Web Shoppers Are Happier These Days

If you're feeling better lately when you look at your Netflix (NFLX) queue, e-ticket or online stock portfolio, you're not alone. A new study says consumer satisfaction with online retailers is up, especially with online brokerages and travel-booking sites. The report also hints that consumers may be ready to spend more online."While economists debate whether or not the recession is truly over, and whether the economy will get better or worse, the increase for the e-commerce sector bodes well for all companies concerned," wrote Larry Freed, CEO of market research firm ForeSee Results and the study's author. ForeSee Results analyzed the rankings of online retailers produced by the American Customer Satisfaction Index, a measurement created by the University of Michigan's Ross School of Business, which crunches millions of customer evaluations from more than 200 companies and government agencies.

The ACSI, which has been collecting measurements for the last decade, is generally good at predicting future success, so a rebound is good news for industries hit by the recession, according to Freed's report. Online retailers generally haven't suffered as much as bricks-and-mortar stores during the recession -- the recent Commerce Department retail sales tally found online stores' sales were up 12.4% in January -- but the travel and brokerage sites did feel the pain as consumers shut their wallets.

As the Markets Go, So Go Brokers

Consumers are now happier with their brokerage sites, thanks in no small part to the stock market's rebound. The group's score rose 5% in 2009 after dropping 6% in 2008, mostly because of gains by E*Trade Financial (ETFC) and TD Ameritrade (AMTD), which both raised their scores by 7%. But the sector's favorites were two traditional investment houses, not Web-only players: Fidelity Investments and Charles Schwab (SCHW).

That e-brokers are more popular is no surprise, according to the study's authors. After all, the S&P 500 index lost 38.5% of its value in 2008 -- most of it late in the year -- and then regained some of the lost ground in 2009, rallying up 23.5%.

"When the market crashes, customers aren't happy. When it recovers, they feel better about their experience," said Claes Fornell, a professor at the University of Michigan, in a statement. "But the improvements in e-retail and online travel are a good sign that consumers may be ready to spend again, if they can find the means to do so."

More Popular Than Bricks and Mortar

Satisfaction with online travel sites rose for the first time in five years. Most improved in the sector was Priceline.com (PCLN). The auction site, which has been expanding its regular travel reservations services, increased its score by 5.6%. But it couldn't catch up with Expedia (EXPE), which is still the leader in the e-travel segment.

Satisfaction scores at online stores, which dipped slightly last year, rose again in 2009, and the e-tailers are even more popular than bricks-and-mortar stores. The ForeSee study notes the average customer satisfaction index for e-tailers is 9% higher than the average for all of retail. The sites have compensated online shoppers, who can't physically touch their products, by giving them 24/7 access and more product information than they can get in a store, the study says.

Netflix, which turned the video-rental business on its head, has the best customer-satisfaction among e-tailers, followed by Amazon.com (AMZN) and computer e-store Newegg.

Keeping Customers Happy

However, the report also warns that Amazon, which had been the leader in customer satisfaction for years, should "take heed" that its rankings have stayed put for the last two years and been overtaken by Netflix and Newegg. Freed notes that Netflix and Overstock.com (OSTK) have both raised their scores during the recession, while Amazon and eBay (EBAY) haven't yet recouped their losses.

Some retail analysts estimate that about one-third of shopping decisions made last holiday began with a Web search and that this number will grow in 2010 while consumers remain very cautious in their spending and retailers keep upgrading their sites. With retail not out of the woods yet -- consumer confidence has been up and down lately -- keeping customers happy online could move the needle forward.
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