Reports suggest consumers will continue to spend online with retailers that provide significant discounts and a hassle-free experience, even during a recession.
One day after Amazon defied gloomy sales forecasts by calling the 2008 holiday season its "best ever," a new report ranks the online retailer as number one in customer satisfaction among Web sites for the time period.
Taken together, the two reports suggest that consumers will continue to spend their money online with retailers that provide significant discounts and a hassle-free experience, even during a recession.
The Top 40 Online Retail Satisfaction Index, released annually by ForeSee Results and FGI Research, said consumers gave Amazon a satisfaction score of 84 out of 100, which is 10 points higher than this year's average score of 74. Netflix also scored an 84, though each of the 38 other sites ranked received scores below 80. A quarter of the sites received scores under 70.
Larry Freed, CEO of ForeSee Results, said the sites that scored highest were those that made shopping online simple and easy -- and offered the deep discounts in prices consumers were looking for this season.
"Expectations were high" this year for discounts, he said, because consumers had been told to expect bargains due to the souring economy. "In other years, people would have hurried up and ordered something because they were afraid [the retailer] would run out of the item. But people didn't have that fear this year. People just waited" until the price bottomed out, he said, benefitting those sites that offered the best deals.
According to ForeSee, a customer-satisfaction measurement company based in Ann Arbor, MI, a satisfied online shopper is 73 percent more likely to make another purchase online, 38 percent more likely to purchase again from that retailer offline, and 75 percent more likely to recommend the retailer to a friend.
Among the lowest ranked sites this year were The Gap, Circuit City, and Home Depot, all of which received a score of 69. The largest declines belonged to the Home Shopping Network, which dipped 9 percent, and The Gap, which fell 7 percent.
Freed suggested The Gap was done in by its new policy of allowing consumers to purchase from all three of its brands -- The Gap, Banana Republic and Old Navy -- during a single trip to any of its Web sites. The strategy, which he conceded "looked good on a press release," likely ended up eroding the three distinct brands.
"I think it backfired," he said. "These brands are very different: Old Navy is more of a value play, and Banana Republic is more of a fashion play. If you're on the Banana Republic site and, oh boy, I can go purchase something from Old Navy, the brand positioning starts to blend together, and that's never good."
The survey also revealed that online retailers relied more than ever this year on a time-tested tactic: E-mailing past customers with special deals and promos. "Retailers said, 'It's worked for us in the past, so not only are we going to do it again, we're going to do it fast and furious,'" said Freed. Precisely what impact that had with shoppers remains to be seen, however.
But as important as deals and low prices were this year, Freed cautions against reading too much into it.
Price is "not the be-all, end-all for satisfaction, even in a recession" he said. "It's much smarter for the long term to improve satisfaction through Web experience improvements than erode brand equity through price cuts."
ForeSee surveyed more than 3,000 visitors to the top 40 online retail sites, and used the University of Michigan's American Customer Satisfaction Index to calculate results.
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Douglas Quenqua is a journalist based in Brooklyn, NY who writes about culture and technology. His work has appeared in The New York Times, Wired, The New York Observer, and Fortune.
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