Report: Customer Relationships Key to Dot-Com Viability

Amid reports that a number of dot-coms are on the brink of failure, GartnerGroup and Consumer Reports are recommending improved customer service and privacy statements as key ways to avoid the e-commerce shakeout.

Recent U.S. e-commerce casualties include privately held e-tailer ToySmart.com, which is struggling and likely to close, despite high-profile backing from Walt Disney. Another online toy store, Viacom-backed Red Rocket, closed its virtual doors two weeks ago.

Across the pond, UK e-tailer Boo.com closed up shop last week. UK startup Net Imperative has also called in the liquidators, although the company continues to operate its site, an online community and information resource for Internet professionals.

Watch the Brick-and-Mortars

Analysts for the Stamford, Connecticut-based GartnerGroup suggest that online businesses pay attention to what their brick-and-mortar cousins are doing in order to “provide customers with the appropriate balance between ‘e’ and traditional business.”

Online customers will often give an e-tailer only one chance to succeed or fail, according to Darryl Plummer, a vice president and group research director at Gartner.

“Companies cannot risk having their customers abandon their shopping baskets and never returning. Just as the majority of users rejected the concept of the paperless offices, customers do not accept a ‘pure Web’ relationship with their supplier,” Plummer said.

He added, “People need human contact; they need the reassurance that machines just cannot provide. Most of all, they need someone to yell at when things go wrong, and the successful e-business will need to take this into account.”

Gartner recommends that e-businesses take five steps to improve their business practices:

• Establish outsourced call centers that can deal quickly and efficiently with queries that cannot be dealt with over the Web;
• Provide customers with a foolproof mechanism for returns — a key element to the value chain that cannot be provided over the Internet;
• Invest in the physical infrastructure to ensure that delivery and storage facilities can meet customer demand;
• Invest in the data center and consider outsourcing its management to a data monitoring specialist; and
• Make sure the complete experience, from the moment a customer enters the Web site through fulfillment, delivery and return, is as easy as possible from the customer viewpoint.

Improved Policy Statements

For its part, Consumer Reports is recommending basic improvements to e-commerce Web sites, after evaluating almost 50 e-commerce sites over the past six months. For example, the product-testing firm concluded that most sites could improve their ratings from “average” to “excellent,” and create more satisfying online experiences for customers by clarifying their policy statements.

“Most of the sites we evaluated were ‘Average’ or ‘Very Good,'” said Anne McKay, community manager of Consumer Reports Online. “But there are a number of things that all sites could do to improve. We found that certain product categories in our e-Ratings are leading the way in setting standards for all e-commerce sites — specifically toys, books and music, and apparel. These are among the most popular categories on the Web, and we think that competition in the categories is helping the sites make innovative changes.”

Many of the sites evaluated by Consumer Reports had overly complex privacy statements, which could be improved by getting to the point and explaining exactly how a customer’s personal information is or is not used, the product-testing firm advised.

Companies should also do away with the common practice of requiring customers to “opt-out” if they do not want their private information shared with third parties. Instead, customers should be asked to “opt-in” if they want their information shared.

Enhanced Navigation and Interactivity

Finally, online businesses can improve the usability of their sites by having clear, intuitive navigation aids and a search engine that is flexible and well cross-referenced, according to the study.

Consumer Reports also found that it would be helpful to consumers if sites were to offer interactive features — such as worksheets, planners, and shopping lists for quick reordering — to enhance and customize the shopping experience.