[Note: you can read about our latest version of this study (2007) at GrokDotCom]

Future Now Inc.'s 2004 Online Retail Study for Customer Focused Excellence

Ecommerce is booming! Online holiday sales will continue to grow, but this year's growth will likely decelerate from levels achieved during the 2003 holiday season. The evidence follows:

ComScore Networks, an e-commerce market research firm based in Reston, Va., reported that online spending for the combined November and December 2003 period grew 29.5 percent to $12.5 billion, compared with 19 percent growth to $9.7 billion in the 2002 holiday season. Shop.org shows online holiday spending totaled $18.5 billion in the US in 2003, noting a 35% rise over online spending in 2002.

Jupiter Research expects 2004 online sales to jump 24 percent year-on-year to $65 billion, excluding travel, automotive, auctions and prescription drugs. According to Bizrate, the top 2003 holiday categories in terms of sales volume were Computer Hardware, Electronics, and Entertainment. However, the Food & Wine (up 58 percent), Gifts & Flowers (up 56 percent), and Apparel (up 38 percent) categories saw the strongest growth over that period.

Nevertheless, Future Now, Inc. is not sipping the same Cool-Aid. The methodology of this survey ignores the entire customer experience in favor of the least subjective criteria we could identify. While online retailers gorge themselves with revenues and belch healthy profits they grow fat and happy. They should beware of nimbler and more customer focused competitors waiting to deflate them. Each step in the evolution of consumer sales forced merchants to work harder to remove friction from the buying experience in a systematic way. The Internet offers a virtually frictionless way for consumers to buy. We must work that much harder to persuade and inform buyers, only one click away from competitors.

Simply because consumers find online shopping acceptable, versus a retail environment where service and courtesy have become increasingly harder to find, does not indicate that they are happy. A recent Accenture survey, in BusinessWeek 11/29/2004, of 5,900 adults the percentage of customers who reported that service provided by these types of companies were “Generally Satisfactory” were:

“Generally Satisfactory” is hardly a glowing review especially in light of the types of companies that performed better than Online Retailers.

The Study: 2004 Online Retail Study for Customer Focused Excellence

Future Now Inc.’s 2004 Online Retail Study for Customer Focused Excellence sent out independent mystery shoppers as well as our own website conversion specialists to over 140 top retailers’ websites. The survey has expanded; in 2003 we analyzed only 60 retailers. Their mission was to analyze how customer-focused the retailers’ websites were once a customer identified the product they wanted to purchase.

However, the team was not asked to analyze more subjective variables that Future Now, Inc. knows are of equal or greater value in a retail website’s success.

They were specifically asked to ignore:

• the price points (inclusive of tax, shipping and handling);
• the ease in locating the products;
• the efficacy of the brand in conveying confidence;
• whether or not the overall design was conducive to credibility and sales;
• the entire customer experience from search to fulfillment of purchases.

Therefore this study does not analyze the entire customer experience. Rather, it is valuable for the purposes of benchmarking retailer’s websites based on the least subjective criteria. Future Now, Inc. strongly believes that the amount of attention lavished on becoming customer-focused translates into more sales long-term.

Methodology: 2004 Online Retail Study for Customer Focused Excellence

Each site was visited by at least two mystery shoppers and reviewed by our own conversion specialists for accuracy. If the mystery shopper could not find something (i.e. a return policy), the retailer received a negative mark, even though someone with more expertise or a company representative might find it. This mimics the real world, where if the customer cannot find it, it does not exist.

The mystery shoppers searched for 45 different data points across 13 categories to find out which retailers’ website was the most focused on meeting their customer’s needs once they had identified the product to be purchased. Each data point was assigned a weighted score, totaling 100 points.

The data points included questions such as:

• the quality and detail of images (could the shopper zoom in or did the retailer provide images from multiple angles);
• did the product copy description answer the shopper’s questions;
• how well did retailers do at meeting shopper’s gift buying needs (e.g. did the retailer offer gift wrapping, messaging or gift certificates);
• was it easy and simple to check out from the website (how many pages did it take to check out and did the retailer provide a progress indicator);
• how well did the retailer do at addressing the shopper’s concerns (e.g.. return policies, guarantees, third party seals and security assurances);
• how easy and clear were the retailers return policies;
• did retailer provide shipping and tax totals early in the checkout process;
• did the retailer offer multiple payment options (e.g. pay by check, PayPal, etc.);
• did the retailer offer estimated delivery times and show in-stock availability for items;
• did the retailer offer pick-up at store options.

These scores were not provided to our mystery shoppers, who only received a brief verbal explanation of mostly yes or no questions. The scores were tallied by our staff to see which retailer did best.

The Retailers Studied by our Mystery Shoppers (in alphabetical order):

We chose a sample of retailers across multiple categories, fashion, electronics, jewelry, gifts, housewares, toys and sporting goods.

1-800-flowers.com, AbeBooks.com, AllPosters.com, Amazon.com, Art.com, Aubuchonhardware.com, AutoZone.com, B&H Photo, BabyUniverse.com, Backcountry.com, Barewalls.com, BassProShops.com, Batteries.com, Bedbathandbeyond.com, Bestbuy.com, Blair.com, Bloomingdales.com, Bluefly.com, Bluenile.com, Bn.com, Brookstone.com, Buy.com, Cabelas.com, Campingworld.com, Cdw.com, Chadwicks.com, Childrensplace.com, Circuitcity.com, Coach.com, Coldwatercreek.com, Compusa.com, Cooking.com, CrateandBarrel.com, Crutchfield.com, Dell.com, Diamond.com, DicksSportingGoods.com, DisneyStore.com, DrsFostersmith.com, Eastern MountainSport.com, Ebags.com, EbGames.com, eCost.com, eLuxury.com, Eddiebauer.com, eTronics.com, FogDog.com, Footlocker.com, Ftd.com, Fortunoff.com, Fossil, Fredericks.com, GameStop.com, Gap.com, Gateway.com, GearDirect.com, Gloss.com, Golfballs.com, Guess.com, Hats.com, Harryanddavid.com, Hewlett Packard.com, HickoryFarms.com, Hsn.com, Ice.com, Illuminations.com, Jandr.com, Jcpenney.com. Jcrew.com, Jos A Bank.com, Kbtoys.com, Kmart.com, Lampsplus.com, Landsend.com, Levenger.com, Lids.com, Lillianvernon.com, LinensandThings.com, LizClaiborne.com, Llbean.com, Lowes.com, Macys.com, Magellans.com, Mondera.com, Neimanmarcus.com, Newport-news.com, Nordstrom.com, NorthernTool.com, Officedepot.com, Officemax.com, Oldnavy.com, Omahasteaks.com, OneStepAhead.com, Oreck.com, Orvis.com, Outpost.com, Overstock.com, PartsAmerica.com, Patagonia.com, PcRush.com, PepBoys.com, Petco.com, Petsmart.com, Pier1.com, Proflowers.com, Qvc.com, Radioshack.com, RedEnvelope.com, Reflect.com, Rei.com, Restorationhardware.com, Saksfifthavenue.com, Sears.com, Sephora.com, Sharperimage.com, Sheplers.com, ShoeBuy.com, Shoes.com, Smartbargains.com, Snap-on.com, Sonystyle.com, Spiegel.com, SportsAuthority.com, Staples.com, SurLaTable.com, Talbots.com, Target.com, Tigerdirect.com,ToolKing.com, UrbanOutfitters.com, Vermontcountrystore.com, Victoriassecret.com, Walmart.com, Williams-sonoma.com, Yankeecandle.com, Zappos.com

The Results: 2004 Online Retail Study for Customer Focused Excellence

We would like to congratulate the top twelve retailers for their efforts at providing their customers a customer centered focus.

1. Crutchfield.com 80%
2. Diamond.com 78%
3. SportsAuthority 74%
4. Amazon.com 74%
5. Dell.com 73%
6. Cooking.com 70%
7. Walmart.com 69%
8. EbGames.com 69%
9. Circuitcity.com 69%
10. TigerDirect.com 68%
11. HewlettPackard 67%
12. Zappos.com 66%

2003 Leaders:

1. Landsend.com 81%
2. Amazon.com 77%
3. LLBean.com 73%
4. Bluenile.com 72%
5. QVC.com 71%
6. Nordstrom.com 70%
7. BestBuy.com 69%
8. Newport-News.com 68%
9. Sears.com 68%
10. Mondera.com 67%
11. Macys.com 65%
12. Neimanmarcus.com 65%

The Leaders by Category:

Apparel / Fashion
1. Zappos.com 66%
2. Landsend.com 65%
3. eLuxury.com 65%

Electronics
1. Crutchfield.com 80%
2. Dell.com 73%
3. CircuitCity.com 69%

Food
1. HarryandDavid 54%
2. HickoryFarms 54%
3. Omahasteaks 48%

Jewelry
1. Diamond.com 78%
2. Bluenile.com 64%
3. Mondera.com 58%

Children / Toys
1. EBgames.com 69%
2. BabyUniverse 62%
3. KBtoys.com 55%

Housewares / Kitchen
1. Cooking.com 70%
2. SurLaTable.com 66%
3. Williams-sonoma63%

Office
1. Staples.com 65%
2. OfficeDepot 37%
3. OfficeMax.com 29%

Mass Merchants
1. Amazon.com 74%
2. Walmart.com 69%
3. Target.com 63%
4. Overstock.com 63%

Selected highlights learned from the study:

• 106 of the 140 retailers (76% vs. 65% in 2003) offered gift certificates.
• 49 of the 140 retailers (35% vs. 38% in 2003) offered multiple image views of products.
• 41 of the 140 (29% vs. 25% in 2003) allow customers to change the default font size while viewing their website; another 23 of the 140 (16% vs. 25% in 2003).
• retailer’s choice of default font size were too small for our mystery shoppers to read, of which only 3 sites allowed customers to change the default font size.
• 49 of the 140 retailers (35% vs. 37% in 2003) offered free shipping.
• 66 of the 140 retailers’ (47% vs. 45% in 2003) offered any information regarding in-stock availability on the product offering page.
• Only 11 of the 140 retailers (8% vs. 18% in 2003) offer in-store pickup of orders. Please note that not all of these retailers have physical locations.
• 120 of the 140 retailers (86% vs. 73% in 2003) offer estimated delivery times.
• 96 of the 140 retailers (69% vs. 70% in 2003) provide shipping cost early in the checkout process.
• 95 of the 140 retailers (68% vs. 57% in 2003) offered the option to telephone in payment for your online orders.
• 16 of the 140 retailers (11%) offer pay by check and 4 of the 140 (3%) accept PayPal.

The study reflects significant factors that customers have come to expect. Future Now, Inc knows from having spent the last six years working with online retailers and observing how customers buy at retailers’ websites that customers notice the little things. In the long run customers vote with their dollars for companies that have an intense focus on satisfying their customer’s needs.

For more information about this study or for assistance with your website please contact us.