The online retail experience will get better
(and why you should be worried about that)

According to research by ForeSee Results, an online customer satisfaction firm, online retailers are not very happy with their own shopping experiences.

Satisfaction Survey
According to the survey report (available on the ForeSee Results web site):
"The results in the study were collected using an online survey co-sponsored by ForeSee Results and Internet Retailer. This survey used the methodology of the American Customer Satisfaction Index (ACSI) to measure the satisfaction of e-retail industry insiders’ shopping experience with other e-retailing sites. A total of 368 e-retail industry insiders participated in the study and were asked to evaluate their experience with online retailers, other than their own company’s."

"The good news is e-retail insiders are more satisfied with the state of their e-retail experiences than last year, with their overall satisfaction surging ahead 8.6%, improving from a 58 last year to a 63 this year, on a 100-point scale. Yet as they are the most demanding of online customers, they still significantly trail overall consumers’ very strong Online Retail Satisfaction score of 83, as measured by the ACSI.

It's interesting that the general Online Retail Satisfaction score (83) is higher than the Offline Retail Industry satisfaction score of 75. Amazon.com has the highest satisfaction score of anyone online (measured in this way): 88.

What it means
The report "suggests that e-retailing will continue to get more competitive because the insiders want the online shopping experience to get better. "Investors and customers should be happy that these insiders are so hard on themselves," ForeSee Results CEO Larry Freed in a statement. "It means they're not taking their success for granted and aren't just sitting back and enjoying their accomplishments."

Okay, the words "success" and "accomplishments" should be taken with a grain of salt, since not many online retailers can tell big success stories yet.

"Internet history and ACSI experience suggest that online customers’ expectations will continue to rise and preferences will change rapidly. To keep the pulse on these expectations and preferences, e-retailers should constantly measure and work to improve customer satisfaction at their sites. The first step in continuous improvement is to be able to identify weaknesses and opportunities."

Thoughts & Predictions
This is a good indicator that online retailers (and others who place a high value on their online channel) will be looking for more ways to improve their sites. Currently Amazon.com is the benchmark for retail sites, and as leaders like Amazon keep raising the bar, consumer expectations will rise as well. Sites that can't keep up will see lower customer satisfaction. Sites that provide the best experiences will see higher customer satisfaction, higher revenue and higher customer retention. The best big sites will get bigger, the bad sites will get fewer, and like most other industries, you'll see consolidation over the long term.

Online businesses looking to stay around will need to lean on good experience design and utilize usability (user-centered design), information architecture, branding, and channel integration. Offline businesses who want to take advantage of the online channel will need to meet customer expectations of a good online experience. Those expectations will be set by online leaders. Metrics will be key to constant improvement and benchmarking.

If you don't have a team constantly measuring and improving your customers' online experience, your online days will be painful and numbered until you change your approach.

The days of playing around in the web channel have ended for most serious businesses. Small start-ups will continue to innovate and bring breakthrough ideas to market; challenging the leaders and stirring the proverbial pot. (See Google for a recent example.)

Is there a Google comin' to get you?
Amazon, eBay, Yahoo!, and Google all have sizable User Experience or Usability teams. Those teams play a major role in their companies' success. Their company cultures are also very centered on the quality of their products - their web sites, applications, and services. For example, Google's Enterprise Search Appliance is sold as "plug and play" -- they sell you a piece of equipment that you plug into the power and network in your data center, and it's a simple configuration process to set it up to provide search results on your intranet. No messing around with multiple hardware and software vendors, no worrying about who supports the hardware the software runs on - Google supports the whole solution. (Yes, I said that buzzword "solution" -- in this case it's actually warranted.) There's no chance of vendors pointing fingers at each other. Have technolgy vendors like IBM, Oracle and HP noticed this model? Are they worried it'll take off? Or are they considering how to use this model to get a leg up on the competition?

IBM likely doesn't see Google as a "competitor" -- but it's the Googles of the world that should keep them awake at night. It's those wickedly smart companies that are 100% committed to selling more intuitive solutions, more usable products, and better experiences that can quickly redefine an industry just as Google has done with search. Amazon's done it with books and online retail.

Are you worried about where your next competition will come from? You should be. (Regular readers may wonder:) What does this have to do with user experience? Everything.

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Initial ComputerWorld article fournd via Webword
Study finds Internet retailers unhappy with own online shopping experiences

Related Posts:
- Practicing Usability in the future
- User centered design sells products