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 | | http://www.commercemanager.info/magazine/article_688_top_online_retailers_are_leaving_money_on_the.html |
Despite strong increases in online consumer spending, a new study shows that many of the nation’s top retailers are performing well below their potential online and may be inadvertently driving away some people who would otherwise make purchases.
ForeSee Results and FGI Research produced the study, based on surveys of consumers who browsed the 40 highest-grossing e-retail sites, which scores and ranks web sites on the basis of how well they are delivering the kind of experience site visitors want. Falling short in this area can cause web site visitors to spend their money elsewhere and, in some cases, the sites were found to negatively impact future offline spending with the same brand.
Netflix, Amazon, and QVC are the stand-out performers in satisfying site browsers. Costco and Kmart are at the bottom of the pack.
“You can have strong online revenues but if you’re not engaging site visitors in the way they want, you are leaving money on the table—and for some of these retailers it’s worth a lot of money,” said Larry Freed, an online satisfaction expert and CEO of ForeSee Results. His firm produced the report using the American Customer Satisfaction Index (ACSI) methodology, a sophisticated scientific formula that predicts future consumer spending behavior. The study was produced in partnership with FGI Research, and is based on Internet Retailer’s annual Top 400 Report on e-retailers’ revenues.
“A low satisfaction score means that there are lots of browsers who do not become buyers,” Freed explained. “Of the five top-scoring e-retailers, likelihood of browsers to take the next step and make an online purchase is 36 percent higher than those at the bottom of the list.”
The survey revealed that traditional brick-and-mortar retailers are, in general, dramatically under-utilizing the online channel. Most companies measured in this category—with the noteworthy exception of Barnes & Noble, an online star—have a huge gap between likelihood to buy online vs. offline.
The list of top performers includes some names that might surprise many. QVC and LL Bean are the best-performing multi-channel retailers. QVC earns an 84—a very strong score on the ACSI’s 100-point scale—and is tied with online titan Amazon. LL Bean is close behind with 82. Both have strong ratings from customers for both their online and offline channels. Newegg, a relative newcomer to the e-retail world, is also near the top of the pack, with an 82. The best company in terms of delivering the right online experience as identified by consumers is Netflix, with an 85.
Kmart brings up the rear, with a 69—and the company shows signs of doing a good job attracting people to its site but disappointing them once they get there. Costco is only slightly better at 70.
“There is huge untapped potential for companies like Costco,” said Freed. “People love Costco, but they don’t like what they find online and so how much they shop there is very limited.”
Freed said many companies do not understand which things most influence browsers, and therefore make decisions about Internet strategies and tactics that are sometimes unimportant to people and other times actually turn off buyers.
“Among online shoppers, the Internet has not become as price-sensitive a channel as expected,” said Freed. “In many cases, companies that are competing primarily or largely on price are competing on the wrong thing. Our study shows price matters some of the time but key aspects of the site experience matters 100 percent of the time—literally 100 percent. Navigation, selection, all kinds of other things are what’s driving the buy decision—but many of the online retailers have not isolated the right factors to drive purchasing behavior.”
The full list of companies measured and their scores are as follows:
| Website | Company Name | Browser Satisfaction Score |
| Netflix.com | Netflix Inc. | 85 |
| Amazon.com | Amazon.com Inc. | 84 |
| QVC.com | QVC Inc. | 84 |
| Newegg.com | Newegg.com | 82 |
| LLBean.com | L.L. Bean Inc. | 82 |
| OldNavy.com | Old Navy | 81 |
| TigerDirect.com | TigerDirect Inc. | 81 |
| Apple.com | Apple Computer Inc. | 80 |
| Avon.com | Avon Products Inc. | 80 |
| BN.com | Barnes & Noble Inc. | 80 |
| Williams-Sonoma.com | Williams-Sonoma Inc. | 80 |
| HarryandDavid.com | Bear Creek Corp. | 80 |
| HSN.com | HSN (Home Shopping Network) | 79 |
| Gap.com | Gap Inc. | 78 |
| Drugstore.com | Drugstore.com Inc. | 78 |
| EddieBauer.com | Eddie Bauer Holdings | 78 |
| PotteryBarn.com | Pottery Barn | 77 |
| Dell.com | Dell Inc. | 77 |
| HPShopping.com | Hewlett-Packard Co. | 77 |
| JCPenney.com | J.C. Penney Co. Inc. | 77 |
| Quixtar.com | Quixtar Inc. | 77 |
| ToysRUs.com | Toys "R" Us Inc. | 77 |
| OfficeDepot.com | Office Depot Inc. | 75 |
| Staples.com | Staples Inc.v | 75 |
| BestBuy.com | Best Buy Co. Inc. | 75 |
| Walmart.com | Wal-Mart Stores Inc. | 75 |
| Overstock.com | Overstock.com Inc. | 75 |
| 1800Flowers.com | 1-800-Flowers.com Inc. | 75 |
| NeimanMarcus.com | Neiman Marcus Group Inc. | 75 |
| Sears.com | Sears, Roebuck and Co. | 74 |
| SonyStyle.com | SonyStyle.com | 74 |
| Target.com | Target Corp. | 74 |
| CircuitCity.com | Circuit City Stores Inc. | 74 |
| FTD.com | FTD Inc. | 74 |
| BananaRepublic.com | Gap Inc. | 73 |
| CDW.com | CDW Corp. | 73 |
| Gateway.com | Gateway Inc. | 73 |
| Chadwicks.com | Redcats USA | 73 |
| Buy.com | Buy.com Inc. | 71 |
| CompUSA.com | CompUSA Inc. | 71 |
| Costco.com | Costco Wholesale Corp. | 70 |
| Kmart.com | Kmart Corp. | 69 |
| Smith + Noble, Territory Ahead, TravelSmith, etc. | Cornerstone Brands | n/a |
Published: 06/2005
Author: FGI Research
| FGI Research is a leading provider of market research and information solutions that improve the speed, accuracy and impact of business decisions. |
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