Net Auctions at the Crossroads

Although ever-increasing numbers of Web users are surfing to auction sites, a study from cPulse suggests that the auction fad will not have staying power unless online auctioneers take action to convert browsers to buyers.

The "Internet Customer Satisfaction Study" found that during the second quarter of this year, 26 percent of site visitors were first-timers, compared to only 8 percent in the first quarter. That means, according to cPulse, that many of the visitors to auction sites are merely checking out the phenomenon and do not plan to jump into the online auction frenzy.

"Online auction sales have been touted as one of the biggest merchandising trends in e-commerce today," said Jody Dodson, cPulse executive vice president. "Yet unless site managers study their customer satisfaction, auction sites could be 'going, going, gone' sooner than they believe."

A recent report by Jupiter Research predicted that consumer-to-consumer online auction sales will spike from $3 billion (US$) in 1999 to $15.1 billion in 2004.

No Returns

During the first quarter, 70 percent of online auction visitors who indicated they were "very unlikely" to return to an auction site said it was because they were dissatisfied. During the second quarter, that dissatisfaction was replaced with apathy and only 49 percent of auction visitors said they were leaving because of dissatisfaction.

The study by New York City-based cPulse also found that the number of first time and infrequent auction site users who were not likely to come back to an auction site in the future had more than doubled from the first quarter to the second quarter, jumping from 9 to 19 percent.

Research firm Gartner, which owns cPulse, found that during the first quarter of 2000, 42 percent of all Internet users over the age of 18 had visited an auction site but only 14 percent had actually bid.

"Normally in high repeat visit industries we see very strong positive correlation between a respondent's satisfaction with a Web site's experience and that respondent's likelihood to return to that Web business at some point in the future," cPulse analyst Michael Hochster said. "Usually, as customer satisfaction goes up so does their likelihood of coming back. Our research shows exactly the opposite happening here."

Complaints

Although the number of auction fraud cases has increased dramatically in the past few years -- the U.S. Federal Trade Commission has seen auction fraud cases grow exponentially from 107 in 1997 to more than 11,000 in 1999 -- the trustworthiness of online auction houses has improved in the eyes of heavy auction site users.

In first quarter 2000, trustworthiness was cited as the number one concern among users who did not plan to return. By the second quarter, concerns over trustworthiness had dropped to sixth place.

Instead, auction users are currently complaining about high minimum bids, low product selection, poor product descriptions, and difficulty locating desired products.

cPulse suggests that online auction houses that want to survive need to focus on providing a wider selection of products and redesigning their sites to make them easier to navigate.

The Problem of Fraud

Consumers may seem less concerned about auction fraud than in the past, but reports indicate it is still a growing problem. Recent statistics released by the U.S. Federal Bureau of Investigation (FBI) show that at least half of the roughly 4,000 cases generated by the Internet Fraud Complaint Center (IFCC) involve auction fraud.