Network downtime may dampen e-commerce holiday sales

New e-commerce businesses may want to outsource their DNS provider to minimize downtime.

An increased reliance on information technology does not come without a downside: Internet downtime can result in considerable losses to e-commerce businesses, to both profits and customer loyalty, that can be impossible for a company to recoup. Business that accept credit cards online, and especially e-commerce ventures with new merchant accounts, must address network downtime concerns.

During the holiday shopping season, e-commerce merchants are especially vulnerable to network downtime, as increased web traffic can cause connection problems.

“Failure of our site could have potentially costs [of] $50,000 to $100,000 per each hour of outage during peak traffic,” Joseph Finsterwald, CTO of online retailer Karmaloop, told Internet Retailer Magazine.

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As an example, if a company generates a $6 million profit in a given year, and one quarter of its sales are attributable to e-commerce, yet the company experiences 1 percent of internet downtime, the company loses $15,000 annually. Companies that sell products exclusively online or who experience more downtime are impacted even more.

New e-commerce businesses may want to outsource their Domain Name System (DNS) provider because websites with in-house DNS are usually not as equipped to handle outages. Outside servers can provide for more data transfer and employ experts that can fix most problems that arise.

According to MarketWatch, a recent study of 1,000 websites found that those that hosted their own DNS averaged 95.05 percent internet availability, compared with 97.35 percent internet availability among websites that used a third-party provider. That difference translated to an average of 40 minutes daily more availability among the latter group.

Of course, third-party services can cost a fair amount, but it may still be less than what e-businesses lose from their profits due to downtime.