February 20, 2007
By Coreen Bailor, (former) Associate Editor, CRM Magazine

Online Shopping Picks Up Steam

Customer satisfaction with e-commerce increased for the second consecutive year, narrowly falling short of its all-time high, but easily outpacing customer satisfaction with offline retail, according to the latest ACSI E-Commerce Report. The report, unveiled today by the University of Michigan and ForeSee Results, measures customer satisfaction across four subsegments: online retail, online auction, online brokerage, and online travel companies. ForeSee Results uses the University of Michigan's ACSI methodology, which is based on several factors such as site users' likelihood of returning to the site or recommending it to others, to determine rankings based on a 100-point scale. E-commerce experienced a 0.5 percent year-over-year increase from 2005's 79.6 to clock in a score of 80, just eight-tenths of a point shy of its all-time peak in 2003 and 7 percent stronger than the national ACSI aggregate score of 74.9. There has been serious emphasis placed on improving the online shopping experience by adding features like product reviews and providing better images, product specifications, and product comparisons, according to Larry Freed, president and CEO of ForeSee Results. "The online experience has really closed the gap [between] the offline shopping experience and that has allowed the scores to continue to remain high in an environment where the standard that consumers have continues to rise," he says. The e-retail subcategory continues to lead the pack in satisfaction, tallying an aggregate mark of 83, up 2.5 percent from 2005's 81. Amazon.com and Barnes & Noble last year both received a score of 87, tying for the highest satisfaction score within e-retail and the entire e-commerce industry. Both sites continue to pull in impressive ACSI scores, but this year Barnes & Noble surpassed Amazon.com, albeit just barely: Barnes & Noble grabbed an 88, Amazon an 87. Other sites that placed in the e-retail evaluation include Buy.com (81) and 1-800-Flowers.com (77). Customer satisfaction with auctions was unchanged (78). Not surprisingly eBay (80) continues to dominate the category, despite suffering a 1.2 percent year-over-year decrease from 2005's 81. "What's interesting is eBay is competing more and more with the Amazon.coms of the world and that's a challenge for them," Freed says. "The eBay business model is more about putting a buyer and seller together, not taking a lot of responsibility for the transaction, where Amazon.com is taking much more ownership for the transaction. From a customer service standpoint that puts it in a better position than eBay." The online brokerage subsector realized a 2.6 percent increase in satisfaction, from 2005's 76 to 2006's 78, led by The Charles Schwab Corporation and new entry Fidelity (both tied with 80). Charles Schwab also made the biggest improvement among all companies that placed, growing its ACSI score 8.1 percent from 2005's 74. The online travel industry was the only space that suffered a drop; its 2006 score of 76 represents a year-over-year decrease from 2005's 77. Expedia had the highest satisfaction score (78), followed by Orbitz (75) and Travelocity (74). When online travel aggregator sites started off "[they] really were unique in that they gave you the ability online to look across many, many providers--hotel properties, airlines, and so on--and also created a very strong price equation," Freed says. "As time has evolved they're getting pressure from the hotels, the airlines, and others, that are aggressively trying to create loyalty between the user and them, not between the user and an online agency." Freed adds they're also facing pressure from airlines and hotel companies offering things like lowest rate guarantees, and travel search engines like Kayak.com and Sidestep.com that allow customers to purchase directly from hotel providers, airlines or other providers. "The 2006 ACSI E-commerce scores show that the industry as a whole is keeping pace with consumers' rising standards and effectively delivering a satisfying online experience," Freed writes in a statement. "It's easy to take this high level of performance for granted, but maintaining it takes commitment to continued improvement and to listening to the customer, because constantly rising expectations demand increased excellence from year to year." Related articles: E-Commerce Gets Some Satisfaction

Customer Satisfaction Loses Its Grip Retailers Are Becoming More E-Savvy