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Online retailers fumble on customer care

While online retailers are tallying the results of a strong holiday shopping season, their customers may be enumerating their service failures, a report says.

While online retailers are tallying the results of a strong holiday shopping season, their customers may be enumerating their service failures, according to a report released Thursday.

According to a Jupiter Media Metrix study which measured 250 Web sites, 70 percent of online retailers failed to resolve basic customer requests online within six hours. Customers that went with online-only operations endured the worst treatment, according to the study.

Online-only retailers fared slightly better at responding in the first six hours than did brick-and-mortar operations, but were less responsive overall. Forty percent of online-only retailers took more than three days to respond or did not respond to e-mail at all, compared with 28 percent of brick-and-mortar retailers.

"Santa might be relaxing now, but retailers can't," said David Daniels, a Jupiter senior analyst who cautioned retailers to appease customers who've had sub-par experiences.

Indications are just coming in that online sales had a strong holiday season despite the slow economy. Comscore Networks, which tracks e-tail activity, has said that online shoppers looked last week like they were on track to hit, or slightly beat, its forecast of $10 billion to $10.25 billion. America Online said that its members spent $11 billion online during the fourth quarter, up 72 percent from last year.

Internet retailers eBay and Amazon.com have yet to release their sales figures, but are expected to meet or beat estimates when they report on Jan. 15, and Jan. 22, respectively. Ebay is likely to hit $215 million in sales vs. its own estimate of $200 million to $210 million, according to Robertson Stephens analyst Lauren Cooks Levitan, while Amazon's sales may hit $1.02 billion, within its range for 0 percent to 10 percent growth over last year's fourth quarter.

But while companies may score well with their sales figures, they're still failing with customer satisfaction, according to the Jupiter study. Only 30 percent of retailers resolved basic requests within a six-hour window. That's slightly better than last year's 27 percent, and much better than 1999's results, when fledgling e-tailers bungled with the massive holiday rush.

Customers that went with online-only retailers as opposed to brick-and-mortar retailers may have been even more disappointed. Thirty-three percent of online-only operations responded within the first 6 hours, compared with 28 percent of brick-and-mortar operations. Those that didn't respond during that window weren't likely to respond at all. Only 26 percent responded within 3 days, and a whopping 40 percent took longer than 3 days or just didn't respond. In comparison, 28 percent of brick-and-mortar retailers took longer than 3 days or didn't respond at all.

According to a Jupiter consumer survey last November, 57 percent of customers said the speed of a retailer's response to e-mail enquiries would affect their decision to make future purchases from them.

"Retailers must scrutinize online customer-service response times, contact-center service levels and staffing resources," Daniels said.

Also Thursday, a research report was issued indicating that companies will be spending less in 2002 on customer service software. Global spending on customer relationship management (CRM) software, $6.7 billion in 2001, is expected to be flat or negative in 2002, with no increase expected until 2004, according to a report issued Thursday by Meridien Research.

Software companies have already reported a slowing in sales for CRM software. Siebel Systems, the biggest seller of CRM software, reported a third-quarter sales decline of 11 percent year over year; analysts, on average, expect a 25 percent drop in the fourth quarter. They say that part of the decline is likely due to companies shifting away from niche specialists like Siebel to companies that offer more general software packages that encompass CRM applications.