America's Best (and Worst) Online Retailers

As a larger and larger portion of retail sales in the U.S. move online, customer service has become essential to e-commerce businesses that want to attract shoppers and keep them. E-commerce also has become critical to the profits of brick-and-mortar operations like Wal-Mart Stores Inc. (NYSE: WMT) and Best Buy Co. Inc. (NYSE: BBY). Research firm comScore reports that from the start of November through December 21, e-commerce sales reached $38.7 billion - up 16% from the same period in 2011. Very few retailers can ignore the growth in online shopping and the need for the e-commerce customer to believe he or she is being treated well.

Research company ForeSee recently released its "E-Retail Satisfaction Index (U.S. Holiday Edition)," which is based on more than 24,000 customer surveys conducted between Thanksgiving and Christmas. The companies covered by the study are 100 of the largest online retailers based on revenue. On a 100-point scale, the average retailer in the survey scored a 78. The benchmark against which all other e-tailers should be measured is Amazon.com Inc. (NASDAQ: AMZN), which also happens to be the largest e-commerce company in the world. ForeSee reports that Amazon's 88 rating this year is "the highest score ever attained by any retailer measured in the holiday Index since 2005." It is not clear whether Amazon is large because its customer service is so excellent, or whether its customer service is excellent because it is so large.

Some of the retailers included in the study have sales presences outside the internet - unlike Amazon. A number have brick-and-mortar or catalogue businesses, so online sales are only a portion of their total revenue. And, for some large retailers, their online sales efforts are still in the infancy. As measured by comScore, Walmart has the second most visited e-commerce site in America after Amazon. But online sales are only 2% of Walmart's U.S. revenue. Online revenue may be important to the future of large retailers, but e-commerce results are not crucial now. L.L.Bean ranks second on the Foresee satisfaction list, but it has physical stores in 10 states. Crate & Barrel is very near the bottom of the Foresee ratings, and it has more than 100 stores. Online-only retailers obviously have more riding on online customer service than retailers that operate stores or catalogues.

One final observation worth making is that the number of visitors an e-commerce site has does not appear to be related to its customer service rating. Companies appear to hold their own fates based on their retail practices and not their visitor count. Amazon.com is among the top sites for customer satisfaction, with 119.8 million unique visitors last month. 1800Contacts.com is also among the top-rated sites and had only 489,000 unique visitors.

24/7 Wall St. began its analysis with ForeSee's rankings, which are based on grades for content, website functionality, price and merchandise. We added the number of visitors to each website based on research firm comScore's data and then provided analysis about what each company sells online and how e-commerce is related to the balance of its operations.

These are the 24/7 Wall St. Best (and Worst) Online Retailers.

Filed under: 24/7 Wall St. Wire, Research, Retail Tagged: AAPL, AMZN, BBY, EL, featured, GMCR, LINTA, NTRI, PCCC, SBUX, SCHL, UNTD, WMT