Poor online retail performance needs to be addressed, despite continued industry growth; a 32 percent problem rate from the holiday season hasn't been fixed.
Posted Mar 30, 2007
News Update: Forrester Research briefly took its report out of circulation in order to restate certain facts and figures. The changes are reflected here as of April 24, 2007.
About a third of online shoppers reported problems or dissatisfaction with the e-commerce experience during the 2006 holiday season. Service issues ranging from poor site performance to limited stock availability plagued shoppers at sites both big and small. Many of the problems are nothing new, nor are they impossible to solve, and something must be done, according to "The Big, Ugly Obstacle Holding Back E-Commerce," a report by Sucharita Mulpuru, senior analyst for retail with Forrester Research.
The problems online shoppers encountered during late 2006 and, by extension, still encounter every day, span the whole of the e-commerce channel. The most common difficulty cited by the 32 percent of respondents who reported problems was shipping delays, accounting for 37 percent of respondents. Backordering and lack of available stock came second, with 35 percent of respondents noting the complication. Sluggish site performance was tagged in 22 percent of responses. Other notable issues included difficulty tracking packages and mismatch between the online depiction and the actual item (each 12 percent); Web site freezes and undesired order cancellations (9 percent each); unhelpful or unresponsive customer service (7 percent); and several others.
According to the study, most of the operational problems were avoidable. "Weaknesses appeared in seemingly obvious elements of the customer experience, such as poor FAQ pages and sluggish Web site performance," the report states. "However, merchandise stock issues and the timeliness of product shipments topped the list of concerns." Average satisfaction with the five groups of retailers Forrester examined was 65 percent, with online retailers scoring highest. The percentage of shoppers who said they were satisfied or very satisfied with those sites was 81 percent. Specialty retailers scored lowest, achieving those top two ratings only 59 percent of the time.
"The problem is with where retailers are focusing their attention and spending online," Mulpuru says. "So much is spent on marketing and merchandising the site, but there's a huge gap in the area of Web-site operations." By ignoring the issues at hand, Web retailers are setting themselves up for lower lifetime value of customers and lower Net Promoter scores, either of which could ultimately cripple a business. "I don't know of any other place where 30 percent of customers or more report problems and it's a good thing," Mulpuru says.
The solution, Forrester recommends, is to accept the existence of Web-operational problems as the first phase of recovery. "Like any pathology, poor Web-site performance can be cured with the appropriate therapeutic remedies," the report states. "Lapses happen to everyone--even the most venerable brands--and the best way to cope is to acknowledge that they happen and create an action plan to quickly identify future problems and resolve them."
While the long-term goal for a business should be to shift its culture to embrace and act on key customer metrics, the report suggests the following as quick fixes to start the process:
Start measuring. Key Web site metrics should be part of every executive's dashboard. As retailers look at sales multiple times per day and examine how well a paid search campaign is performing, they should also constantly monitor a slew of metrics, such as site performance in different regions and technical issues at call centers, which can alert the team to errors.
Start benchmarking and sharing. Even when companies have Web site performance metrics, they often are not shared with other parts of the organization because distribution centers are located remotely or because executives simply do not have sufficient operational backgrounds to interpret the data.
Focus on what counts. While download time is critical, it is also important to recognize which metrics need improvement and which ones are good enough. Some metrics, such as download time, are acceptable at the benchmark average. Others, such as improved fill rates, can drastically affect customer satisfaction and long-term customer value.
Incorporate more visibility around fulfillment and shipping. As issues surrounding fulfillment are a particularly sticky thorn for consumers, it is essential for retailers to overdeliver on this aspect. Free shipping is an obsession, but quality control in the package delivery process is almost as important.
It's not enough for a company to say it embraces improving customer experience--it has to put new approaches into practice with fervor. "Companies like NetFlix and Amazon are religious about it," Mulpuru says. "They have such good customer service that their reputations for it have driven their success."
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