Study: Customer Satisfaction With E-Tail Outpacing Brick-and-Mortar

Customer satisfaction with online retail was even with last year at 83 points on a 100-point scale, but surpassed brick-and-mortar retailers by 12 percent, according to the American Customer Satisfaction Index.

"Against a backdrop of weakening consumer spending and talk about recession, e-commerce will continue to be a bright spot for multichannel companies," said Larry Freed, president and CEO of ForeSee Results in Ann Arbor, Mich., which partnered with the university's Ross School of Business on the survey.

E-Commerce Outperforming Others

The index is the only uniform, national, cross-industry measure of satisfaction with the quality of retail goods and services in the United States. It measures more than 200 companies in 40 industries and is based on thousands of quarterly interviews with customers who have purchased and used specific products or services in defined time periods.

Satisfaction with the online marketplace has risen by 8.5 percent since 2000, according to the index. It now outperforms all other service industries measured by the index.

"Online commerce delivers convenience that is unparalleled in the offline world ... and service quality and consistency is better because there is no unknown factor of a sales associate," Freed said.

At the same time, online retail has grown into a US$136.4 billion industry, up from $32.6 billion in revenue in 2001, according to U.S. Census Department data.

Travel Down, Financials Up

Amazon.com (Nasdaq: AMZN) ranked at the top with a score of 88, followed by Newegg, which sells computers and electronics, with 87, and Netflix (Nasdaq: NFLX) , which sells digital downloads of videos, with 84. eBay (Nasdaq: EBAY) was up a point to 81.

In other e-commerce categories for the fourth quarter, the index found:

• The online travel industry fell for a second straight year, down 1.3 percent to 75. The three major online travel sites all had drops in satisfaction and increasing difficulty in differentiating their services. Expedia (Nasdaq: EXPE) fell 3.8 percent to 75, Orbitz was down 2.7 percent to 73, and Travelocity fell 1.4 percent to 73. The three major sites are facing more competition from airlines, hotels and other travel search engines.
• Customer satisfaction with online financial services continues to climb. Online brokerages are up 1.3 percent to 79. Fidelity was the biggest gainer for the quarter with a 5 percent gain to 84. CharlesSchwab.com was up 2.5 percent to 82 and TD Ameritrade rose 3.9 percent to 80. E*Trade (NYSE: ET) was down 1.3 percent to 73.

Challenges Ahead?

Overall customer satisfaction with goods and services purchased declined in the fourth quarter and that combined with falling home prices, rising energy prices, tighter credit and higher unemployment may mean even more challenges ahead for consumer spending growth, said Claes Fornell, head of the American Customer Satisfaction Index.

"In such an environment, customer satisfaction becomes even more important because satisfied buyers tend to reduce seller's cash flow volatility," Fornell said.

Customer satisfaction with the offline retail sector fell 0.3 percent to 74.2. Satisfaction with department and discount stores fell to its lowest level since 2001 with a score of 73. Nordstrom (NYSE: JWN) leads the sector with a score of 80. Wal-Mart (NYSE: WMT) fell 6 percent to 68 during the quarter.

In specialty retail, Barnes & Noble (NYSE: BKS) scored 83, Borders had 81 and Office Depot (NYSE: ODP) had 78.