The Voice of Online Marketing | MEDIA KIT | NEWS TIPS
The latest practical news and developments at the intersection of search, email,
social media, mobile marketing, web analytics, online advertising, ecommerce and more.
Marketing News on Twitter Interactive marketing RSS newsfeed

Fraud Fear Steers Shoppers Off 'Net; Costs Rise for Merchants

Customer satisfaction with e-commerce fell for the first time in three years, dropping 2% to a score of 80 on a 100-point scale, according to the American Customer Satisfaction Index (ACSI), reports Retailer Daily.

The decline was driven by a dramatic plunge in customer satisfaction with online brokerages, hit hard by the fallout from the financial crisis that erased billions of dollars of investment capital.

The annual ACSI e-commerce report, released today (Tues.) by the University of Michigan with e-commerce partner ForeSee Results, measures customer satisfaction with online retail, online brokerage, and online travel.

“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,” said online customer satisfaction expert Larry Freed, president and CEO of ForeSee Results.

"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."

Online Retail

After a three year climb, e-retail slipped 1.2% to 82. A big decline by eBay, one of the largest and most prominent e-retailers, pulled down the aggregate score. eBay registered its worst performance ever, dropping 4% to 78.

The leading online auction company is losing its edge, as discounts become harder to find and competition for goods drives prices higher; also, major retailers are offering deeper discounts offline than ever before, giving customers less reason to shop for deals online, Foresee said.

"eBay is the only e-retail company measured by the ACSI to have lower satisfaction now than it did when it was first measured nine years ago, and that should be reason for concern," said Freed. "It isn't keeping pace with the competition, and its revenues and stock price have followed suit.”"

Amazon remained one of the best-performing companies in all of ACSI, despite a 2% drop to 86. The company reported strong financials and its best holiday shopping season ever. But record numbers of shoppers may have increased the incidence of shipping errors and other customer service gaps.

Computer and electronics e-retailer Newegg improved 1% to 88 to take the e-retail throne from Amazon. Netflix was up 1% to 85 in its sophomore year in the Index. Both companies have specific business models that target a much more limited audience than Amazon, which sells an enormous range of products.

Online Brokerage

The economic downturn has been toughest on the online financial services industry, which plummeted 6.3% to 74 on the ACSI's 100-point scale. Each of the individual measured online brokerage firms also dropped in customer satisfaction.

TD Ameritrade suffered the biggest decrease in score of all measured companies in the industry, diving 11% to 71—the second largest decline of all 200+ companies measured by the ACSI in 2008 either online or offline. The company’s financials directly reflect customer dissatisfaction: As of January 2009, TD Ameritrade reported that first-quarter profits plunged 23%.

Fidelity and Charles Schwab, with scores of 80 and 78, respectively, maintained leadership positions even while suffering 5% drops in satisfaction. E*Trade dropped 6% to 69, in last place.

"It's not surprising that online brokerage firms took a big hit in satisfaction, and its dive is largely responsible for the drop of the e-commerce sector overall,” noted Freed. "The convenience of managing your investments online doesn’t mean much when you see your portfolio take such huge hits. Fair or not, that’s going to affect customer satisfaction."

Online Travel

Customer satisfaction with online travel remained unchanged in aggregate year-over-year, though the industry has been slowly declining since 2002 and won’t likely improve in what industry experts predict to be the worst year for business and leisure travel since 2002.

Expedia (+2.7) and the All Others category (-2.5%) tied for first at 77. Travelocity was in second place (+2.7% to 75) followed by Orbitz (+1.4% to 74). fell 1% to 72, the lowest-scoring company in the industry.


Related Topics

Related stories:

Subscribe to MarketingVOX|News

Latest interactive marketing news Latest media planning news & facts Latest marketing data & research