Intelligent Enterprise

Recently, Cognitiative Inc. and Greenfield Online Inc. released their Q1 2001 Pulse of the Customer report in a joint effort to "track the attitudes, behaviors, and preferences of online customers." After surveying 2,000 online consumers, the report found that 92 percent shopped online while 84 percent also bought online. The more impressive and perhaps more important finding was that, out of those who shopped online, 93 percent said their expectations were met or exceeded.

Keeping these current online consumers happy is going to be an important trend in 2001, according to Laurie Windham, founder and CEO of Cognitiative. The strongest online purchase growth came from those who have shopped online before. People shopping for the first time only accounted for 12 percent of online buyers.

"A trend you will see is that a lot of promotional spending will shift from acquiring customers to retaining customers. Last year, freebies for first-time buyers brought people to the sites, but this year people are expecting loyalty programs," said Windham.

Aside from responding to promotions, confidence in the site's brand name is also important for attracting and keeping customers. Traditional retailers that customers could identify with and feel confident about were the new success stories of online shopping. The 2000 holiday season saw a surge of traditional retailers' online sites in the top 20 list of moneymaking sites. JCPenny.com, Walmart.com, and BestBuy.com all made it into the top 10 and BarnesandNoble.com was second on the list. The recent downsizing of online-only retailer Amazon.com, which was the number one moneymaking site in the 2000 holiday season, may add to the fears of consumers who do not have full confidence in dot-coms.

So how should e-tailers keep their buyers happy? First, let's look at what made them unhappy. Fifty percent of online consumers encountered difficulties - the number one problem being items out of stock. The problem grew worse when the buyer was not notified until days after the transaction that the purchase would not arrive in time for the holidays. An Accenture study found that 12 percent of orders failed to arrive by the promised delivery date.

Windham believes that the need to give customers better service is the most important competitive trend for 2001, meaning that companies must better integrate their online ordering with their inventory. Windham also points out that the companies need to be integrated on levels other than inventory, such as online product selection and customer service.

Cognitiative's report attributed the success of traditional retailers' sites to their ability to integrate good customer service. Traditional retailers were able to process returns much more quickly and some offered the ability to return online items to the physical stores. Windham suggests that as online shopping becomes more reliable and consumers become less likely to worry about online privacy, we will see a shift of purchasing from channels such as catalogs and TV shopping networks to online retail sites. In the Pulse of the Customer report, 50 percent of those surveyed said they purchased less from these offline channels because of their online purchases.

So, as the economy takes a downturn, e-tailers and retailers need to take a look at how their sites are hurting or helping their business. Internet sales are still increasing, and the companies that take note of the current trends will be the ones that turn shoppers into profitable buyers.

Jeanette Perez