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Industry Research : Amazon’s Prices Lead To More Customer Dissatisfaction

The e-commerce king now shares the top spot in a customer-satisfaction survey, and drops from its 2011-2013 high. Inc. weathered the 2014 holiday shopping season with its customer-service crown mostly intact, but the largest e-commerce operator in North America took at least one hit that could point to vulnerability in 2015, according to new study.

Measured on a 100-point scale, Amazon, No. 1 in the Internet Retailer Top 500 Guide, achieved an online customer satisfaction score of 83, according to a report based on methodology crafted by customer satisfaction monitoring firm ForeSee. That 83 score gives Amazon a share of the top spot with web and TV retailer QVC, whose parent Liberty Interactive Corp. is No. 6 in the Top 500. QVC also earned a score of 83 last year. Three e-retailers scored 82: Avon Products Inc. (No. 49), L.L. Bean Inc. (No. 32) and Netflix Inc. (No. 7).

But Amazon’s most recent score is five points lower than the 88 score the e-retailer earned in 2013, 2012 and 2011; the average for all of the top 100 e-commerce sites, as determined by the Internet Retailer rankings, decreased two points this year, to 77 from 79. The report deems a score of 80 as "the threshold of excellence at which an organization meets and exceeds customer expectations."

"It’s a watershed year for U.S. holiday retail, starting with Amazon’s dramatic drop in customer satisfaction," says Jim Yang, senior vice president of products, marketing and services for Answers Cloud Services, part of Answer Corp., which produced the study and bought ForeSee in 2013. "This year’s data demonstrates the difficulty of staying ahead in an increasingly complex multichannel shopping world. It’s not that Amazon is no longer exceptional, because it clearly is. Rather, Amazon’s inability to deliver adequately against its customers’ expectations, particularly when it comes to product pricing, has opened the door for other retail brands this year. In the face of savvier consumers, retailers have to take a more disciplined approach to monitoring and improving customer satisfaction or else find themselves struggling to remain relevant."

The report blames part of the Amazon drop on "customers’ assessments of Amazon’s price competitiveness." Indeed, recent research from Kantar Research shows that Wal-Mart Stores Inc. (No. 4) often offers lower prices than Amazon. Pricing is positioned to take on increasing importance in 2015, given the spread of price-monitoring software and the fact that, according to one estimate, 20% of online prices change daily, as reported in a recent Internet Retailer magazine story about online pricing.

"Over the past year, Amazon customers have become more dissatisfied with Amazon pricing relative to competitors," the report says. "Many customers noted that shipping costs were too high at a time when many other mass merchants were offering free shipping. Amazon customers are also accessing other online resources and competitors’ sites more frequently than they did in 2013."

That may not be Amazon’s only problem going into 2015, the report continues. "Amazon’s decline in customer satisfaction also came with a decline in important future customer behaviors," the report says. "This year, Amazon shoppers are less likely to recommend Amazon to others, less likely to purchase again from Amazon, and less likely to remain committed to Amazon as a customer."

Amazon did not provide immediate comment on the report’s findings. A new Internet Retailer magazine cover story examines the moves Amazon might make in 2015 and the e-retailers strengths and potential weaknesses going into the new year.

The "Answers Experience Index: 2014 U.S. Retail Edition" used some 40,000 consumer surveys conducted between Oct. 26 and Dec. 15 to arrive at its findings. The study used to be called The ForeSee Experience Index but changed after Answers Corp. bought ForeSee.

Among the other findings in the lengthy report are:

• The average customer-satisfaction score for shopping in retail stores as a whole stands at 78, compared with 77 for shopping online and 76 for shopping online with mobile devices.

• Shopping continues to become more about multiple channels, requiring more attention to mobile from retail chain operators: 68% of in-store shoppers said they visited the store’s web site on their phone while in the store, compared to 55% in 2013. "Having rich content on their mobile site is critical for retail chain stores, since 46% of showrooming shoppers are buying in-store anyway," the report adds.

• Shoppers using multiple channels to shop tend to come away more satisfied: The satisfaction score for shoppers using three or more channels stands at 81 for the holiday shopping season, compared with 79 for two channels and 77 for a single channel.

Today's Tip of the Day - Double Standards

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Published: Friday, February 27, 2015

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