Online Retailers Slow to Satisfy, Study Finds

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Internet retailers in the United States spent $460 million this year on Web services in an effort to meet the needs of savvier online consumers, according to research conducted by Datamonitor, London, a business research company.


However, the U.S. online retail industry -- as well as its European counterpart -- has still seen a high percentage of customers abandon their shopping carts due to poor customer service.


Datamonitor compiled its multinational report from a variety of sources. These include survey results from 2,000 international consumers, company database studies and grass-roots interviews with online vendors. The database studies were conducted with firms from the United States, France, the United Kingdom, Germany, Sweden and Spain.


The research found that 8.7 percent of attempted online transactions were abandoned this year because of customer service problems, up from 7.8 percent last year.


"It's not as if online retailers have not taken steps proactively to resolve customer service problems, particularly in wake of last year's really horrible holiday season," said Glenn Koser, an analyst at Datamonitor. "There have been new e-service systems and software put into place, but the technological innovations either could not effectively meet all the customer needs or the customers' needs have shifted to areas that went beyond what the software currently offers."


Koser said online retailers are failing to meet consumer demands, in part, because of an ever-growing Internet population in the United States, which jumped from approximately 40 million households online in 1999 to more than 50 million this year. In addition to the increase in volume, he said, consumers are becoming more knowledgeable and are expecting better customer service.


"They know what to look for, and they know what to anticipate," he said. "They know where the problems have been, and they're not going to put up with poor customer service."


Koser added that traditional retailers are likely to "emerge as the leaders" in providing quality customer service online because of their "experience in the brick-and-mortar environment." In contrast, pure-play dot-coms are faced with the challenge of proving themselves to capital investors this holiday season, he said.


"If [pure-play dot-coms] do not produce or do not show that they can be profitable or provide the customers with what they're asking for," Koser said, "that capital investment is not going to be made available to them next year."
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