Customer Satisfaction Ratings Drop For Amazon, EBay

A study by the University of Michigan and ForeSee Results reports that both Amazon and eBay saw more than a 4% drop in the study's annual customer-satisfaction index.

Tony Kontzer, Contributor

February 14, 2005

2 Min Read and eBay Inc. are generally regarded as experts in customer satisfaction, but a study released Tuesday suggests that efforts by the two E-commerce bellwethers to forge into new markets may be eroding their expertise.

The study, completed by the University of Michigan and online customer-satisfaction consulting firm ForeSee Results, indicates that as Amazon has branched out into new product areas, it's relied on retail partners to service customers and eroded its brand identity in the process. After seeing its customer-satisfaction index either hold steady or grow each of the previous three years, Amazon's rating fell 4.5% in 2004, to a rating of 84 from 88 in 2003.

That slip allowed, which unlike Amazon has a brick-and-mortar retail presence and sells only its own product lines through its Web site, to take over the top spot among retailers with a satisfaction rating of 87, up from 86 last year.

Meanwhile, eBay appears to have run into similar difficulties during its evolution from an auction community into a full-fledged marketplace selling new and used merchandise through a fast-growing community of small businesses. The study indicates eBay has exchanged happy customers for revenue growth, with its customer-satisfaction index dropping 4.8% for 2004, to 80 from 84 the previous year.

That allowed Inc., which also has evolved its business model from auction-only to selling airfares via a model similar to those used by Expedia, Orbitz, and Travelocity, to close the gap. Priceline was the only site in the auction category to post improved satisfaction: Its rating rose 2.8%, to 73 from 71 last year.

The declines of Amazon and eBay dragged down the E-commerce sector as a whole, with online customer satisfaction dipping 2.7%, to a rating of 78.6 from 80.8 in 2003. The E-retail category recorded the most dramatic drop, mirroring by falling 4.8%, from 84 to 80. A poor performance from Charles Schwab Corp. didn't help the E-commerce sector, either, as the brokerage saw its online customer-satisfaction rating fall 5.3%, to a relatively dismal 71 from 75 a year earlier. Online brokerages generally score lower than retailers and auction sites in customer satisfaction.

Despite the drop-off in online customer satisfaction, E-commerce sites still enjoy superior loyalty to their brick-and-mortar counterparts. Their 78.6 rating was still 6.4% higher than the aggregate customer satisfaction of 73.6 for online and offline commerce.

The study's findings were based on surveys of more than 4,000 online shoppers since the end of 2004.

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