Jumping the E-Gun - eBay's system problems are a lesson for other electronic commerce providers - Company Operations - ColumnENT, Sept 8, 1999 by Bill Laberis
In June of last year ebay's system went down for 22 hours, creating the cyber equivalent of a huge "closed" sign on eBay's front door. As a result eBays stock dropped the next day, significantly a $4billion dollar market value drop. In addition to their market loss they lost an estimated $5 million in revenue. Suddenly the convenience was taken away from the seller/customer. Shipments were delayed and auctions were placed on hold, nothing more than a minor bump, or so one would think.The bottom line came down to the fact that eBay was not ready nor did they anticipate a total systems failure. This seems odd since they are a company that’s livelihood depends a functioning computer system and network.
Instead of taking blame for their faulty system they blamed their vendor Sun Microsystems for the outage. Sun released a statement saying it was related to a human error, but all in all it was apparent that eBay was not prepared. This young company that grew fast had lost sight of what needed to be protected their system. This was a major wake up call for many other e-commerce sites.
Stress tests should be ran on systems like the one implemented by eBay. When companies grow rapidly stress tests are often forgot about. The overload of visitors and transactions on these sites needs to get estimated and the sites must be prepared for the demand that they are going to incur. Online transactions put a major stain on a system, therefore a backup is needed. Companies should also pretest instead of using the shotgun approach.
Since e-commerce is fairly new there aren’t very many models to follow, so a lot of it is learn by doing or watching others mistakes and learning from them. Basically the managers of these companies need to be more aware of their risks and plan accordingly.
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