We now are mere hours away from when retailers begin their end-of-year sales rush and either go into the black for the year (hence the more recent use of the term "Black Friday") or finish it in a most definitely unhappy holiday red.
Increasingly, for many retailers Internet sales are making the difference regarding whether they turn a profit or loss for the year. According to comScore, a digital marketing intelligence company, US holiday Internet sales (measured from 1 November to 31 December) are expected to increase about 15% from last year to some $37.6 billion.
Two companies in the news who are hoping their web sites hold up during the holiday demand are Target and Virgin America.
In 2001, Target, the second largest retailer in the US, outsourced its on-line operations to Amazon for some $100 million per year, according to this Bloomberg Business Week story. However, in 2009, Target decided that it needed to bring its on-line operations in-house. Many analysts at the time thought it was a risky move on Target's part for two reason: the company aggressively condensed a three-year project into two years, and the re-launch of its web site was planned to occur soon before the 2011 holiday season.
In late August, Target launched its new web site as planned. However, since the launch, there have been six outages according to the Business Week story. The worst so far was the one that occurred on the 13th of September, when Target unveiled a limited line of clothing for sale from Italian designer Missoni. The resulting demand crashed Target's web site, which angered thousands of Target shoppers.
The rash of crashes forced Target CEO Gregg Steinhafel last week to reassure investment analysts that the web site would be ready to withstand the expected holiday demand. However, the words he used didn't really sound all that convincing. According to this story at NetworkWorld, CEO Steinhafel stated:
"Our online business and technology teams are working tirelessly to correct the issues that have arisen with the re-launch of Target.com. We know we're not yet providing a consistent experience online, and we won't stop until these issues are resolved."
CEO Steinhafel also was quoted in the NetworkWorld article that he believed the web site was now "stable;" he won't have to wait long to see whether that belief is justified.
Another major company having web site trouble is Virgin Atlantic. In late October, the airline launched its new reservation system and according to a story in the Wall Street Journal, the airline has been having problems with it ever since. The WSJ article states that:
"Most Virgin America customers have been unable to modify their flights online since the airline switched to a new Sabre reservations system on Oct. 28. And many complain they also cannot book flights or check-in online, or were charged too much."
The WSJ says that Virgin America "... operates about 130 flights a day, carrying 12,000 passengers."
According to Virgin America Chief Executive David Cush, "Problems have been confined to the web site and kiosks."
A Virgin notice to passengers about its woes can be found here.
Virgin management apparently expected that the cut-over to the new reservation system would pose few problems, and that any that cropped up would be able to be handled swiftly. In fact, the airline said soon after the new system was turned on that it was "... pleased with the relative smoothness of this transition."
Given the problems that Virgin Blue experienced in Australia just last year with its reservation system migration, and US Airways meltdown in 2007 when it migrated to a new reservation system, the airline should have prepared for the worst.
The WSJ states that Virgin is expecting that it will be able to get its system back nearly to normal once a new batch of fixes are made on the 1st of December. If it doesn't, Virgin will be having a very, very blue (and red) holiday season.
Update: 29 November 2011
On-line sales over the US Thanksgiving holiday were reportedly up, with on-line sales yesterday - Cyber Monday - 33% above last year, says an IBM statistical report (PDF).
Even with the large growth in sales, there were few reported web site problems. There was a reported problem with eBay's ProStore platform on Thanksgiving day blamed on a power failure, and the UK retailer Ebuyer.com's web site crashed from traffic volume as it began its £1 clearance sale yesterday on what is termed Mega Monday in the UK and Europe. The site returned later in the day.
But other than degraded performance reported on the majority of major retail web sites, that seems to be about it.
Now we'll see if Virgin Atlantic can get its reservation system fully working later this week.