Big, Ugly Obstacle Holds Back Online Growth

Discussion
Apr 06, 2007

By George Anderson

It’s kind of hard to find fault when you look at the year-to-year upward sales arc that has been ongoing in the world of e-commerce. But, that is exactly what Sucharita Mulpuru, senior analyst for retail with Forrester Research, has done in the report: The Big, Ugly Obstacle Holding Back E-Commerce.

According to the study, consumers found quite a few aspects of the online shopping experience to be less than satisfying.

Nearly one-in-three reported having one or more problems, including shipping delays, the number one complaint, followed by backordering/out-of-stocks, sites that were slow or froze, tracking issues, confusing product depictions online, poor customer service and other factors.

“The problem is with where retailers are focusing their attention and spending online,” Ms. Mulpuru told destinationCRM.com. “So much is spent on marketing and merchandising the site, but there’s a huge gap in the area of website operations. I don’t know of any other place where 30 percent of customers or more report problems and it’s a good thing.”

Even the best of companies run into issues, according to the report, and “the best way to cope is to acknowledge that they happen and create an action plan to quickly identify future problems and resolve them.”

Forrester offered steps online merchants could take to more quickly improve the customer experience. These include measuring performance using a wide variety of metrics; sharing benchmarks across business functions; recognizing what aspects of the business are good enough and focus on those that are not; and concentrating on fulfillment and shipping.

Ultimately, companies that excel have been improving the customer experience as the raison d’etre of the entire organization.

“Companies like Netflix and Amazon are religious about it,” Ms. Mulpuru said. “They have such good customer service that their reputations for it have driven their success.”

Discussion Questions: Where do you see the biggest issues with the online shopping experience? What strategic and/or tactical solutions would you recommend to e-tailers?

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16 Comments on "Big, Ugly Obstacle Holds Back Online Growth"


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Mark Lilien
Guest
15 years 1 month ago

The Forrester eCommerce report doesn’t systematically compare eCommerce to bricks-and-mortar traditional shopping. Certainly the latter channel is often unsatisfactory and is held back by uneven performance, too. Internet shopping is frustrating when you can’t find a phone number to speak to a problem solver. But most bricks and mortar stores don’t make it easy to find a problem solver, either. It’s unlikely that service will get better (online or otherwise) since retail margins aren’t likely to rise, and service (especially the human variety) isn’t free. Some people complain that online shopping isn’t well-aligned with the bricks-and-mortar experience, that the multi-channel retailer should have all channels providing a consistent customer experience. But is there really a big gap? Many retailers ARE consistent: they provide a low-grade experience online as well as in-store.

Kai Clarke
Guest
15 years 1 month ago

The author is viewing online retailing through dimmed glasses. There are very few complaints (as a percentage of sales) compared to those of the traditional retailer, and the strengths of online retailing (no lines, no drive, instant comparisons, same return policies, no taxes, low freight costs) easily outweigh the few inconveniences. This is why online sales are continuing to grow as fast as they have. As the presence of full motion video grows for our cellphones, we will continue to have great growth in this category. There are no true obstacles to online growth, and we will see more and more purchasers of products online.

Herb Sorensen, Ph.D.
Guest
15 years 1 month ago
I’m going in a little different direction here, applying the Forrester comments to the offline, in-store experience: “Forrester offered steps online merchants could take to more quickly improve the customer experience. These include measuring performance using a wide variety of metrics;” Comment: When it comes to measuring the in-store shopping experience, offline retailers are hampered by not having access to the clickstream that online retailers do. Nonetheless, this is the potent force that is driving online retailing to a leadership position for ALL retailing–metrics! “…sharing benchmarks across business functions;” Comment: Without a uniform suite of “clickstream” metrics, there is no common language suitable for communication across functions. We are rectifying this, to an extent, with our PathTracker® Tool Suite. But there is no point in using detailed, specific metric language if your audience doesn’t think in detailed metric ways. Hence my regular urging to think online when trying to think about offline, in-store shopping. “…recognizing what aspects of the business are good enough and focus on those that are not;” Comment: The key to success… Read more »
W. Frank Dell II, CMC
Guest
15 years 1 month ago
I see a number of issues with online shopping that have greatly reduced sales growth. It starts with web sites designed by programmers, not by customers for ease of shopping. Sites charging shipping, handling and taxes (illegally) turn shoppers off. The result is higher prices and receipt delay versus driving to a store. Shoppers should know when items are in or out of stock when they select the item for purchase. If it’s out-of-stock, a realistic expectation of when it will be available to ship must be provided. Then there is the execution. Every purchase from Dell computer arrives ahead of the expected delivery date. There is no reason not to provide tracking numbers, as 90% or more goods are shipped FedEx or UPS. Customers can go online and track. The biggest problem is online sites that sell items they don’t have in stock and must first go out and purchase them before they can ship. In today’s world, the standard is if you order today it should be shipped the next working day. Web… Read more »
James Tenser
Guest
15 years 1 month ago
Praise is due to Sucharita for reinforcing a central tenet of retail customer service: It’s not the technology, it’s the practice. Yet sound multichannel service practices require reliable, scalable, functional technology to support a business model built around customer wants and needs. Industry contacts inform that chaos still reigns in the online retail world in the weeks prior to and following the holiday surge. Technology systems that perform with adequate reliability year-round often are stressed past the breaking point when the order rate mounts and large numbers of returns and other service issues are addressed. In too many instances, the online store functions passably well at merchandising the goods and taking the order, but the back end and fulfillment systems blow up. Small service errors multiply into customer crises that tax the service organization. Well-intentioned call center people then find themselves unable to resolve problems promptly or properly because the business model has failed them. There are happy exceptions, of course. However, a great many retailers are still struggling with home-baked systems that aren’t up… Read more »
Bill Bittner
Guest
Bill Bittner
15 years 1 month ago
The first thing retailers have to do is recognize that online shopping is the way of the future and that it is imperative that they make it work right. Too often the Brick and Mortar retailer begins right off the starting line by relegating the online experience to an outside service provider and then trying to meet the demand through existing infrastructure. The first thing to do is recognize that there is a whole other tier required in the distribution network to service the online shopper. Don’t think you are going to be able to handle them through existing distribution or store facilities. Much like a “repack warehouse,” this new tier has to have the equipment and selecting aisles that allow retailer personnel to efficiently select single units of items normally distributed in cases. Instead of the B2C processes ending with the sale as the customer leaves a store, they just begin when the customer sale occurs on the website. Fulfillment becomes a whole new set of steps that enable the retailer to differentiate themselves,… Read more »
Laura Davis-Taylor
Guest
Laura Davis-Taylor
15 years 1 month ago

I found this report quite surprising, as I am an avid online shopper (and former interactive marketing person) and have little complaint other than an occasional out of stock and an issue with paying to return items not true to size or description. Even then, the customer service has rarely been poor.

What surprised me the most is that other retail research reports have found consumers to express frustration that their brick and mortar store experiences aren’t as good as their online ones and they want retail brands to build better bridges between the two.

This makes me wonder if these issues are tied to specific sites that are blowing this out of proportion. Certainly, level of comfort and experience with online navigation must have a play here as well Amazon and Netflix raising user expectations for all sites. Unfortunately, not everyone has their budgets for infrastructure and technology.

I’ll be curious to hear what others have to say on this!

Gregory Belkin
Guest
Gregory Belkin
15 years 1 month ago

The biggest issue I see with eCommerce is inconsistency with traditional brick-and-mortar or call center practices. eCommerce is only as good as those who manage it: good customer service and tight internal processes are the true keys to process success. Most importantly, however, eCommerce practices must be integrated with other traditional practices, and not siloed into its own universe.

As a former Aberdeen analyst, I spent a lot of time and effort on this subject. All of my research (and every thing I have heard since) shows that a majority of retailers still treat different selling channels differently. Separate IT practices. Separate inventory information. Separate pricing and promotional strategies. Separate returns policies.

The result? Unhappy customers trying to reconcile one channel’s offering with another. Processes must be unified, or else unhappy customers will go elsewhere.

Dick Seesel
Guest
15 years 1 month ago

It’s hard to tell from the study being cited whether consumers are dissatisfied with web-only retailers or multi-channel retailers. Many web-only retailers have failed because they do not bring a heritage of customer service or supply-chain expertise to the table, with Amazon and Netflix being famous exceptions to this rule. Multi-channel retailers who are committed to parity between their in-store experience and their online experience are likely to succeed…as long as the in-store experience is a rewarding one for the customer in the first place.

David Biernbaum
Guest
15 years 1 month ago

Sucharita Mulpuru, senior analyst for retail with Forrester Research has effectively identified several problems, pitfalls, and above all the opportunities that need attention in doing business via eCommerce; however, eCommerce today is just a mirror of any other business categorization. There will always be businesses that are extremely competent and customer service oriented, and a larger number that will fail because they lack the funding, expertise, or resources to obtain and maintain customers. eCommerce has matured to a point where it can’t be painted with any kind of broad brush anymore, for better or worse. Like any other category, eCommerce will have its share of businesses that are competent and long term players, and many more that are not.

Dan Gilmore
Guest
Dan Gilmore
15 years 1 month ago
I am going to tie two of the above comments together. One commentator notes you can’t look at the eCommerce market as one big thing. In a sense that is right, but I would argue in another sense it is not. A small number of companies have earned some level of deserved respect and excellence (Amazon), which is why a growing number of companies outsource their store fronts and/or order fulfillment to Amazon (though in turn, Amazon is increasingly using drop shipping). But I think for many years it will still be a maze of alternatives out there, both from multi-channel merchants (with the key factor being geography no longer matters, as it does with brick and mortar, so everyone competes with everyone on the web), and small and/or web-only players. This is driven by customers relentlessly looking for price and to a lesser extent selection. So, customers will always have a range of web experiences, which over time will get better mostly across the board, but still with wide variation. I recently had what… Read more »
Paul Waldron
Guest
Paul Waldron
15 years 1 month ago

Online shopping or shopping advice is tricky in the best of circumstances and is much more so when we are talking about CPG products.

Typically a FMCPG consumer is looking to buy multiple items for their mundane weekly or semi-weekly replenishment needs. They want speed, complete fulfillment, impeccable on-time delivery or pickup and they want the same items available in the bricks and mortar store.

This last point is particularly vexing for retailers. The ability to tie together product information in a meaningful way across the many disparate applications and silos in a grocery, drug or mass retailer is virtually non-existent. When the customers see a product online, make the purchase decision and then find the product from the shelf is different than the one online, they often treat it like an out-of-stock.

These issues are but one of the reasons so many retailers are looking for a common source of product information across their functional silos.

Nikki Baird
Guest
Nikki Baird
15 years 1 month ago
I have no doubt that the operations aspects of eCommerce and multi-channel are a nightmare that has so far been mostly hidden from consumers’ eyes. And it’s getting increasingly difficult to continue to hide how bad it is. A lot of retailers got caught up in the internet land rush, and did so either with very immature commerce platforms, or with heavily customized ones–customization that reached to include inventory and fulfillment. I’ve been shocked at the most basic WMS and inventory systems that are used to support many a $1B+ retailer’s online business. Also, the growth of eCommerce has been such that a lot of retailers are hitting the wall in terms of operations, and are now having to make decisions about whether to open a new facility, or try to get increased efficiencies out of the existing place. And operations on the whole has had a harder time getting investment dollars because most of that, up till now, has gone to sprucing up the website and increasing conversion rates. The time is ripe for… Read more »
Bill Bishop
Guest
Bill Bishop
15 years 1 month ago

The research that we’ve done on online shopping reveals that the value proposition and shopping experience is truly quite different from that provided in the brick-and-mortar store, and some surprising dimensions of the experience can be very significant.

It seems to me that the first thing that an e-retailer needs to do is to establish a broad and comprehensive understanding of the value proposition that shoppers assign to their services and find ways to amplify the sources of value creation and minimize the the things that are reducing value within the context of the total value proposition. This more holistic approach should result in a significantly stronger value delivered to shoppers and pave the way for increased patronage.

Paula Rosenblum
Guest
15 years 1 month ago

The biggest issue I find with the online (vs. cross-channel) shopping experience is clearly with customer service. Everything is fine until you need to talk to a human and have an actual question answered.

It’s often virtually impossible (especially in the case of web-only retailers) to find a customer-service phone number to call. Usually I have to resort to looking at a site map to find a number.

Having said that, overall, I too am surprised at the results of the survey. By most other accounts, the eCommerce experience is superior to the in-store experience and cross-channel experience. Sushirita knows what she’s doing, so I don’t doubt her results. I’m just surprised.

Joy V. Joseph
Guest
Joy V. Joseph
15 years 1 month ago
I think the issues with online shopping are highlighted because it has not yet completely been assimilated into the expectations of shoppers. I do an equal amount of shopping online and in-store and have found customer service issues in different instances in each. I had to run around in circles to be refunded for an airline ticket purchased online that I had to cancel due to the fault of the airline and the agent. I never heard back from the email query I sent, I could hardly ever get to talk to a live person and the automated voice response could not help me because of the uniqueness of the problem. Ultimately my wife sent an email to the CEO, who, promptly responded and set the refund rolling. On the other hand, I have had really bad in-store experiences with a national retail chain, where I was buying furniture and got entangled in the commission battle between the two sales associates who were helping us. So, I believe there are issues with both online and… Read more »
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