Exact Target, the service provider responsible for Groupon’s daily e-mail deals, suffered a server outage this weekend that looks to have had a staggering effect on Groupon sales in several cities. The news was reported and confirmed by DailyDealMedia’s Boyan Josic, a blogger who noted painfully slow sales for morning deals today in Austin and Abilene, Texas, and San Jose, Calif., among other cities. This seems to play up Groupon’s overall dependence on emails, which can be a problem when things go down with a third-party provider but which also seems to indicate that people have no other pattern of interacting with Groupon outside of those e-mails.
The crux of the situation is that some of ExactTarget‘s servers went down, resulting in an inability for many Groupon subscribers to click through on the links on their daily e-mails to actually review and make purchases. Josic explained to me that customers only engage with Groupon’s servers after ExactTarget processes the initial mouse click, so if that service is down, customers never make it to the Groupon site. He said the outage appears to have begun some time on Saturday, although Groupon confirmed with him that it has been resolved as of this morning. Indeed, the low numbers that Josic cited when posting have picked up — sometimes only minimally — throughout the morning.
However, they still weren’t up to par as of around 9 a.m. PDT, said Josic, whose site tracks the group-buying space very closely. He thinks this means one of two things: either ExactTarget’s service is still not fixed, or scorned customers aren’t checking back in to see if they’re able to access their deals now. The latter, said Josic, is a particularly troubling proposition for Groupon.
What’s certain is that Groupon subscribers could have accessed the deals directly through Groupon at any time since the outage began simply by visiting Groupon.com. Groupon’s official response, both to me and to Josic, is, “We weren’t the only clients affected by the outage. While some customers may not have been able to click through the e-mail to the website, they could always go to Groupon.com to purchase.” In fact, DealFind, another ExactTarget customer, appears to be suffering from slow sales, too.
That subscribers could have, but didn’t, visit the sites leads Josic to believe that “the brand almost means nothing; it’s all about the subscriber.” Subscribers, it seems, are willing to consider deals that come to them, but aren’t necessarily willing to do the legwork to track them down themselves, even if it means the relatively pain-free task of visiting the Groupon site. I don’t know if this affects Groupon’s fate as its IPO approaches, but it certainly says something about the fickleness of its customers’ buying habits if Josic’s assessment is accurate. Groupon and other group-buying services might need to figure out a way to engage with customers on its site without relying on the e-mail middleman.
Josic said the outage likely led to significant revenue losses in the cities affected. DailyDealMedia is in the process of analyzing the weekend’s numbers against its existing set of Groupon sales data to estimate the ultimate effect.
Of course, this situation also says something about the inherent risk in outsourcing any critical business processes to a third party. We saw an even larger-scale outage in April regarding Amazon Web Services’ cloud computing platform, which downed many popular web sites almost completely for days. Performing a service isn’t inherently more reliable and probably requires a lot more effort, but at least companies have a modicum of control when it comes to resolving this type of performance issue. Josic noted, though, that Exact Target doesn’t have a history of service interruptions as far as he’s aware.
That means Groupon’s biggest problem probably isn’t keeping its services up and running, but getting customers to view it as something more than a daily e-mail coupon.