One of every five beauty purchases online is made via the Amazon marketplace, according to a new report.
Retailers are in front of the consumers in their expectations of e-retail web sites, and that bodes well, says The Insider’s View of E-Retailing survey.
Online retailers don’t have a very high opinion of e-retailing sites-and that’s a good thing, say the results of a survey of online retailers sponsored by ForeSee Results Inc. and Internet Retailer, with distribution of the results sponsored by Assist Cornerstone Technologies. Online retailers participating in the “Insiders’ View of E-Retailing” survey gave e-retail sites a ranking of only 58 on the American Customer Satisfaction Index, well below consumers’ ranking of their online experiences at 77. “The scores were incredibly low compared to what we see elsewhere in retail,” says Larry Freed, president of ForeSee Results, which measures customer satisfaction at web sites. “Very few e-retailing insiders feel there are world-class retail sites.”
The satisfaction rating using the American Customer Satisfaction Index for all customer experiences is 73. The rating for offline retail experiences is 75.
The low scores indicate not only that e-retailers know there is a lot of work to be done to make online retailing a viable part of the retailing industry but also that the industry is moving into the next stage of development. “In the early stages of an industry, there is incredible hype and one of the really scary things is you think you’re doing better than you are,” Freed says. “In the second phase, reality sets in. You become critical. In this case, insiders are saying we have a long way to go.”
In fact, only 25% of survey respondents say e-retail sites are meeting their own expectations and only 13.6% says e-retail sites compare favorably to their ideal of a web site. 84% believe less than 25% of sites are world class.
The results are based on the American Customer Satisfaction Index, developed in 1994 as a uniform, national, cross-industry measure of satisfaction with the quality of goods and services available in the United States. It seeks to link customer satisfaction to future consumer behavior and economic returns. It applies a mathematical model that seeks to eliminate anecdotal reports of satisfaction, customers’ self-reported levels of satisfaction and customers’ assessments of what’s important in making a buying decision. “Companies measure all other assets, such as inventory, buildings and so on, but they don’t measure customers in the same way,” Freed says. “The missing ingredient is customer satisfaction.”
The results are based on nearly 300 responses from e-retailing executives at traditional retail chains, catalogers or virtual merchants, to an online survey from July 30 to Aug. 2. They were asked to rate such criteria as:
- how severely a poor online shopping experience impacts overall impression of the retailer
- the importance of customer satisfaction to the respondent and the respondent’s company
- the ability to accomplish what the respondent wanted to on e-retail sites
- the ability to find information on e-retail sites
- the degree to which companies value the respondent as a customer.
In spite of their low levels of satisfaction-and perhaps enhancing their ability to know a good site or a bad site when they see one-e-retail managers and executives are much more likely to shop online than consumers in general. Nearly 60% of respondents do more than 10% of their shopping online and 12% of those do more than 50%. By contrast, only 1.3% of all retail sales take place online, according to the U.S. Department of Commerce.
No.1: Order processing
The areas of online shopping that e-retailers think are performing the best are order processing, with a score of 68, site functionality, with a 66, and content, 64. Security, which is a subset of order processing in the survey, scored a 7.8 among insiders (subsets are ranked 1-10 while major categories are 1-100). Interestingly, it is one concern that consumers have cited consistently as preventing them from shopping more online. “That’s an education issue,” Freed says. “It will be tough to communicate to consumers that online transactions are more secure than offline.”
Functionality measures the ability of a customer to perform tasks efficiently and the customer’s perception of the usefulness of services. Content is a measure not only of product descriptions and images but also of the other content that sites make available, such as the customer book reviews at Amazon or outdoor activity information at REI.com. It measures the accuracy, quality and currency of such content.
At the bottom of e-retailing insiders’ satisfaction lists were returns, which earned a score of 51, site navigation, 54, and account set-up, 55. A particular weakness was the ability to return online purchases to offline stores. “Many multi-channel retailers have not built the bridge between channels,” Freed says. As for navigation, many e-retailers believe most sites require too many steps and that navigation is unclear. Similarly, many think retail sites require too many steps to establish an account.
The implications for a retailer of not living up to customer expectations, Freed says, is loss of market share. And that loss can take place on the web a lot faster than it does in the real world, he stresses. “Customer satisfaction has a much bigger impact online than it does offline,” he says. “There’s much more competition online and it’s easier to do comparison shopping.” For instance, he says, if a drugstore is out of a certain size toothpaste ,shoppers will buy whatever sizes are in stock because it’s too much trouble to find a store that has a certain desired size. Not so on the web, where the next store is only a click away. “No one would disagree that the buyer is in control in the online world more than in the offline,” Freed says.
Furthermore, the impact of a negative experience online goes beyond online shopping. “Three-fourths of respondents say a bad online shopping experience impacts their overall impression of an organization,” he says.
This survey clearly reveals that e-retailing insiders know the web shopping experience needs to be improved. So what can retailers do? “Look in the mirror,” Freed says. “Retailers are realizing how important customer satisfaction is and asking how they can manage customer satisfaction at their own sites.”