Consumers Less Satisfied With eBay and Amazon

Customer satisfaction with e-commerce moguls Amazon.com and eBay has eroded in the last year, according to the University of Michigan’s American Customer Satisfaction Index (ACSI). The ACSI is a closely watched barometer of consumers’ brand perceptions, including those of online retailers.

The ACSI results, which are released annually, show overall satisfaction with online retail brands fell 4.8 percent in the last year, the first decline since the category was added in the Index in 2000. That’s the largest drop among the four e-commerce subcategories tracked by the index, including retail, online travel, auctions, and brokerage.

Most prominently, Amazon dropped 4.5 percent from 88, one of the highest scores ever measured in the ASCI 10-year history, to 84. For its part, eBay, in the auctions subcategory, fell 4.7 percent from 84 to 80.

“E-retail is undergoing a fundamental shift as some of the industry heavyweights move away from their core focus,” said Larry Freed, chief executive of ForeSee Results, which commissioned the study. “Some of the best-known brands are changing business models and changing relationships with their customers. It’s tough to do that without eroding satisfaction.”

The ACSI is conducted by the University of Michigan’s Ross School of Business. The e-commerce portion of the study is done in partnership with ForeSee Results, an online customer satisfaction management concern. The ACSI surveys visitors of measured Web sites, using a formula that weights aspects of the online experience according to what most influences customer satisfaction and behavior.

Freed attributes Amazon’s drop in customer satisfaction to its gradual transformation from a book and music retailer to an aggregator of a wide variety of goods, including electronics and apparel, from multiple vendors. That expansion, designed to grow overall revenues for the company, in itself functions as a kind of rebranding that can confuse customers.

“Companies like Amazon obviously want to broaden their offerings so they can increase revenue,” said Freed. “They can stand to take a hit in customer satisfaction if they don’t lose too much ground and make up for it by increasing sales volume. The challenge is to maintain a high level of customer satisfaction as they expand their market.”

eBay’s decline in customer satisfaction is also the result of changes to its business model, Freed said. Although still effectively an online auction site where individuals sell goods to other individuals, eBay has been ramping up the number of small businesses that sell goods on its site. That move puts eBay into more direct competition with companies such as Overstock.com, which recently added online auctions to its product offerings, he added.

Diversification also puts companies such as Amazon and eBay into growing competition with traditional retailers operating both on- and offline, Freed said.

“Amazon is not only changing its model, it’s also getting into more complex merchandise categories where consumers like to use a range of shopping channels,” Freed said. “This could be an issue for Amazon going forward, as people don’t have any options beyond the Web channel.”

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