Hurricane Sandy wallops Internet commerce just as hard

From Fab.com to Amazon.com Inc and eBay Inc, e-commerce companies scrambled on Tuesday to get goods to buyers on time after Hurricane Sandy tore a swathe of destruction across the U.S. northeast.

The storm — which severed power to warehouses and offices, ripped up rails and roads and shuttered airports — challenged the notion that Internet retailers might benefit from problems at store chains exposed to the elements.

Fab.com, a fast-growing design e-commerce start-up based in New York City, handled unusually strong volumes on Monday as people hunkered down at home. Then the problems began.

Fab operates out of two warehouses in hard-hit New Jersey, one self-owned and another run by warehouse company Dotcom Distribution. With both lacking power as of mid-afternoon, no packages were making it out the door on Tuesday.

“The biggest impact to us right now is that our warehouses have no power,” said Jason Goldberg, founder and chief executive of Fab.com. “We’re doing everything humanly possible to send packages as quickly as possible.”

Retailers from New York to Washington are starting to re-open and re-staff in the aftermath of Monday’s destruction. But many of Fab.com’s fellow Internet retailers were still struggling to fill orders, handle customer service and keep websites running ahead of the crucial holiday season.

Those efforts are geared at ensuring buyers do not wait too long for their products — and averting a damaging backlash against their sites and reputation.

Amazon.com warned merchants on Tuesday that use its shipping service, Fulfillment by Amazon, that Sandy might impact the handling of orders. Third-party sellers on its marketplace that handle their own shipping were instructed to contact shoppers directly about their orders.

It advised them to temporarily deactivate online listings should they be unable to meet usual shipping standards.

“Because the Internet is an opaque purchasing method, customers don’t always understand where their product is coming from or if they are going to be affected,” said Eric Heller, head of Marketplace Ignition, which helps online retailers sell through websites such as Amazon.com. “We’re encouraging sellers to proactively reach out to buyers that may be affected.”

RECOVERY PLANS

EBay pursued a similar tactic, emailing shoppers who purchased items from merchants that may have been impacted by the storm in recent days, asking for patience. It recommended that affected eBay Store-subscribers put their pages in “vacation mode” to control purchasing and show shoppers that their operation has been temporarily disrupted, a spokeswoman said.

And Gilt Groupe, which runs a popular high-end fashion website, expects delivery times to take one to three days longer than normal, said Kevin Ryan, founder and CEO of the company.

Beyond logistics tangles, loss of power and telecommunications have hurt Internet firms that rely on telephone and Web-based customer service in the absence of store staff.

Fab.com’s offices a block from New York’s Hudson River were blacked out and closed until further notice. About a third of employees lacked power as of Tuesday afternoon. A dozen camped out at Goldberg’s home working on recovery plans and preparing the company’s online holiday stores for their Thursday launch.

Gilt’s offices in New York have been difficult to access, so the company has not been able to run its usual photoshoots for a few days, Ryan said.

“We will need to get back in soon or there will not be any new sales up,” he said. “I think we will get back in by Thursday and everything will be OK.”

Others like online eyeglasses start-up Warby Parker, in the SoHo district of New York City, sought temporary solutions to a loss of power and Web access. It found a temporary office that it will start using on Wednesday to handle customer inquiries.

“We’ve been scrambling to get our systems up and running,” said co-founder Dave Gilboa.

By Alistair Barr

SAN FRANCISCO (Reuters) –  (Additional reporting by Alexei Oreskovic in San Francisco; Editing by Edwin Chan and Chris Gallagher)