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April 8, 2015

Less Holiday Snafus Mean Higher Satisfaction for Online Retail

While traditional retailers see few gains in customer satisfaction for the holiday season 2014, one industry category manages an upswing: Internet retail. According to ACSI’s Retail Report 2014, customer satisfaction with department and discount stores stays flat, while specialty stores decline compared with the prior year. Yet consumers are more pleased overall with their online shopping experiences. The twist is that websites from brick-and-mortar competitors have a hand in the upswing.

Among the pure-play Internet companies in the ACSI study, nearly all show weaker satisfaction in 2014 compared to 2013. In contrast, the aggregate score for “all other” Web retailers—which includes smaller websites and the online channels of traditional stores—jumps 8% to an ACSI benchmark of 81 (0 to 100 scale). The small players’ positive momentum boosts the category average to 82, effectively recouping the large loss incurred in 2013 when bad weather caused a late-season shipping fail.

Coming into this season, both retailers and shippers were better prepared to avoid the prior year’s disappointments. Shipper UPS, however, may have over prepared. The company hired thousands of extra workers only to find that demand turned out to be lower than anticipated with the exception of peaks on Cyber Monday and December 22.

Yet, in spite of shipping successes, four big Web retailers show customer satisfaction declines: Amazon (-2%), Newegg (-2%), eBay (-1%), and Overstock (-3%). The only major player to gain in 2014 is Netflix, a company that is still in recovery mode following its severe decline in 2011, when consumers reacted to price hikes.

The upward ACSI path of Netflix since 2012 coincides with a quadrupling of its stock price and success with producing original content. While Netflix still falls short of its pre-2011 satisfaction level, it is again closing the gap to leader and streaming rival Amazon. With the streaming market poised to receive an influx of new players, some from the traditional TV business, neither company should rest on its past laurels when it comes to satisfying customers.


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