Internet Retailers Continue To Lead Multichannel Merchants In Satisfaction

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Overall satisfaction levels among browsers of the top online retailers declined 1.3 percent from a year ago, according to the Top 40 Online Retail Satisfaction Index, which was released by ForeSee Results and FGI Results.

The study is based on 8,500 surveys of consumers who browsed the 40 highest grossing e-commerce sites and assigns scores based on how well they are delivering the kind of site experience visitors want.

The aggregate satisfaction score of 76 for spring 2006 is up 2.7 percent from the holiday 2005 score of 74, but is lower than last spring's score of 77.

"Customers' expectations continue to rise online," ForeSee president/CEO Larry Freed said. Consumers are demanding higher levels of site performance and customer service from the industry's largest retail sites, basing their expectations on the collective experience of all the sites they visit, Mr. Freed said.

For the second year in a row, Netflix and Amazon topped the list, outperforming brick-and-mortar multichannel merchants in customer satisfaction on the annual survey.

Internet-only retailers don't face the same challenges managing customers' online expectations that multichannel merchants do, Mr. Freed said. "Satisfaction is a combination of what you get and what you expect. The pure-plays are much more in control of this aspect because it's all about what's online. In the brick-and-mortar world, it's much more about the store side setting the expectations."

However, this leaves open the opportunity for multichannel merchants to do a better job supporting multichannel consumers, Mr. Freed said. Merchants can do this online by paying more attention to how they handle returns and having consistent prices. He also thinks eventually all multichannel merchants will eliminate shipping costs, seeing shipping and handling as the cost of doing business online, just as they look at real estate, human resources and inventory costs for their brick-and-mortar stores. "At the end of the day, consumers want the same price, whether they drive to a store or order online," Mr. Freed said.

Of the top 40 online retail sites measured by the survey, four sites scored 82 or higher on the100-point scale; 82 is considered a superior rating. Netflix.com was the leader in browser satisfaction with a score of 85, followed by Amazon.com at 83 and QVC.com and Newegg.com each at 82.

The biggest year-over-year drop in satisfaction was experienced by bananarepublic.com, which had also the lowest score with a 67. The site also scored very low in terms of price, which "points to the possible conclusion that it is not the traditional Banana Republic customer who is coming to the site," Mr. Freed.

Chadwicks.com experienced the biggest jump in satisfaction and delivered a score of 78.

The study found that the Internet has not become as price-sensitive as might be expected. On the whole, price is rarely the primary driver of customer satisfaction among the top 40 retailers, indicating companies must compete on other factors, like merchandise selection, site experience and brand, Mr. Freed said.

Another surprising discovery is that search engines generated site visitors with the lowest satisfaction ratings and the lowest likelihood to purchase online. Online shoppers driven to a site by familiarity with a retailer generated the most purchase-prone traffic, according to the report.

Satisfaction is important for several reason, Mr. Freed said. The report found that online shoppers for retailers in the top 10 percent of the index were 33 percent more likely to purchase online than the bottom-performing 10 percent. Also, online shoppers were 16 percent more likely to recommend the retailers' site if it was one of the index leaders.

Online customer satisfaction can fuel sales in the offline channel as well, he continued.

ForeSee's Multi-Channel Value Index, which includes 33 of the retailers in the Top 40 research, projects the contribution of Web sites to sales through any channel. On aggregate, the MCVI score has increased 2.6 percent since the holiday season, indicating that retailers are more effectively using the online channel to drive overall sales during the non-holiday season than during the holidays.

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