Wednesday, February 18, 2009

Drop in E-Commerce Satisfaction Ends Three Year Climb in American Customer Satisfaction Index

Customer satisfaction with the e-commerce sector falls for the first time in three years, dropping 2 percent to a score of 80 on a 100-point scale, according to the American Customer Satisfaction Index (ACSI). The decline is driven by a dramatic plunge in customer satisfaction with online brokerages, which were hit hard by the fallout from the financial crisis that erased billions of dollars of investment capital. The annual ACSI e-commerce report, released by the University of Michigan with e-commerce partner ForeSee Results, measures customer satisfaction with online retail, online brokerage, and online travel.

Online Brokerage

The economic downturn has been toughest on the online financial services industry, which plummets 6.3 percent to 74 on the ACSI’s 100-point scale. Each of the individual measured online brokerage firms also drops in customer satisfaction. TD Ameritrade suffers the biggest decrease in score of all measured companies in the industry, diving 11 percent to 71. This is the second largest decline of all 200+ companies measured by the ACSI in 2008 either online or offline, and the company’s financials directly reflect customer dissatisfaction.

Fidelity and Charles Schwab (NASDAQ: SCHW) with scores of 80 and 78 respectively, maintain leadership positions even while suffering 5 percent drops in satisfaction. E*Trade drops 6 percent to 69, solidly in last place.

Online Retail

After a three year climb, e-retail slips 1.2 percent to 82. A big decline by eBay, one of the largest and most prominent e-retailers, pulls down the aggregate score. eBay registers its worst performance ever, dropping 4 percent 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.

Amazon continues to be one of the best performing companies in all of ACSI, despite a 2 percent 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 improves 1 percent to 88 to take the e-retail throne from Amazon. Netflix is up 1 percent 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. It is easier to satisfy a customer base that is shopping for specialized products than it is to satisfy customers that may want anything from books to TVs to shoes.

Online Travel

Customer satisfaction with online travel remains unchanged in aggregate year-over-year, though the industry has been slowly decreasing since 2002. The industry is going to need more than a boost in customer satisfaction in the wake of what industry experts predict to be the worst year for business and leisure travel since 2002.
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