) main page and corresponding mobile site went offline for 30 to 40 minutes, leaving millions of frazzled Internet shoppers to frantically click the homepage link contained in the mildly amusing error message below.

Source: Amazon.com screenshot

For those of you who don't have eagle eyes, that reads:

We're very sorry, but we're having trouble doing what you just asked us to do. Please give us another chance -- click the Back button on your browser and try your request again. Or start from the beginning on our homepage.

So what's the big deal? It was only half an hour, right?

Bigger than you think
Before you go thinking this is much ado about nothing, let's do a little back-of-the-napkin math.

A few weeks ago, Amazon told investors to expect third-quarter net sales in the range of $15.45 billion to $17.15 billion. For simplicity's sake, let's take the midpoint of that guidance and assume Amazon expects third-quarter sales of $16.3 billion.

But that number was for total net sales -- which includes both products and services -- and most reports seem to indicate the majority of Amazon's supplementary "services" remained functional, most notably including their Amazon Web Services division, through which they manage content and traffic for thousands of other websites around the world.

As a result, and noting that around 82% of Amazon's total net revenue so far this year has come from product sales, that means roughly $13.37 billion of the company's total expected third-quarter revenue should come from the "products" category. 

Next, including July, August, and September, we know there are 92 days in the current quarter -- that's 2,208 hours, or 132,480 minutes. Divide Amazon's expected $13.37 billion in net revenue by that last number, and we see Amazon is expecting around $100,920 in product sales, on average, each and every minute during this three-month period.

All told, that means a 30-minute outage for the company's main retail site would cost Amazon more than $3 million in sales. Forty minutes? That'll run more than $4 million.

Come to think of it, those numbers could be even higher considering this particular outage happened to occur smack dab in the middle of the shopping day.

Foolish takeaway
As it stands, the cause of the outage remains unclear, and Amazon hasn't responded to inquiries on the topic just yet.

But while three to four million bucks certainly does seem like a lot of money, it's hardly going to break the bank for this retail juggernaut. I suppose, then, we should try to remember "minor" outages here and there are par for the course for Web-centric beasts like Amazon.com.

So in the end, apart from doing everything in their power to ensure their primary revenue source doesn't stay down for long, I still doubt the folks at Amazon are particularly concerned about yesterday's short-lived debacle.

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  • Report this Comment On August 20, 2013, at 11:15 AM, hippoman132 wrote:

    I wonder how much of the IT infrastructure is outsourced. In the old days (age is unimportant), we would have had a structured plan in place 4 hours after the failure.

  • Report this Comment On August 21, 2013, at 1:03 AM, sliderw wrote:

    Hogwash. If I can't shop at Amazon for a few minutes, I will come back later and try again.

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