Lack Of Live Interaction Could Cost Holiday E-Tailers

According to a new report by research firm Datamonitor, e-tailers that fail to utilize Web-enabled live customer service operations could lose $3.2 billion (US$) in sales this holiday season.

Datamonitor's research found that the key to growing e-commerce profits for online merchants is to maintain customer loyalty by offering live online customer service from representatives in call centers.

However, the report discovered that only 8 percent of the 69,500 call centers in the U.S. are currently Web-enabled and less than 1 percent of all e-commerce Web sites currently offer live customer assistance.

Equal Lost Sales Offline

"Because growth in e-commerce is coming at the expense of other sales channels, revenues lost online translate to a loss of market share offline," Datamonitor technology analyst Leonard Chang said. "Therefore, it is imperative for companies to integrate live customer service with their Web sites as soon as possible."

Chang estimates that 10 percent of abandoned shopping carts on Web sites would have been salvaged through better customer service.

The study also identified other key statistics:

The online customer support market will grow from $150 million in 1998 to $2 billion by 2003.

40 percent of all call centers in the U.S. will provide multimedia customer service by 2003.

70 percent of the 200 vendors that offer an online customer service solution are startups.

According to the report, retailers ranging from Lands' End to 1-800-flowers are getting the message and shifting the focus of their e-tailing efforts from sales to customer service.

Surge In Handheld Computers

In a separate report, market research firm NPD Intelect indicates that retail sales of handheld computers in the U.S. skyrocketed 62 percent to 2.5 million units for the first nine months of the year.

Some industry observers feel that these figures are more evidence that the e-commerce platform of choice in the U.S. is quickly shifting from desktop PCs to portable devices.

In August, inexpensive organizers carried an average price of $37, down from $53 a year ago, while higher-powered Palm and Windows CE devices had an average price of $345, down from $397 a year ago.

However, some analysts contend that e-commerce can only reach critical mass when the prices of such devices plummet to around the $200 range.

The high-end market continues to be dominated by 3Com Corp.'s Palm products, which had a 78 percent market share in September, up from 75 percent a year ago. The Windows CE devices of Japan's Casio Computer Co. had a 9.5 percent market share, followed by Hewlett-Packard (NYSE: HPQ) Co., which had a 3.4 percent share.

In low-cost organizers, the Royal Consumer Business Products of Italy's Olivetti SpA had a 38 percent market share in September, while Japan's Sharp Corp. had 37 percent, the report said.