Get Strategic :: E-commerce

People shopping online are generally more satisfied with the experience then those who shop in stores. This is nothing new; the trend has been evident for a couple of years. However, the gap looks like it could widen as more and more consumers shop online.

According to the annual American Customer Satisfaction Index (ACSI) E-Commerce Report from ForeSee Results, customer satisfaction with the e-commerce sector improved to a total satisfaction score of 79.6 out of 100. While this is a point lower than the rating two years ago (80.8), it has been steadily improving over the past year – up 1.3 points over last year. This compares to offline shopper satisfaction of 72.4% - down 0.3% from last year.

The gap between online and offline satisfaction is now more than 7 points or a total of 10% greater. A number of factors could explain why the trend in favor of Internet shopping:

· Greater price comparison opportunities online

· Less time spent shopping (no need to worry about parking!)

· Free delivery options by many e-tailers

· Increasing customer demands and standards

· More aggressive competition drives sites to improve customer services as a point of differentiation

The reports states: "As consumer standards rise, the "best of the best" e-commerce organizations are increasingly standing out from the rest of the pack, challenging competitors in their categories to enhance their focus on customer satisfaction in order to compete successfully."

Leading the pack of the top performers are e-retailers (e.g. Amazon) with an 81% customer satisfaction rating. Auctions, brokerage, and travel sits are close behind.

Source: ForeSee Results

"E-retailers used to be at a disadvantage because customers couldn't touch and feel their products, but they've figured out that there's a whole lot more they can offer to make up fo that," said Larry Freed, CEO of ForeSee Results, in an interview with eMarketer.com (see Shoppers Show Rising Satisfaction with Web Shopping). “Today's online stores have evolved significantly, offering advances such as 360° views of products, customer reviews, side-by-side product comparisons, and extensive product information and specifications that often exceed what is available in a store or catalogue."

The report cites Amazon.com as a proud retailer with some past ups and downs. The e-tailer had lost 4.5% in customer satisfaction ratings, but posted a 3.6% gain after making significant site changes. Though I have to admit, Amazon.com is very good on fulfillment of customer orders, but the site lags behind leaders with respect to site usability.

The lesson is simple: if customer satisfaction is a priority for your organization, then you should be using the web as a differentiator over the competition.

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Friday, February 3

Don’t let the bastards grind you down

by Toby Ward on Thu 02 Feb 2006 10:24 PM PST

Last week Yahoo! reported record profits – double the profit of last year. What was Wall Street’s response? Hammer it. The stock dropped quickly because it failed to reach the expectations of a few analysts. Those ‘expectations’ were off a couple of pennies per share. Yahoo’s stock is now less than it was a year ago despite doubling its profit on tremendous grouwth. Yahoo’s price-to-earnings ratio now sits at under 27.

Pessimism continues to proliferate Wall Street and Main Street. Ironically, this is the complete opposite of the trend six years ago when Wall Street couldn’t buy enough Internet stocks – sending prices to outrageously high and unconscionable levels. Those same sage investors now turn down their noses at Internet stocks, driving the prices to levels lower than would otherwise be seen as reasonable to outside onlookers. USA Today’s index of 50 Internet stocks increased just 1% in 2005. Without Google, it would have lost 8.2%.

Does this mean you should hesitate to invest in your website? An informed decision is required. Let’s take a look at some of the numbers:

Almost 80 percent of North Americans have Internet access.
More than 50 percent have made online purchases.
A majority use the Internet as a decision-making tool.
Online retail sales in the two weeks preceding Christmas were up 29% over last year to US$3.03 billion.
The Internet is cited as the most influential channel on luxury purchasing (cited by 44 percent of affluent purchasers).
35% of first-time buyers consider the Internet to be their most important informational tool, as compared to 8.2% naming TV
Online newspaper reading is up 30% to 53.6 million visitors a month during the fourth quarter of 2005
39%of North Americans use online banking.
73.5% of e-commerce sites estimate sales growth of 15 to 35% this year.
60% of chain retailers estimate web sales growth of 25-200 percent.
Time spent online by adult Canadians has increased 50% since 2002 and Internet use is ready to overtake watching television.

Those numbers reflect a different story then the dogged, pessimistic tale woven by Wall Street. Its credibility as it relates to Internet stocks was ruined in the bubble of 1999 – 2000. That credibility continues to fail today.

“And it's not for a lack of profit,” writes USA Today’s Matt Krantz in Dot-coms' song and dance no longer entertains investors. “Forty-eight of the current members of the Internet 50 that were public in 2000 have seen their profits as a group quadruple since then. Google and Salesforce.com were private in 2000, so that doesn't even include Google's massive profit contribution.”

Here’s another key fact: according to the IDC FutureScan, all the indicators depict an expectation of 5% growth in U.S. IT spending this year. In other words, off the street and in the offices, business is investing in IT and the Web.

Don’t be scared away by Wall Street. Instead, listen to and embrace what your customers demand.