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

Customer satisfaction with the e-commerce sector 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, 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 today by the University of Michigan and 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 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 (AMTD) 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 (SCHW), with scores of 80 and 78, respectively, maintained leadership positions even while suffering 5% drops in satisfaction. E*Trade (ETFC) 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 Retail

After a three year climb, e-retail slipped 1.2% to 82. A big decline by eBay (EBAY), one of the largest and most prominent e-tailers, 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. Major retailers also 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 (AMZN) 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 (NFLX) 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 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 (EXPE) (+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 (OWW) (+1.4% to 74). Priceline.com (PCLN) fell 1% to 72, the lowest-scoring company in the industry.

Comments

[Wake-Up!:]

As long as greedy eBay charges the most outrageous fees on the planet (even WalMart can beat them), ecommerce will continue to fail.

Sellers cannot compete when they have to elevate prices so high, buyers simply walk away. People have become wiser. They let their fingers and keyboards do the shopping and find the best prices possible.

Only a fool would waste money at eBay when WalMart and other outside sites are cheaper. And since they appear to phasing out the auction format in favor of the "Buy it Now" and diamond powersellers (a.k.a over-seas garbage), there's really no reason to step foot into the crumbling eBay palace.

eBay is a has-been. Amazon kicked the sand in their face again this holiday season and yet the current management continues on this destructive path. They have alientated long time veteran sellers, cheated and BS'ed their way into forcing a PayPal payment only scheme and a failed search engine, ironically named "Best Match" which when used, allows potential buyers to see only what eBay wants them to see.

Not to mention advertisements as far as the eye can see, that does absolutely nothing but bog computers down and diverts potential shoppers to "click here" and leave the eBay site to make their purchases elsewhere - and they wonder where the traffic is going? Is the Pay Per Click worth it?

Even over-bloated pigs have to stop gobbling some time, don't they? I wonder if eBay is the exception? Open your eyes and close your greedy mouth!

Free yourself! www.Bonanzle.com

JMO

Feb 23 02:57 PM

[Allan kraig:]

eBay beats their customers in the head, Milks every penny they can from their sellers, Meg cut the budget for customer service to fatten the bottom line for the stock holders & you are surprised they have slipped .. You can spin this till your head falls off and until somebody wakes up & starts driving the bus that Meg left the monkey at the wheel it only going to go lower .. (monkey: ie meg once said a monkey could drive this bus & so she did with JD)

Change after change after change all for window dressing for the stock holders, ebay needs to get real input from their real sellers not these flash in the pan DIAMOND minute wonders that have tanked the site .. eBay & JD base company value only in the stock price with no consideration for customer satisfaction .. they have quickly forgotten that the sellers ARE THEIR CUSTOMERS .. Allan Kraig

Feb 23 03:32 PM

[Et tu, Brute!:]

To Allan kraig:

No no no, Allan! A monkey CAN drive this bus!

But John Donahoe CAN'T!

:~)

Feb 23 04:12 PM