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Apple Slips in E-Commerce Satisfaction

ecommerce and the economy

Despite the beating that the e-commerce industry is taking during the downturn, a handful of firms managed to stand out or improve their customer satisfaction -- positioning themselves for a greater share of the market once the turnaround hits, observers say.

Yet there have been some upsets as well in ForeSee Results' latest e-commerce satisfaction study, released today. Perennial darling Apple.com fell five points and now trails HPShopping.com and Dell.com, while Newegg.com and TigerDirect.com lead the computers and electronics category with the highest online customer satisfaction scores

Apple's (NASDAQ: AAPL) expansion into the smartphone market has proved an obvious boon for company, but the study conducted by ForeSee suggests that despite the success of the iPhone, it may be having trouble serving a different customer base than it's used to, as it slips in the rankings.

ForeSee Results measured and analyzed customer satisfaction data for the leading online computer and electronics retailers by sales volume as part of the spring edition of its Top 100 Online Retail Satisfaction Index. The regular study, produced with FGI Research, uses the University of Michigan's American Customer Satisfaction Index (ACSI) methodology. Under the methodology, a score of 80 is considered excellent.

In addition to Apple's slip to fourth in the rankings, findings show that on the whole, the computer and electronics category is providing only an average online experience compared to other online retail sectors, while the customer satisfaction index as a whole fell 3 percent since last year to an aggregate score of 73 on the study's 100-point scale.

The news comes at a time when e-commerce is trying to weather the recession as consumer spending drops and budgets are cut.

As a result, the dip in customer satisfaction threatens to smother an online retail recovery just as the rest of the economy shows signs of marginal improvement, according to authors of the report.

"Online retailers picked a bad time to drop the ball, and if they don't shore up customer satisfaction, things could get even more bleak," Larry Freed, report author and CEO of ForeSee Results, told InternetNews.com. "Revenue will tell you a lot about past performance, and by that measure, things don't look great." Recent studies indicated that e-commerce sales showed flat growth during first quarter, compared to last year.

"But customer satisfaction will tell us a lot about what's ahead, and more companies are losing ground," Freed added. "That's a real canary in a coal mine for future sales online and offline, loyalty, retention, and return visits."

Winners and losers

The findings could prove especially critical for computer and electronics retailers, for whom online customer satisfaction is often critical: a highly satisfied Web site visitor is 33 percent more likely to purchase offline and 68 percent more likely to purchase online, according to the study.

It also shows that a one-point increase in online customer satisfaction translates roughly to a 9-percent increase in revenue for a top 100 e-retailer in the firm's study.

Online retail stalwarts Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN) led all e-retailers for a fifth year in a row, with scores of 85 and 84, respectively -- showing that it is possible to succeed despite tough times.

The largest improvements go to Kohls.com, with 6 percent year-over-year increase to 76; Costco, with a 3 percent since last year and 6 percent since 2005. Eight other companies improved 3 percent.

[cob:Special_Report]Among apparel and accessories retailers, L.L. Bean, Talbot's and Zappos topped the list.

Yet the report also found that only 16 of the top 100 e-retailers improved, while over half declined. Even Apple.com got knocked from its throne, sliding nearly 6 percent to 75 and now trailing Dell.com, TigerDirect.com and HPShopping.com.

"Apple used to have a much more targeted audience, but with the iPod and iPhone, its consumer base has broadened, which is a great thing from a business perspective, but it also brings in a lot of shoppers who may not be Apple computer users, so it means they have to approach things a bit differently," Freed said.

"What we're seeing is that price is more important to consumers over the last six months than it has been in seven years, and Apple is never going to win on price, so it's even more important for them to provide satisfaction."

Other notable declines include CVS.com, down 8 percent to 71, trailing Walgreens and Drugstore.com; NeimanMarcus.com, down 7 percent to 70; and Willams-Sonoma.com, down 6.4 percent to 73.

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