Customer Satisfaction With In-Store Improves, But Drops For E-tailers

Reversing an 18-month trend, consumer satisfaction with in-store retail products and services ticked upward in the fourth quarter of 2008. But similar good news wasn't on the menu for E-tailers. After a three-year period where consumer satisfaction with online-only retail companies steadily climbed, the Q4 2008 results showed a 1.2 percent decrease.

Overall, the American Customer Satisfaction Index (ACSI) climbed 0.9 percent to 75.7 on the 100-point scale during the quarter, compared with the same period in 2007. "Very few economic indicators show positive signs these days," said Claes Fornell, who heads the ACSI. "The American Customer Satisfaction (for in-store) is one of them."

He said customer satisfaction in the retail sector, which includes department and discount stores, specialty retail stores, supermarkets, gas stations, and health and personal care stores, gained 1.3 percent to 75.2. This growth was mainly based on an improvement in customer service.

However, the uptick didn't spread to online players; consumer satisfaction with online-only retailers decreased by 1.2 percent to 82, according to ACSI. eBay, for example, declined 3.7 percent in the quarter, the worst score ever recorded for the online auction giant by ForeSee Results and the University of Michigan. The analysts said the drop was likely caused by deep price slashing at brick-and-mortar retailers. That reduced consumer interest in making a lot of auction purchases, which tend to be not low-priced but fair-priced based on a strict supply-and-demand model.

Because eBay is one of the largest E-tailers whose level of consumer satisfaction is measured by ACSI, its numbers pulled down the overall E-tail satisfaction scores.

Using the ACSI, ForeSee Results said eBay scored a 78 while E-tail overall scored 82. The eBay score for Q4 2007 was 81, and E-tail overall scored 83 in the same timeframe.

The survey also found a slight drop in Amazon's consumer satisfaction score, from 88 in 2007 to 86 in 2008. "That's not a big concern for me," ForeSee Results CEO Larry Freed said. "Obviously, we want to keep an eye on that, but 86 is still an incredibly high score. They are selling everything to everybody and doing a lot of business. They've consistently done a very, very good job."

Also doing a good job, it seems, is Newegg. By scoring an 88 on the index for Q4 2008, it not only ranked higher than Amazon but also beat Netflix and its score of 85.

But Freed said he was surprised by the eBay number. "That was probably the most interesting thing in this group," he said. "eBay is clearly the leader in auctions, and it is hard to imagine a scenario where they are not the leader."

Aside from facing the huge discounts offered by retailers, eBay might have seen a slip in consumer satisfaction due to a widening unhappiness among users about the way individuals selling used goods on the site are being outnumbered by companies with eBay stores, Freed said.