Study: Online Holiday Shopping Improves Over Last Year

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Ninety-two percent of attempted holiday purchases over the Internet have been successful this season, according to the results of Andersen Consulting's second annual U.S. e-fulfillment study.


E-tailers and retailers have made buying over the Internet easier, quicker and more reliable this year, according to the study results. This compares with last year's e-fulfillment study results, which found that upward of 25 percent of attempted online holiday purchases were unsuccessful.


"This study, conducted for the first time during the 1999 holiday season and again in 2000, shows that online holiday purchases are a better option for shoppers this season compared to last season," said Robert Mann, associate partner at Andersen Consulting. "The study suggests that online U.S. e-tailers learned from their mistakes last year, developed strategies to address e-fulfillment and supply-chain issues and, more importantly, improved their execution, making great improvements that consumers will value."


Participants in this year's study attempted to place 563 orders at 97 Web sites. To conduct the study, Andersen Consulting's supply-chain group provided 15 of its professionals with a credit card number. All orders, ranging from books and toys to clothing, were placed over a seven-day period at different times of the day and were delivered either to Atlanta, Chicago or San Francisco.


Participants were able to complete 517 of the 563 orders placed. While that meant 8 percent of online purchase attempts failed, it is much improved over the 25 percent failure rate reported last year. Among the reasons for the failures were that some sites could not take orders, some crashed, some were blocked, and some were under construction or were otherwise inaccessible.


The 1999 study found that e-tailers' Web sites provided a higher service level than those of traditional retailers or catalog companies. This year's study, however, showed that retailers and catalog companies are closing or have completely closed the service level gaps found last year. For example:


( Retailers' sites still take longer to place orders compared with e-tailers, but the gap has closed from three minutes last year to only a minute and a half this year.


( Last year, e-tailers did a better job than retailers of telling consumers when products were in stock, by about 5 percentage points. This year, retailers are one point ahead of e-tailers. Both are about 95 percent reliable in having the stock they promise.


"E-retailers are being very careful to make sure consumers are more aware of deadlines, even at the risk of losing a sale. They want to be sure they can guarantee delivery rather than try to push the date," Mann said.


"For example, the majority of Web sites surveyed in the 2000 study indicated that lead times for standard shipment modes are averaging nearly 10 days compared to claims of about five days last year. Web sites are reminding consumers that Christmas is on a Monday this year, which may increase the need for late shoppers to pay extra for express shipping."


The study also found that roughly 40 percent of sites charge sales tax, despite the continued congressional moratorium on taxing Internet sales. More than 50 percent of retailers' sites charge tax, while less than a fourth of e-tailers do.


"Ultimately, the success of the [business-to-consumer] model is a function of the reliability and economy of product fulfillment," said Jeff Luker, global managing partner at Andersen Consulting's retail practice. "Successful e-tailing depends not only on attracting demand to the Web site, but on a brand's ability to respond to this demand and create a consumer experience that drives repeat business. In short, retailers must deliver on their promises."


Mann said, "Even though e-tailers have made great strides in 2000, they still have work to do to improve the customer experience and better serve the procrastinator. Placing orders 10 days before Christmas leaves a lot of last-minute shoppers at the door. Consumers should shop as early as possible, pay close attention to delivery dates and be prepared to pay extra for shipping if they wait too long."


Andersen Consulting, the $8.9 billion global management and technology consulting organization, will change its name to Accenture on Jan. 1.
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