Satisfied Online Shoppers Adding Up

Susan Hall

Updated · Jun 07, 2005

Online sales are booming. But even the top-grossing e-tailers may be leaving money on the table, a study reported on Wednesday.

“You can have strong online revenues but if you're not engaging site visitors in the way they want, you are leaving money on the table — and for some of these retailers it's worth a lot of money,” said Larry Freed, an online satisfaction expert and CEO of ForeSee Results.

ForeSee produced the study of the 40 top-grossing online retailers with FGI Research.

Freed said customer satisfaction is a good indicator of the growth potential for the Internet channel. “When you look at a company's financials, it tells you what has happened,” Freed said. “Satisfaction gives an indication of what's going to happen.”

ForeSee used the methodology of the University of Michigan's American Customer Satisfaction Index (ACSI) to assess the satisfaction of shoppers using the top sites. It found a gap of nearly 30 points in customer satisfaction between the top-rated sites and the ones at the bottom.

The top-rated company was DVD rental company Netflix, with an 85 ACSI score; it ranked 17th in terms of online sales. Tied for second place were bookseller, the top seller online, and, the Internet arm of the TV-shopping channel, both with ACSI scores of 84.

The worst-rated online retailer was KMart, with a score of 69; the discount store also was 36th out of 40 in terms of online sales. rated only slightly better at 70; it was 26th in terms of sales.

Freed noted that in terms of total retail sales, Costco is near the top.”Online satisfaction is quite low in comparison,” he said. “This is a company that has a great opportunity in front of them. Consumers love Costco, but when they go online, they're getting less than average performance.”

If Costco can improve the online experience, he said, it could grow its revenue significantly.

Freed said that, despite predictions that comparison-shopping and price-finding services would slice e-commerce margins razor-thin, price is seldom a very significant factor in whether people like an e-commerce site. Customer-satisfaction issues are accelerated online, he added.

“In an online environment, if I'm not getting what I need, I am going to go to another site at exactly that moment,” he said. “If I'm physically at Wal-Mart, to go to a Target is somewhat of an effort.”

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