Study: Glitches and Fraud Derail Online Shoppers

Newly-released research from The Boston Consulting Group (BCG) reveals that a strikingly high online purchase failure rate and fear of online fraud are preventing a sizable number of online shoppers from returning to the Web.

The study, “Winning the Online Consumer: Insights Into Online Consumer Behavior,” shows that while 28 percent of attempted online purchases fail, four of five consumers who have purchased goods online within the last 12 months experienced at least one failed purchase attempt.

The results are based on a survey of 12,000 consumers in the U.S. and Canada, and were generated by BCG during the fourth quarter of 1999. Of those surveyed, 57 percent of Internet users have shopped online, and 51 percent have purchased goods or services over the Internet. The typical online purchaser completed 10 transactions and spent $460 (US$) online over the last 12 months.

Failure Rate Too High

BCG believes that the percentages of failed purchase attempts are too high. According to Eric Yolles, who managed the teams of BCG analysts for the study, “The first online purchase experience is the moment of truth for the online retailer.”

Yolles told the E-Commerce Times that “at this stage, a lot of people are unsure about the online shopping environment, and they enter it with a whole bunch of concerns, whether real or imagined.”

Most notable among those “frustrations and failures” is anxiety over credit card security.

High Expectations

Twenty-eight percent of consumers whose purchases failed stopped shopping online, while 23 percent stopped purchasing just at the site that failed. The study found that six percent also stopped shopping at the retailer’s brick-and-mortar locations.

“Consumers have a certain level of experience with these retailers who have offline locations,” Yolles said. “So they have the exact same level of expectations for the online site. To the extent the online retailer can’t deliver that, the repercussions are pretty severe.”

With that nexus in mind, Yolles said the smart retailer does not rush to put up a Web site just to get online. “It’s better to take the time to make sure the site is well put together first. Increasingly, we talk to consumers who tell us the thing they like about their favorite Web site is simply that they understand how to use it.”

Consumers who have had a satisfying first purchase experience are likely to spend more time and money online, Yolles said. Satisfied online customers averaged 12 online transactions and spent $500 during the past 12 months, as opposed to disgruntled customers who spent $140 on four purchases.

Pathways to Customer Satisfaction

While the study seems to indicate that there are no second acts in e-commerce, BCG concluded that retailers that truly deliver the goods could grow old on the Internet. The study identifies five key lessons for online retailers:

• Remove access barriers in the online purchasing experience
• Get on the consumer’s short list of top five bookmarks
• Engineer a flawless, end-to-end purchase experience
• Target and clinch the heavy purchasers
• Cross-leverage online and offline channels

“There’s an amazing number of people without a lot of technological capabilities getting online right now,” Yolles said. “Retailers have to recognize they are serving and addressing an increasingly heterogeneous customer base with different skill sets. If their core customers are not online, they soon will be and the stakes are very high in terms of satisfying or delivering to their needs.”