Target Site Collapses: Anxiety for Other E-Commerce Sites

Retail

Published: April 20, 2015 6:38 am

Demand for Lilly Pulitzer clothing knocked Target.com offline early on the morning of April 19. The Wall Street Journal quoted a Target spokesperson who said, “When the traffic got heavier, we made the website inaccessible.” The problem has at least two effects. One is that Target lost sales. The other is that it lost customers who will not come back.

While it is impossible to forecast what other retail sites might go down, the structure of e-commerce traffic is such that any site built in a way that cannot handle a massive surge in traffic faces trouble. Amazon.com Inc. (NASDAQ: AMZN) is not among these. It has its own Web services company, as well as years of experience with unusual traffic as it introduces new products with wild demand. This advantage is one more that makes it the likely leader of the category now, and for the foreseeable future.

So, who faces risks? The tier of retailers just smaller than Target, which rely more and more for online sales. Most of these wish they had the Lilly Pulitzer success without its damaging by-product. The Target problem has to cause at least some anxiety among these larger brick-and-mortar companies. Based on overall revenue, this includes Macy’s Inc. (NYSE: M), Best Buy Co. Inc. (NYSE: BBY) and Sears Holding Corp.’s (NASDAQ: SHLD) Kmart.com and Sears.com destinations. The risk to these is only a guess, but because they are at the top of the Retail 100, their traffic is already near the top of the e-commerce ladder, almost certainly.

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If any benchmarking is possible, Amazon and Apple Inc. (NASDAQ: AAPL) need to be at the top of the list. Like Amazon, Apple can handle sharp increases in traffic. Early shoppers for the Apple Watch and generation after generation of iPhones have proven that. It is a wonder Target did not foresee this issue. It is an alarm for other retailers that could face a period of unexpected demand.

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