Not all abandon sales are a loss for Amazon. Many customers will simply just com back and buy another day because they don't know about the competition.
They are optimizing for market share and innovation rather than profits. It's a world domination thing.
I think it's awesome. Imagine if Google had run a bunch of low-rent punch-the-monkey display ads early on. It would have killed them. Facebook vs MySpace is another good example of what happens when you focus on long-term value creation versus short-term profit taking.
With its low profit margin amazon leaves virtually no room for a small size competitor to dislodge them from their share of the market.
Say you want a bite of the tablet market dominated by apple, it's easy, make a somewhat decent tablet for cheap and there you have it.
If you want a bite of an amazon dominated market, well good luck with that, and while at it hope that amazon is not planning to get into the market you're in.
It seems their strategy relies on tiny margins, maybe with a different set or circumstances amazon would change their stance, but I don't think it's currently part of their plans to ramp up prices.
From Amazon's perspective, it's the only way to exist in the long term. If they keep costs and margins low, they don't give their competitors much breathing room to challenge them on price.
It's true that their profit margins can be vanishingly thin, but that doesn't mean they don't make money.
For some classes of items, they can sell at cost and still make money, because their operations are allegedly so good that they can turn over the inventory before their own payment to the supplier is due.
For example, say Amazon buys a book today and payment is due to the publisher in 30 days. They sell the book tomorrow at cost. Now they get to sit on the full price of the book for the rest of the month. In fact, take that money and buy another book, and sell it right away too. Keep that up, and you have a very big pool of money always sitting in your bank account. Money that can be profitably invested in other activities.
Why would a publisher give them 30 days to pay? Because they're Amazon. It's good to be big.
Is there a name for the fallacy of ignoring marginal effects at the tail end of a probability distribution? I see it here incredibly frequently.
There will almost certainly be some number of people who would have stopped by Amazon right now and made some impulse purchases. At the scale Amazon operates, the increase in inconvenience to push off the marginal purchase as a function of inconvenience is almost certainly miniscule (See frequent reports on how milliseconds of page load time affect the likelihood of purchase)
I can attest to this being the case. I mentioned it elsewhere in the thread, but we're in e-commerce and when walmart.com went down around black friday last year we saw a 20megabit jump in traffic until their site came back up... and we're only one e-com provider out of many.
That's assuming that they're revenue is spread out evenly over every day and every minute. Which is not the case. Think Christmas, deals, weekends, time of the day, etc...
It also assumes that everybody who goes to buy something from Amazon while its down end up buying somewhere else as opposed to simply waiting until later that day
That's less than I expected! Back at the height of their popularity, I remember hearing that AOL could lose a lot of money every second their servers weren't showing ads.
It's January, so not much is being lost here. We're looking at the slowest shopping season of the year. My unscientific estimate based on previous experience in retail would suggest sales are probably 1/50th peak Thanksgiving/Xmas volume.
Still, downtime is money, even if it isn't a world-changing amount of it.
It's actually surprising it isn't down more often—internally, everyone has write access to prod and the rule is that if you deploy something to prod you need to be able to roll it back.* Apparently, though, someone has failed on the second item.
* Or so I was told in a job interview with the big A a few years back.
I find this extremely hard to believe. (Not calling you a liar, but I think something must have gotten lost in translation).
The possibility for theft and fraud would be so massive if every dev at Amazon had write access to production that I find it nearly impossible to believe this is true.
Developers probably have access to most production systems. Credit card processing and source of truth on orders that get shipped are most likely segregated. (actually PCI dictates that physical and data access controls be in place so only essential employees can access card data)
Who cares if I can access the credit card processing system if I can insert random code elsewhere in the system that redirects you to my phishing page whenever you enter credit card information?
Given that you would be an Amazon employee with a solid audit trail leading back to you in that scenario, I'd say it's pretty likely you'd be caught and prosecuted rather quickly.
Yes, I and my coworkers could've sold the realtime trades of a petroleum multinational to the highest bidder, including ones that hadn't happened yet. That would've been easy, and would've been worth 100's of millions to someone. Not getting caught and having your life ruined -- that was scary and would've been hard. Now, if I was working for a sovereign power, like China, and my life was there anyhow, then pulling stuff like that in the US wouldn't be so hard.
The bits that need high security such as production databases have extra layers of access and tracking. But most devs can push changes to the retail website.
One of the reasons I left Amazon was that I was given the job to deploy code regularly (about weekly) at 1am or so, and one evening, there was a problem due to work of another team, so it escalated and we spent 6 hours dealing with it. We rolled the change back right away, but for contractual reasons their code had to be fixed and deployed and there was an interdependency. Fortunately, it wasn't my team's mistake, but I had to be there to help test it, etc.) So, it's finally working at 7am, and I stuck around for 30 minutes to make sure it kept working before going to sleep around 7:45AM.
I emailed my boss about it, and of course he was getting emails the whole while as the tickets status was changing.
Still, the fact that I showed up at 10:15 for the 10AM meeting that morning was "unacceptable" and I got chewed out. (~2 hours sleep!)
I made the mistake of thinking that my HR rep might be someone to talk to about this, because I wasn't sure how to make it clear to him that it was kinda unreasonable (Especially since I told him I'd be late for the meeting)... and that's when I found out that everything I told her was written up in an email & sent to him.... resulting in getting chewed out yet again for going to HR!
The lesson: as a programmer, never work for a boss who can't program, or at least, be very wary of it!
I have to say, it sounds to me like the lesson isn't about bosses who can't program, so much as "don't have a terrible boos". There are plenty of fields I know nothing about, but if I was managing people in that field, I would expect that on 2 hours sleep they wouldn't be effective, and I also wouldn't expect them to work both night and day shifts. It's common sense.
45 minutes of downtime so far, we're seeing mostly 503 responses with an occasional 200 getting through. We've seen a few other smaller outages for amazon.com in the past but this is definitely the longest in at least the last 3-4 years. Details at http://reports.panopta.com/amazon/server/96291
I got that bit thank you :-) but I did not understand why there might be a web page on amazon named after bozos, some sort of test page? Or a joke that has completely passed me by?
Funny. I followed the "down=yes" link and got the "Service unavailable" page, as expected.
Then I clicked on the "down=no" link for fun, and the page partially loaded for me. I refreshed it and got the whole front page loaded. And then one more time and got the "Service unavailable" again...
Been a while since I've seen the amazon homepage down. Wow.
I know from the e-commerce side, when walmart.com went down last year we saw a traffic increase (enough to actually link to to the outage for walmart). I wonder if it'll happen here.
As for why, it's easy. Taxes. Much like Walmart rents its stores form an LLC it owns to write off the taxes and bring down the liability of the largest revenue sector, Amazon can write off their server costs since they can "rent" them from AWS LLC. While AWS makes a good chunk of change, it has nothing on amazon.com so by making AWS its own entity (and event better for them that its publicly available) they get a gigantic tax write off and AWS makes capex expenditures saving them taxes. All In all, the shell game must save amazon millions just like it does for Walmart
Running on AWS doesn't protect you from problems in the applications you're running on AWS. You can `rm -rf /` an EC2 instance and have plenty of problems.
I remember being in a talk by Dr. Vogels last year and he mentioning that *most of the Amazon.com North America services moved over to AWS in September 2011, many other services outside of NA were yet to move.
It appears just to be the homepage, but all deep links are unauthenticated. That is: if you were logged in before the site started misbehaving, and use a deep link, you're not logged in on the page that loads.
200 comments
[ 2.3 ms ] story [ 237 ms ] threadall the internal links seem to be working fine http://www.amazon.com/gp/site-directory/
edit: added less ugly link
P.S. Wild guess. No idea about how much sale do they make during peak hours.
I think it's awesome. Imagine if Google had run a bunch of low-rent punch-the-monkey display ads early on. It would have killed them. Facebook vs MySpace is another good example of what happens when you focus on long-term value creation versus short-term profit taking.
Say you want a bite of the tablet market dominated by apple, it's easy, make a somewhat decent tablet for cheap and there you have it.
If you want a bite of an amazon dominated market, well good luck with that, and while at it hope that amazon is not planning to get into the market you're in.
It seems their strategy relies on tiny margins, maybe with a different set or circumstances amazon would change their stance, but I don't think it's currently part of their plans to ramp up prices.
If you are going up against the loss leader kindle though it is going to be a lot harder.
There was an article on HN a couple of weeks ago precisely about this topic, decent read / informative.
Link: http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins
HN Discussion: http://news.ycombinator.com/item?id=5112998
For some classes of items, they can sell at cost and still make money, because their operations are allegedly so good that they can turn over the inventory before their own payment to the supplier is due.
For example, say Amazon buys a book today and payment is due to the publisher in 30 days. They sell the book tomorrow at cost. Now they get to sit on the full price of the book for the rest of the month. In fact, take that money and buy another book, and sell it right away too. Keep that up, and you have a very big pool of money always sitting in your bank account. Money that can be profitably invested in other activities.
Why would a publisher give them 30 days to pay? Because they're Amazon. It's good to be big.
There will almost certainly be some number of people who would have stopped by Amazon right now and made some impulse purchases. At the scale Amazon operates, the increase in inconvenience to push off the marginal purchase as a function of inconvenience is almost certainly miniscule (See frequent reports on how milliseconds of page load time affect the likelihood of purchase)
(Surely there's some loss from being down, but it's not a simple loss = current order rate * downtime argument).
61.1 Billion dollars (yearly revenue) / 31556926 seconds = 1936.18 dollars/second
That's still a huge amount of money ... $7mm an hour?
Still, downtime is money, even if it isn't a world-changing amount of it.
On a side note, the first thing I did was google, amazon down, and saw it was (http://www.isitdownrightnow.com/amazon.com.html) then I came here, and I am proud to say, this post was #1.
Does anyone have statistics for Amazon homepage uptime? I don't remember the last time I heard about Amazon being down.
And an hour after I read Patrick's (patio11) article on the Rails vulnerabilities. It's a scary day indeed.
* Or so I was told in a job interview with the big A a few years back.
The possibility for theft and fraud would be so massive if every dev at Amazon had write access to production that I find it nearly impossible to believe this is true.
One of the reasons I left Amazon was that I was given the job to deploy code regularly (about weekly) at 1am or so, and one evening, there was a problem due to work of another team, so it escalated and we spent 6 hours dealing with it. We rolled the change back right away, but for contractual reasons their code had to be fixed and deployed and there was an interdependency. Fortunately, it wasn't my team's mistake, but I had to be there to help test it, etc.) So, it's finally working at 7am, and I stuck around for 30 minutes to make sure it kept working before going to sleep around 7:45AM.
I emailed my boss about it, and of course he was getting emails the whole while as the tickets status was changing.
Still, the fact that I showed up at 10:15 for the 10AM meeting that morning was "unacceptable" and I got chewed out. (~2 hours sleep!)
I made the mistake of thinking that my HR rep might be someone to talk to about this, because I wasn't sure how to make it clear to him that it was kinda unreasonable (Especially since I told him I'd be late for the meeting)... and that's when I found out that everything I told her was written up in an email & sent to him.... resulting in getting chewed out yet again for going to HR!
The lesson: as a programmer, never work for a boss who can't program, or at least, be very wary of it!
Then I clicked on the "down=no" link for fun, and the page partially loaded for me. I refreshed it and got the whole front page loaded. And then one more time and got the "Service unavailable" again...
I know from the e-commerce side, when walmart.com went down last year we saw a traffic increase (enough to actually link to to the outage for walmart). I wonder if it'll happen here.
http://www.zdnet.com/how-amazon-exposed-its-guts-the-history...
As for why, it's easy. Taxes. Much like Walmart rents its stores form an LLC it owns to write off the taxes and bring down the liability of the largest revenue sector, Amazon can write off their server costs since they can "rent" them from AWS LLC. While AWS makes a good chunk of change, it has nothing on amazon.com so by making AWS its own entity (and event better for them that its publicly available) they get a gigantic tax write off and AWS makes capex expenditures saving them taxes. All In all, the shell game must save amazon millions just like it does for Walmart
http://knowyourmeme.com/memes/thats-the-joke