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Customer Satisfaction with Online Retail Declines

December 27, 2007

Retail operations have struggled with a challenging year. And, even though we enjoyed an extra week of Christmas shopping between Thanksgiving and December 25th, that week was actually lost in November for retailers, making the profit numbers this year a little more challenging to realize.

Online retailers are not immune to this lull. Customer satisfaction can play into a retailer’s success and according to the Holiday 2007 edition of the ForeSee Results Top 40 Online Retail Satisfaction Index, customer satisfaction with online retail during the 2007 holiday season is down slightly from last year.

Aggregate satisfaction with the leading online retailers scored 74 on a 100-point scale, losing 1.3 percent from a year ago, as online holiday sales rose at their slowest pace ever. Could this be a sign of things to come for online retailers?

"Online shopping is still the bright spot for holiday retailers, but lower satisfaction coupled with slower than expected spending growth puts a little cloud over the season," said Larry Freed, president and CEO of ForeSee Results, in a Thursday statement.
 
Freed continued: "In an economy where consumers are feeling the pinch, there's increased competition for the customers' dollar. So, it's even more important for e-retailers to meet their customers' needs online."

The index is once again dominated by last year’s top-rated Web sites. These include Netflix (86), Amazon (82), L.L. Bean (80) and QVC (80) leading the Top 40. The most improved websites from last year include Costco (up 4.3 percent to 72), Zappos (up 4 percent to 78), and Avon (up 3.9 percent to 79).

Overall, 10 sites have successfully increased customer satisfaction from last year, while 18 websites suffered a slip in their scores.

The third annual holiday edition of this index also found that desirable future behaviors that are affected by customer satisfaction, such as the ‘Likelihood to Recommend’ and the ‘Likelihood to Purchase Online,’ are down. Even more significantly, ‘Likelihood to Purchase Offline’ plunged 7.5 percent, slipping to 62 from 67 last year.
 
The index also found that Internet Pure Play still holds the edge over multi-channel retailers when it comes to online customer satisfaction.

"Consumers' likelihood to purchase offline took a big dip from last year, which we attribute to several factors," said Freed. "Gas prices may encourage some people to buy online, rather than drive to the mall. Also, the tough economy and the flurry of discounting throughout the season lead to more price comparison shopping and higher expectations for deals."

Employing the methodology of the University of Michigan's American Customer Satisfaction Index, the survey of over 11,000 consumers was conducted in partnership with FGI Research. The Top 40 Online Retail Satisfaction Index is composed of the top revenue-grossing online retailers as determined by Internet Retailer.


Don’t forget to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers whitepapers, case studies and other documents which are free to registered users. Today’s featured white paper is The Challenge of Maximizing Service Availability and Security.

 
Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

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