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Online Shoppers a Bit Less Satisfied This Year

Kim Hart

Online shopping has become a staple of the holiday season, but customer satisfaction with e-retailers dropped slightly by about 1 percent this year. On top of that, online retail sales grew at a slower rate than in previous years.

Netflix topped the list in customer satisfaction for the third year in a row, according to ForeSee Results, which measured customer satisfaction with 40 online retailers. It's the first time satisfaction has dipped since the Ann Arbor, Mich., firm started tracking it three years ago.

Amazon came in second, followed by QVC, L.L. Bean and Apple.

PC Connection, CompUSA, OfficeMax, SonyStyle.com and Overstock were among the lowest scorers. Costco, Avon and Zappos.com showed the most improvement over last year.

Overall, Internet sales from Nov. 1 through Dec. 21 hit $26 billion, up 19 percent, the slowest rate of growth ever, according to comScore Inc., which tracks online shopping data and Internet traffic. Internet sales growth in 2006 for the same period was 25 percent.

Netflix consistently ranks so high on the satisfaction scale every year partly because the majority of people visiting the site are already customers, and therefore loyal to the site, said Larry Freed, author of the report. But the online movie seller is still a model of branding and pricing, he said.

Amazon excels at making sure merchandise is available and easy to find, but it falls behind in the pricing area--it's not always the cheapest place to get what you want, he said. Nevertheless, Amazon reported it's strongest holiday sales ever this year. Internet purchases from Nov. 1 through Dec. 21 increased 19 percent from a year earlier to $26.3 billion, according to comScore.

In general the companies that solely cater to Internet customers are more successful than brick-and-mortar stores. While online retailers can focus entirely on the Web experience, companies with traditional storefronts have to appeal to traditional mall-shoppers as well as the Internet crowd. Compared to last holiday season, online shoppers are 7.5 percent less likely to buy offline from the retailer in the future, according to the report.

Even with a dip in growth, online retailers did fairly well in the face of a dismal holiday retail season and an unstable economy. Freed said it's the first year e-retailers haven't tried something new and innovative to lure customers. In the past, companies have poured energy into posting product reviews and improving product images.

Freed said he's noticed that online consumers are increasingly turning to shopping comparison search engines, such as Shopping.com and Shopzilla.com, to research products and companies before buying. But, for the most part, these search engines are not driving a lot traffic to the stores.

Improving the site experience--keeping shipping costs consistent and having reliable inventory, for example--goes the farthest in increasing customer satisfaction. It's even more important than price, Freed said.

"It's about where we have confidence and where we have been treated right," he said.

By Kim Hart  |  January 3, 2008; 7:00 AM ET  | Category:  Kim Hart
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They didn't buy Zunes!

Posted by: StevenBallmer | January 3, 2008 9:12 AM

... or Vista!
http://fakesteveballmer.blogspot.com

Posted by: stevenBallmer | January 3, 2008 9:13 AM

I don't understand the following paragraph:

"Netflix topped the list in customer satisfaction for the third year in a row, according to ForeSee Results, which measured customer satisfaction with 40 online retailers. It's the first time satisfaction has dipped since the Ann Arbor, Mich., firm started tracking it three years ago."

Is "it" in the 2nd sentence referring to Netflix? Or is "it" referring back to the previous paragraph?

Posted by: Don L | January 3, 2008 9:23 AM

I think the "it" is referring to "satisfaction" earlier in the same sentence.

Posted by: Chris | January 3, 2008 9:57 AM

I always try to compare prices on Pricegrabber.com. Oftentimes the lowest price will beat anything I would have found on my own and I do end up buying from that merchant, provided it has a good customer satisfaction rating.

Posted by: roger | January 3, 2008 10:41 AM

Shopped Bloomindales By Mail catalogue. Received the order yesterday. One out of two items was wrong. Tried to call the toll free # to see if correct item was still available. Waited, waited, waited---20 minutes. Called back 3 more times. Same deal. Went online to their "website". It's just a list of other websites! No way to contact them. They lost a customer.

Posted by: Lisa | January 3, 2008 12:13 PM

Lowest price doesn't always mean that that vendor is the cheapest. You need to see what the shipping charges end up being before you commit to purchasing. Some on-line retailers advertise low prices but then sock you in the wallet for shipping the items.

Posted by: Alan | January 3, 2008 3:23 PM

Shipping is not the only thing that is commonly added, which is why so many price portals include that information as well as taxes in their "lowest price" calculation. Some call it "best price" or whatever. So yeah, once you have that, lowest price is cheapest.

Posted by: lowest price | January 4, 2008 1:57 PM

Lisa, you never went to Bloomingdales's website. You fell prey to traffic mongers who squat on typos. The name of the store has a G in it after the N and before the D.

www.bloomingdales.com

Posted by: BloominGdales | January 4, 2008 2:01 PM

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