November 8, 1999 4:50 PM PST

Toys "R" Us suffers second day of problems

Web site troubles plagued Toys "R" Us for the second straight day as customers overwhelmed the company's servers, raising further questions about its ability to adapt to the high demands of e-commerce.

The company said the site received a sharp increase in the number of visitors yesterday morning, as consumers began responding to an advertisement placed in national newspapers around the country. With site traffic increasing tenfold from previous peaks, the company moved to limit the number of consumers who could use its systems at any one time.

"I don't think anyone expected a tenfold increase," said John Barbour, chief executive of Toys "R" Us subsidiary Toysrus.com.

The site "slowdown," as Barbour and other company representatives called it, is only the latest in a series of Web-related problems the company has encountered. Slow to enter the e-commerce game, Toys "R" Us was trounced last year in online toy sales by rival eToys. This year, the company has seen a highly touted deal with Benchmark Capital unravel and has had a falling out with the designated chief executive of Toysrus.com, Bob Moog.

For many shoppers, the site was accessible only rarely last night and sporadically today. Many attempts to enter it were met with at least four types of "error" messages and apologies that asked visitors to come back later.

Visitors apparently were responding to the company's "Big Book" toy catalog and other related promotions. The company said it distributed some 62 million Big Books over the weekend in national newspapers. In addition, the company is offering free shipping in November and a free Tickle Me Elmo toy for orders of more than $100.

This morning, the site carried a message that greeted many would-be shoppers yesterday: "Due to the overwhelming popularity of the BIG BOOK of savings, we have had to limit the number of guests to our Web site...Please accept our sincere appologies [sic] and try again later."

Despite the discount catalog and a new advertising blitz, which includes national television commercials, Toysrus.com director of guest relations Ruben Baerga said the retailer did expect a traffic spike. Over the last week, Baerga said the company increased the capacity of its systems 2.5 times, far less than what was needed to handle the tenfold traffic spike.

"It took us by surprise," Baerga said. "We weren't ready for it."

Barbour said the company had already quadrupled its number of servers to prepare for the onslaught. In response to the slowdown, he said the company plans to triple the number of servers it now has. Baerga said that means the company will add up to 200 servers to handle increased traffic.

"That's an undertaking, but we'll do it," Baerga said. "We're working feverishly to fix it."

Even on the few occasions when the site was accessible, at least some items advertised in the company's much-touted Big Book catalog could not be found on the Web site.

Such problems, combined with the outage, confirm analysts' worst fears that many e-commerce sites are not well enough prepared to handle the crush of holiday traffic, a criticism that has been leveled specifically at some of the largest brick-and-mortar retailers.

Yankee Group e-commerce analyst Melissa Bane said outages at sites like Toys "R" Us could hurt those e-tailers this holiday.

"Last year, it was trendy to be caught with your site down--it showed you were pop," Bane said. "This year, it's less glamorous. It's not a tribute to how much traffic you have, but a tribute to how unprepared you are."

Toys "R" Us faces intense competition from other online stores, including eToys, Amazon.com, Wal-Mart, and KB Toys.

The market is expected to be particularly tough this holiday season, which many retail and financial analysts consider a make-or-break period for some e-commerce companies. Net stocks have been slumping in recent months, and online companies are looking to the holiday period to provide a boost.

Consumers are expected to spend about $6 billion online this holiday season, analysts have estimated.

Toys "R" Us is not alone is suffering outages. Virgin's music store recently was clogged because of demand from a sale on CDs. Amazon.com's site also has undergone periodic outages, frustrating customers, including two separate downtimes last Thursday.

Last December, Toys "R" Us's online site suffered at least one multihour outage, as it and other e-retailers were slammed with holiday shoppers.

News.com's Troy Wolverton contributed to this report.

 

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