Amazon customer satisfaction gets a boost, but why?

Piper Jaffray upgrades Amazon's customer service rating, partly because of its Kindle and new accompanying iPhone app, and partly to catch up with the e-tailer's success.

Larry Dignan

Amazon snared an upgrade from Piper Jaffray Monday based on a customer service survey and e-commerce innovations such as the Kindle and its associated iPhone application. However, the reasoning behind the upgrade is debatable.

In a research note, Piper Jaffray analyst Gene Munster acknowledged that he was fashionably late to the Amazon party. That hint indicates that this Amazon upgrade is really about Munster playing catch-up. Munster is upgrading Amazon shares to a "buy" from a "neutral."

Here's a look at Munster's reasoning:

  • Amazon's customer service. Piper Jaffray surveyed 300 online shoppers and found that 81 percent are satisfied with Amazon's customer service. That's down from 84 percent in December. Ninety-four percent of Amazon users would recommend it to a friend.

    Munster finds that Amazon remains the premier e-commerce destination, a finding that's not surprising. And then he cites this Amazon poll on customer satisfaction.

  • Amazon customer satisfaction
  • Europe unique users are off to a strong start in the first quarter.

  • Amazon can gain market share and continue to innovate. Munster reckons that Amazon can even miss earnings estimates and stay in Wall Street's good graces. Sure, it can.

  • The Kindle could be disruptive. Munster writes: "People don't know that they want it. We estimate it will account for about 2 percent of sales in CY09, and 4 percent in CY10."