In its second-largest acquisition, Amazon buys the company for $970 million.
Profitability is within web retailers’ grasp if they can satisfy consumers at each stage of the purchasing process.
Consumer expectations are rising faster than most web retailers’ ability to respond effectively. Yet profitability is within the grasp of the best of them if they can satisfy consumers at each stage of the purchasing process. So says a new report just released by the Boston Consulting Group. "The building awareness through traffic model is dead," says Peter Stanger, vice president and head of BCG’s b2c topic area, North America. "There’s no path to profitability without significant enhancements to each phase of the customer experience." By the end of 2000, the U.S. online purchasing population had grown to 68 million consumers, the survey found. One in five expect to migrate at least half of their spending in each of six major product areas – leisure travel, event tickets, music and video, computer software, books and computer hardware – over the next five years. Those projections could be curtailed, however, by consumer’s growing intolerance of a less than satisfactory shopping experience. A total of 41% of consumers surveyed who experienced a purchasing failure on a web site said never shopped at that site again. "In a way, it’s the end of an era," says Michael Silverstein, senior vice president and global leader of BCG’s consumer practice. "The first era was shoppers saying they’d take whatever web sites give them because it was so much fun to shop online. Now, it’s high-stakes poker."
The gap between retailer performance and consumer expectations has a bigger compounding effect than most retailers realize. The BCG survey found that the least satisfied shoppers spent, on average, $428 online in the past year, while the most satisfied spent an average $673. There also was a near-perfect correlation between consumers’ satisfaction with a site and their likelihood to both return and recommend it to others.