The Checkout

E-Tailers Beat Bricks and Mortar in Customer Satisfaction

When it comes to customer satisfaction, online retailers beat the traditional brick-and-mortar stores, hands-down. In fact, customer satisfaction with e-tailers is nearly 12 percent higher than the overall retail industry. That's just one of the many findings being released today by University of Michigan business school in its latest quarterly study of how thousands of customers rank their experiences with about 200 companies.

Every quarter, the American Customer Satisfaction Index focuses on different segments of the economy. This quarter it's retailers, finance and insurance and e-commerce. Here are some of the key findings:

By far the sector with the greatest satisfaction was online retailing, with companies posting an overall score of 81, considerably higher than the bricks-and-mortar retailers, whose overall score was 72.4. All the online retailers had scores far higher, with Amazon leading the pack at 87. That's still down from its high score of 88 in 2003, but an improvement from last year's 84 grade. Sharing the top 87 score was barnesandnoble.com.

By comparison, the best score by a traditional retailer was 80 by Kohl's, followed by J.C. Penney and Target, which both posted scores of 78. The lowest ratings to a department/discount store went to Wal-Mart (72) and Kmart Corp., now combined with Sears (70). That's a one-point drop for Wal-Mart from last year, but a three-point gain for Kmart.

"E-retailers used to be at a disadvantage because customers can't touch and feel their products, but they've figured out that there's a whole lot more they can offer to make up for that," said Larry Freed, president of ForeSee results, an online customer-satisfaction management company that teamed with the University of Michigan's survey.

For specialty retailers, the highest score (79) went to Costco, while Home Depot posted the lowest (67), a 6-point drop from last year. "Home Depot's state of the art quality techniques are more focused on internal systems for operational efficiency and productivity," said Jack West, a past president of the American Society for Quality in a statement that came with the report. "These things are largely transparent to the consumer and would take awhile to be reflected in perceived quality ratings, if they're ever noticed by the consumer at all."

On other online sites, ebay still posts the highest score for an auction site--81--but it's down from a high of 84 in 2003. Even so, it's substantially in front of other auction sites, including uBid (73) and priceline (72). Expedia had the greatest score increase in the online travel category, up to 79 from 76 last year, making it the clear leader over Travelocity (75) and Orbitz (74), which both posted drops in customer satisfaction.

As for banks, Wachovia posted the highest score (79); Wells Fargo, the lowest (67).

Why should these scores matter? As we all know personally, the more satisfied customers are, the more likely they are to return to that store and even increase their spending.

By  |  February 21, 2006; 9:00 AM ET Consumer News
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Comments

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One of the big upsides to online retailers is that many of them have figured out all your potential questions and made it fairly easy to find answers without ever having to talk to anyone. That often beats a bricks-and-mortar where the aptitude of the sales person helping can vary widely, and you might get two different answers if you asked two different sales people.

Maybe every bricks and mortar should start posting a huge FAQ on one wall of the store. It would probably be more helpful than many of their employees.

Posted by: Justin | February 21, 2006 12:57 PM

I don't trust customer satisfaction surveys. Especially when it comes to online retailers. I find that people who rate their satisfaction higher do so because they don't expect much or brand recognition. Not necessarily actual compentancy. Their expectations in a B&M retail store are much greater. Also, In B&M retail there are more things that a customer can be disatisfied with than online. But that doesn't necessarily mean the online experience is better.

Take Amazon. I find Amazon is one of the worse e-tailers I deal with. And I shop online a lot for bargains. They haven't updated their interface in years. Their sorting methods are atrocious, especially with the confusion between their z-shops, 2nd tier, and Amazon itself.

Here's an example of my last two purchases with Amazon. I placed one order from an etailer that proudly proclaimed free shipping. But I was charged $14 for shipping. When I inquired, I was told I was charged since I didn't place a proper coupon code. But when it mentioned free shipping, it didn't mention any coupon code. This was through one of Amazon's z-shops, where the quality of custoemr service can vary greatly.

Then I place an order directly from Amazon last week that was supposed to come with a pre-order bonus in the "Digital Locker." The bonus was a software key that came with free game play time. Amazon gave me a used key. I wrote back to customer service but by the time they responded and supplied me a new key, the free play period was over.

Now, I'm not listing this to be down on Amazon. I've placed some orders that were real bargains. But I have a higher incidence of problems with Amazon than nearly any other retailer I order from online. From minor things like bizzare shipping dates to major problems like charge errors. So it absolutely baffles me that Amazon is rated so highly.

Now some may argue that I'm just having a spate of bad luck with Amazon. And I'm sure we'll see a ton of posters who talk about how great their service from Amazon has been. But I often also find, that those who are high on Amazon, only shop on Amazon, and rarely ever shop around. So they have very little to place their comparisons on. Why go anywhere else when Amazon has everything?

Then there is brand loyalty. Brand loyalty can be a powerful thing. People will give a company a pass just because of the name on the label. And Amazon is one of the best known internet retailers.

Here's another comparison. I placed an order at Overstock,.com which was a price mistake. They cancelled, but gave me a $5 cioupon. A month later I placed a similar order at Buy.com. They cancelled, and also gave me a $5 coupon. I placed a similar order at Amazon.com and they also cancelled my order. But they didn't send me squat. This occured during my pre-christmas shopping.

I do a lot of online shopping. A lot. All the incidents I'm listing have occured in the last five months or so. And I just don't think my experience is atypical. It's just that I notice it and actualy hold the company responsible for it. Where a lot of shoppers just aren't very savvey.

Posted by: Dave | February 21, 2006 1:32 PM

My experience with Amazon.com: Excellent prices, no sales tax, no shipping charge, never a late delivery, never a wrong delivery, never a billing error. I limit my purchases to items offered directly by Amazon.com, rather than their partners.

Before I bought a digital camera at Amazon.com, I gave a locally owned camera store a chance to match their price, and they wouldn't. They didn't even come close.

When I buy something from Circuit City, I order it online, and pick it up at the store, so I don't have to talk to a salesperson.

Most bricks-and-mortar salespeople have very little product knowledge. Their expertise is in pushing high-profit service contracts and unneeded asessories.

Posted by: John Johnson | February 21, 2006 2:03 PM

I agree -- this isn't too hard to understand. When was the last time you went to brick-and-mortar store, did't have trouble getting into the parking lot/finding a place to park, found a cart with a non-wobbly wheel, walked in without having to dodge several people congregated around the door just standing there, were able to easily manuever to the aisle where the product you wanted was (or were able to easily find it), the store had it in stock in a box that didn't look like an 18-wheeler ran it over, got it to the checkout without dodging a bunch of kids running around, didn't have to wait in a line to purchase it, were able to get it out of the store and in your vehicle with no hassle, were able to get out of the parking lot with no trouble, and then get it back out of your car and into your house without a problem? I'm happy to wait 5 days for a non-essential or "luxury" item if I don't have to do that.

Plus, I don't have to talk to someone who knows less about just about anything than I do.

Maybe that sounds snotty, and maybe I shouldn't expect great service if I get low prices from a minimum-wage employee, but that's my take.

Posted by: Bob Turney | February 21, 2006 3:45 PM

I looked at the website for the results of the ACSI survey. It seems like there really isn't enough data to use this as a comparison between retailers. Very few retailers have specific ratings. It is useful only as an overall barometer of the consumer experience.

Posted by: David Moore | February 21, 2006 4:14 PM

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