Online Customer Satisfaction Beats Out Brick & Mortar

Almost all (96 percent) of those consumers who purchased holiday gifts online last year intend to do it again this year, according to a study by The Boston Consulting Group (BCG) and Harris Interactive, even though more than half of them experienced a purchase failure last year.

According to Michael Silverstein, BCG Senior Vice President and leader of the firm’s Consumer Practice, last year’s online shoppers are willing to give it another go this year, and they even plan on spending more, but they will avoid sites where they had problems in the past. Bad news if you had problems handling orders last year, good news for other retailers. “Despite the navigation and fulfillment issues, consumers see the online channel as a convenient and accessible place for easy, no-pressure shopping,” Silverstein said.

More than one-quarter (27 percent) of consumers who experienced a purchase failure during last year’s holiday season said that they would not return to the offending Web site to buy a holiday gift this year; 25 percent said they would never return to the site at all. The stakes are even higher for online retailers with offline components. More than two-thirds of a multichannel retailer’s online customers also shop at the retailer’s brick-and-mortar store or catalog. Customers who have a bad experience online may be deterred from shopping through the retailer’s other channels as well.

“High customer satisfaction over the holiday season will not be achieved by providing free gift wrapping, gift registries, and product recommendations,” said BCG VP Peter Stanger. “Nor will it be driven by providing competitive pricing and online security — all retailers have to offer this just to be in the game. Holiday shoppers will be looking for retailers who provide fast, reliable delivery, offer flexible and easy returns, and never say that they won’t be able to ship an item because it is out of stock.”

Someone must be doing something right, because the latest findings of the American Customer Satisfaction Index (ACSI) found that customers are more satisfied making retail purchases online than they are shopping at traditional brick-and-mortar stores. Online retail earns a score of 78 on a 0 to 100 scale, higher than the 72 scored by traditional department and discount stores. scores an 84, higher than offline leader Costco’s 79.

The ACSI, which is produced by a partnership between the University of Michigan Business School, the American Society for Quality, and the CFI Group, added 13 e-commerce companies including portals, brokerage services, retail, and auctions to the Index. ACSI is updated on a rolling basis with two economic sectors measured each quarter. E-commerce is being treated as separate sector.

Among the companies added to the Index are Internet heavyweights such as, Charles Schwab, eBay, Yahoo, and E*Trade. Brands that have become synonymous with the Internet, at least partly, because their customer service has been good enough not to drive potential repeat customers away. That leaves plenty of smaller online retail operations without the staff or infrastructure to support customers that are capable of bringing online customer satisfaction down.

Nevertheless, consumer satisfaction with online retailers appears to be getting better. According to cPulse, 48 percent of post-purchase consumers were very satisfied overall with their site experience in Q3 2000, compared to 40 percent in Q2. The percentage of post-purchase consumers who say they are very likely to purchase again from e-commerce sites rose from 40 percent in Q2 to 46 percent in Q3.

The exception to this trend is found in retailers of complex, knowledge-intensive, high-priced products (high-risk purchases). For these sites, consumers’ likelihood to repurchase fell from 23 percent in Q2 to 18 percent in Q3. For high-risk-purchase sites, satisfaction with customer support was very low. Fifty percent of respondents were dissatisfied compared to only 27 percent dissatisfied for the overall commerce industry.

Echoing the opinions of BCG’s Stanger, cPulse found the biggest advantage cited by consumers who were primarily online buyers was convenience, not price or selection.

Customer Preference to Online or Offline Shopping
Based on response to following question:
“For each of the following categories, if an item is easy to buy both offline and online, I would:”
Apparel Electronics Travel Books/Video Groceries Investing
Always/Mostly Buy Online 5.1% 14.1% 29.8% 28.9% 1.9% 17.9%
Buy Equally On/Offline 21.5% 27.6% 22.8% 34.9% 5.8% 14.1%
Mostly Buy Offline 34.8% 26.3% 17.3% 22.7% 15.2% 13.7%
Always Buy Offline 38.5% 32.0% 30.1% 13.4% 77.2% 54.2%
Source: cPulse

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