E-Commerce Gets Some Satisfaction
Customer satisfaction with e-commerce in 2005 was back on the upswing, after having experienced a slight downturn in 2004, according to findings released Tuesday in the annual American Customer Satisfaction Index (ACSI) E-Commerce Report. ForeSee Results uses the University of Michigan's ACSI methodology, which includes site users' likelihood of using a site again or recommending it to other users, to determine rankings based on a 100-point scale.
E-commerce's ACSI score experienced a 1.3 percent boost from Q4 2004's 78.6, to Q4 2005's 79.6. This figure is higher than the national aggregate ACSI of 73.5, but it's lower than e-commerce's Q4 2003 score of 80.8. "Customers' standards for e-commerce sites continue to rise as the industry matures, and online companies have struggled to keep up with industry leaders and high customer expectations," writes Larry Freed, president and CEO of ForeSee Results.
The report segments e-commerce into four subcategories: e-retail, online auction, e-brokerage, and online travel companies. While the retail channel's overall Q4 2005 score of 72.4 represents a 0.3 percent slide from 2004, e-retail's score actually grew 1.3 percent to 2005's 81. At this stage in the e-commerce evolution, online retailers have overcome the challenge of selling tangible products in a virtual world, according to Freed. The convenience and ease of use of the online channel also had a hand in the uptake of customer satisfaction.
Two companies within the e-retail group, Amazon.com and Barnes & Noble, tied for the highest satisfaction score among all e-commerce companies with 87. This represents a 3.6 percent increase for Amazon and an unchanged score for Barnes & Noble, compared to Q4 2004 ratings.
The online auction segment pulled in an ACSI score of 78, up 1.3 percent, thanks in large part to the success of Ebay, which led this category's leaders with a rating of 81, up from 80 in Q4 2004. "When people think online auctions, people think [Ebay]. That's a tough hurdle for any competitor to clear," Freed said in a statement. He adds, though, that as the e-auction giant increasingly competes with traditional retailers and e-retailer heavyweights like Amazon and Overstock.com, "it's more likely that the real challenge to [Ebay] will come from other online titans like Amazon and Google instead of from other online auction companies." UBid received an ACSI score of 73, the same as fourth quarter 2004, and Priceline.com received a score of 72, down 1.4 percent from fourth quarter 2004's 73.
Online brokerage sites, however, have yet to take full advantage of the Web, according to the report, indicative of its aggregate score of 76, the lowest of the four sectors. Freed attributes the lack of widespread adoption and the sector's satisfaction levels to a handful of factors: consumer wariness resulting from extensive media coverage of phishing and lost financial data, and preference for guidance when making investment decisions. "In effect, online brokerage today is where e-retail was five years ago," Freed writes. "Until the industry figures out how to overcome the barriers to moving online, the online brokerage category will struggle to increase satisfaction of its customers."
Still, the sector's ACSI aggregate score did increase 1 point, with the All Others category leading the way with a score of 79, up from Q4 2004's 78. This is followed by Charles Schwab, which rebounded from its Q4 2004 skid to experience a 4.2 percent increase to 74. Etrade Financial increased from Q4 2004's 70 to Q4 2005's 71.
The aggregate score of online travel sites increased one point to 77. Both All Others (2.6 percent increase) and Expedia (3.9 percent increase) received a score of 79. However, Travelocity and Orbitz both slipped one point to 75 and 74, respectively.
"E-commerce has greatly evolved over the past few years, leading to clear differentiation between the leaders and laggards in most industries," writes Freed. "While there's no one formula for success, customer satisfaction is always a focus for any company that is successful over the long term."
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