Report: E-tailers Still Facing Service Hurdles

Many e-tailers will not have the capabilities to meet growing customer service demands this holiday season, according to a report issued by Jupiter Research and the NPD Group.

The survey indicates that only 29 percent of Web sites meet consumer response time expectations, which are at an all time high.

"Service winners will not dazzle customers, but will instead rise above competitors by providing customary and mundane actions, such as delivery updates and rapid responses," Jupiter analyst David Daniels said.

Sixty-two percent of consumers who shopped online in 1999 and contacted customer service had a negative impression of online customer service, the survey said.

Delivery Dilemmas

The majority of online shoppers' negative impressions -- 53 percent -- revolved around delivery issues.

According to the report, 33 percent of online customers expect an e-mail response regarding delivery times within five hours, with the majority expecting it within four. However, the Jupiter survey found that one-third of consumers who ordered out-of-stock merchandise were not even notified of a delivery delay, a situation that signals possible violations of Federal Trade Commission (FTC) shipping regulations.

"Retailers must recognize their delivery limitations early, and inventory managers must work with customer service staff to set appropriate expectations," the report said.

Outsource Support

Jupiter said that online holiday shopping spending will jump to US$12 billion this season, up 66 percent from spending in 1999. Yet only 25 percent of e-tailers were handling increased service volume by partially outsourcing peak call-center operations.

Accordingly, the companies that succeed this holiday will be those that offer back-up support to meet the increasing demand.

"Without redundant resources, businesses are left exposed if their internal resources do not keep pace with demand," Daniels said.

Seeking Solutions

E-tailers have a chance to pick up some of the customer service slack by using self-service help systems, which can make a big impact on service ratings and reduce costs. Currently, only 25 percent of the companies surveyed were using such online solutions and 71 percent of customers had never used such an online help method.

Online retailers also have more leeway with first-time online shoppers, who are more tolerant of delivery problems and customer service glitches.

"Newbies are more likely to accept wearisome service experiences; they will be more gratified by avoiding the offline retail crush," the report said. "However, bad experiences online can quickly make them less forgiving of future online shopping experiences."