February 17, 2009, 12:00 AM

Newegg tops Amazon in customer satisfaction, as eBay slips

Satisfaction with online retail dropped one point, but e-retailers maintained a wide lead over the online travel and brokerage sectors in the annual American Customer Satisfaction Index survey by the University of Michigan and ForeSee Results.

Katie Evans

Managing Editor, International Research

Consumers are in a foul mood, and they took it out on the online retail and brokerage sectors in the annual American Customer Satisfaction Index survey by the University of Michigan and ForeSee Results, a company which measures satisfaction with web sites.

The overall score of online retailers fell from 83 to 82 this year on a 100-point scale, after three consecutive years of gains. Online brokerage fell from 79 to 74, reflecting consumer disenchantment with Wall Street’s dreary performance, while online travel held steady at 75. Taken together, the three industries that make up the e-commerce category in the ACSI had a combined score of 80.0 this year, down from 81.6 last year.

“Despite the drop in satisfaction, e-commerce is still one of the best-performing service sectors of the economy in all of ACSI, but it is far from immune to the challenging economic conditions,” says Larry Freed, president and CEO of ForeSee Results, which works with the University of Michigan on assessing satisfaction with the three online verticals. “It’s a tough environment to do business, but if there’s a silver lining to any of this it’s that the e-commerce sector remains strong and is well-positioned to capitalize on the benefits of satisfying customers when the economy stabilizes.”

Within online retail, computer retailer Newegg took over the top spot, as its satisfaction score improved from 87 last year to 88 in the current survey. Amazon fell from the No. 1 position, its score slipping to 86 from 88. Netflix improved from 84 to 85 and Overstock.com from 80 to 82. Newegg and Netflix both cater to more specialized audiences than Amazon, which makes it easier for them to satisfy their customers, Freed says. “Yet,” Freed adds, “the web is littered with online stores with similarly narrow audiences that do not manage to figure out the winning formula of satisfying customers as well as Newegg.”

The big loser in the online retail category was eBay, whose satisfaction rating fell to 78 from 81. “Part of the drop in score can likely be attributed to the fact that in a down economy, the value proposition offered by used merchandise and small, mom-and-pop retailers has less appeal when major retailers are slashing prices so dramatically,” Freed says.

But, Freed adds, “Whatever the reason for the drop in satisfaction, “eBay is the only e-retail company measured by the ACSI that currently has lower satisfaction than it did when it was first measured nine years ago. Amazon has improved 2.4% in that time period, and the aggregate is up 5%. EBay should be concerned that it just isn’t keeping pace.” EBay did not immediately respond to a request for comment.

Despite the decrease, Freed notes that the 82 overall satisfaction score of online retail is far better than the 75.2 score of offline retail in the cross-industry ACSI study. He also notes that only three service companies of the more than 200 firms surveyed have satisfaction scores of 86 and above: online retailers Newegg and Amazon, and search engine Google.

Here are the scores for the online retail category, with this year’s score followed by last year’s score in the ACSI survey:

    Aggregate online retail, 82, 83
    Newegg, 88, 87
    Amazon, 86, 88
    Netflix, 85, 84
    All others, 82, 82
    Overstock.com, 82, 80
    eBay, 78, 81.

Amazon is No. 1 in the Internet Retailer Top 500 Guide, Newegg No. 10, Netflix No. 17, and Overstock No. 30. EBay is not tracked in the Internet Retailer Top 500 Guide because is it a marketplace and not a retailer.

The American Customer Satisfaction Index survey is a cross-industry survey of satisfaction with the quality of goods and services available in the United States.

Patrick Byrne, CEO of Overstock.com, will deliver the keynote address at the Internet Retailer Conference & Exhibition, June 15-18 in Boston, in a session entitled Rising Above the Economic Storm-How to Thrive in a Volatile Market. Larry Maye, liquidations manager at Amazon.com, will speak in a session entitled Merchandise returns-managing in tough times. Todd Lutwak, senior director of seller development at eBay, will speak in a session entitled Beyond e-retailing 101: Getting the most out of your third-party platforms . Stephanie Tilenius, general manager, North America, for eBay Markets, will speak in a session entitled The new eBay: What eBay`s evolution means to retailers .

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