Holiday e-commerce soars, but satisfaction drops

As the holiday season wound down, U.S. residents kept on shopping significantly more than they did in 2006, particularly on the day after Christmas, but they also reported being less satisfied with e-tailers, according to a pair of studies. And in Canada, glitches with to major retailers also caused some holiday pain.

Between Nov. 1 and Dec. 27 — the first 57 days of the holiday season — U.S. shoppers spent almost US$28 billion in online retail purchases, up 19 per cent compared with the same period in 2006, according to comScore.

Shoppers spent $545 million on Dec. 26, more than doubling the spending on that day in 2006, as they took advantage of “late-season” offers and discounts, according to comScore.

Still, it looks like online spending growth for the 2007 holiday season will fail to meet comScore’s 20 per cent forecast, and fall way below the 26 per cent growth registered during this period in 2006.

ComScore chalks up the smaller-than-expected growth to several factors, including warm weather in early November and various economic challenges this year, including higher gas prices, the real estate crunch and a “jittery” stock market, the company said late last week.

Andrew Lipsman, a comScore senior analyst, pointed out that the 2007 online holiday shopping season was dragged down by very slow sales in November’s first week, particularly in the key apparel and accessories category, as people put off buying winter clothes due to warmer-than-usual weather.

However, if one looks at the “core” of the holiday shopping season — between Thanksgiving and Christmas — spending increased 21 per cent, compared with the same period in 2006, he said.

While it’s undeniable that economic factors also affected spending in 2007, the growth also naturally slows as the online retail market expands and matures, a trend that will continue, Lipsman said.

In Canada, e-commerce at one of the country’s most popular chain stores came to an abrupt halt on Boxing Day when the Web site had to be closed down for almost two hours. The Toronto Star reported frustrated customers hurling insults on the comany’s recently launched online forums about the glitch, which appeared to be linked to the payment gateway. Best Buy Canada, which owns Future Shop, was also affected. Overall, however, Future Shop did business with three million customers, up 30 per cent from last year, the Star said.

Another important metric that dropped this holiday season compared with 2006’s was customer satisfaction, according to ForeSee Results, a provider of online customer-satisfaction measurement services.

A survey of more than 11,000 shoppers revealed that, on a 100-point scale, customer satisfaction with the largest 40 e-tailers dropped, in aggregate, to 74 points, down 1 point, from the 2006 holiday season, according to ForeSee. It conducted the survey in conjunction with FGI Research using the methodology of the University of Michigan’s American Customer Satisfaction Index.

While e-tailers in general made great strides in e-commerce innovation and improvements in the previous two holiday shopping seasons, they failed to deliver significant enhancements in 2007, said Larry Freed, ForeSee’s CEO.

“I have a hard time putting my finger on anything retailers did across the board that improved the experience from a consumer standpoint,” he said.

In previous years, e-tailers wowed shoppers with more product images that were of better quality and could be zoomed into and rotated, and also aggressively expanded their consumer-generated review sections, Freed said.

“Consumers’ expectations for Web site experiences increase every year, so we as consumers expected a bit more than we had last year and I don’t know that we saw a lot more. I think that was the driving force in seeing the overall satisfaction going down one point,” he said.

While it wouldn’t be the only factor in the slower-than-expected growth in spending, the lower satisfaction likely played a part in it, Freed said. “A 1-point drop, though not large, is still something of a concern and is hopefully a wake-up call to retailers to continue to innovate and improve the experience for consumers if they want to see continued strong growth,” he said.

Still, the spending growth in online shopping this holiday season, even at 19 per cent, would greatly outpace the growth of overall U.S. retail holiday spending, forecast at 4 percent by the National Retail Federation.

That four per cent growth rate — which would put 2007 holiday season retail spending in the U.S. at almost $475 billion — would fall below the 10-year average of 4.8 percent and be the slowest since 2002, according to the National Retail Federation.

— with files from Shane Schick

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