The Best and Worst Online Stores This Holiday

Customer service surveys cannot entirely distinguish between true, direct customer service on the one hand and brand perception and reputation of the company providing the service on the other. A look at the customer service scores of the largest retailers proves that point. 24/7 Wall St. examined the internet retailers with the best and worst customer satisfaction ratings based on ForeSee’s Holiday E-retail Satisfaction Index.

Read the ten best online stores this holiday
Read the ten worst online stores this holiday 

To put those customer service rankings in context, we looked at how the parent companies that own the websites have performed recently.  We found that a strong customer service rating often coincides with a company that has widely regarded brands.

It begs the question: Does Apple (NASDAQ: AAPL) have such a high customer service ranking because so many consumers love the Apple brands? Or, is Apple’s customer service for online shoppers really superior to that of other e-commerce businesses? Apple is tied for second place in the index. Amazon.com is in first place. It also has a sterling reputation with consumers, as do some of its major products like the Kindle.

At the bottom of the ForeSee index are Gap (NYSE: GPS), Sony (NYSE: SNE) and Overstock (NASDAQ: OSTK). Gap recently said it would close 21% of its U.S. flagship stores. Sony has had trouble gaining sales for its PCs, games, smartphone and TV products. Overstock, an also-ran online department store, was founded in the days of the dial-up internet. It is hard to see how any of these could be at the top of the list. Or, perhaps if they were at the top of the list, they would not be in such deep trouble now.

ForeSee’s E-retail Satisfaction Index included the top 40 retailers by sales. The company surveyed 8,500 customers between Thanksgiving and Christmas. Despite its shortcomings, 24/7 Wall St. used the data from ForeSee as a foundation, because it is a reasonable measurement of the experience that consumers have with specific e-commerce sites, whether those sites are part of highly successful companies or ones on the verge of failure.

There is also some evidence that a few troubled retailers have actually performed well online. Whether that success is enough to save the companies themselves is impossible to tell. One such example is Avon (NYSE: AVP), with online service that is tied for second among all e-commerce sites in the ForeSee index. But Avon recently posted a disastrous quarter, and its CEO of 12 years was dismissed. Similarly, JCPenney’s (NYSE: JCP) online operations’ customer satisfaction is equal to Apple’s, which is also tied for second place in the ForeSee rankings. However, JCPenney has lost sales to big-box retailers such as Walmart (NYSE: WMT) for years. It is worth noting that JCPenney just hired the head of retail stores at Apple to turn the bricks-and-mortar retailer around. Apple is one of the few companies that was successful online long before it began to build physical stores.

These are the the companies with the best and worst online customer satisfaction. To draw our conclusions about why they are on the list and what the relationship is between the companies and their e-commerce operations, we examined three factors: the ForeSee satisfaction data, the annual sales of each of the companies, and the amount of traffic each site had in November — the most recent month measured by audience research firm Compete.com. Foresee describes its rating as “Average customer satisfaction with the top 40 U.S. e-retail websites increased by one point this year to tie 2009’s all time high score of 79 on the study’s 100-point scale. Satisfaction scores for individual e retailers span a 16-point  range, from a high of 88 (Amazon) to a low of 72 (Overstock).”

The Best Online Stores This Holiday

10. VictoriasSecret.com
> Score: 81
> Point change from last year: +2
> Audience size: 9,608,087
> 12 -change: +13.44%
> Revenue: $9.6 billion

Victoria’s Secret is the lingerie company owned by Limited Brands (NYSE: LTD). The website’s customer service increased by two points from last year. Traffic on VictoriasSecret.com increased 13.4% from last year. The Victoria’s Secret fashion show aired at the end of November, drawing more than 10 million viewers. The show drove visitors to the site during the all-important week following Thanksgiving, the week that marks the beginning of the holiday shopping season.

9. LLBean.com
> Score: 81
> Point change from last year: -2
> Audience size: 7,091,212
> 12-month change: +45.90%
> Revenue: n/a

The L.L. Bean website has enjoyed a larger increase in audience size than any other site on this list. This is partially the result of the company’s decision to drop all shipping fees, regardless of the amount spent on each order, this year. The company is one of only a few, such as Zappos.com, to adopt such policy. Additionally, the company, which is a high-end brand, has a strong focus on customer service in order to maintain its customer base.

8. BN.com (Barnes & Noble)
> Score: 81
> Point change from last year: n/a
> Audience size: 1,098,370
> 12-month change: +39.31%
> Revenue: $7 billion

Due to the success of e-books and Amazon.com (NASDAQ: AMZN), Barnes & Noble (NYSE: BKS) is likely a company that will not be around for too much longer. Former competitor and book-selling giant Borders went belly-up halfway through 2010, and unless this company can successfully make the transition away from bricks-and-mortar operations, that is likely to be its fate too. The indicators of whether this is achievable is the success of the company’s online division, and particularly its Nook e-reader, which competes with Amazon’s Kindle line. The company is making a case for its continued existence in these areas, as site traffic jumped nearly 40% over the past 12 months, and customer satisfaction is eighth among the top 40 e-retailers.

7. Newegg.com
> Score: 82
> Point change from last year: +0
> Audience size: 6,063,608
> 12-month change: -0.72%
> Revenue: n/a

Customer electronics retailer Newegg.com has one of the overall highest customer satisfaction scores and the second highest among companies in the computers and electronics category. The company has a highly specialized consumer base, making it easier to address customer concerns. The site has clearly done an exceptional job at keeping customers happy, and is behind only Amazon.com in sales among online-only retailers.

6. VistaPrint.com
> Score: 83
> Point change from last year: +3
> Audience size: 5,855,017
> 12-month change: -21.64%
> Revenue: $817 million

VistaPrint, which is a relatively small Netherlands-based online printing and portfolio company, is performing relatively well for its size, with steadily increasing revenue and sales over the past few years. VistaPrint’s customer service rate during the holiday shopping season jumped from 80 to 83, putting it sixth overall in a group of much larger companies. However, site traffic for Vistaprint.com dropped more than 21% over the past 12 months.

5. Store.Apple.com
> Score: 83
> Point change from last year: +1
> Audience size: 10,242,992
> 12-month change: 19.17%
> Revenue: $108.2 billion

Apple is growing at a tremendous rate as a company. Its revenue for fiscal 2011 was more than four times that of the same period in 2007. The company has continually released popular, exciting products, such as the iPod, iPhone and iPad, that have helped shape the current consumer electronics industry. Although its online store has one of the highest customer satisfaction scores, Apple is one of the few companies that has successfully shifted a large portion of its customer base from online to brick-and-mortar stores. The company currently has 358 stores. Apple Stores have only been around for 10 years. The company is growing quickly, and sales at the brick-and-mortar stores are increasing along with online sales.

4. QVC.com
> Score: 83
> Point change from last year: -1
> Audience size: 11,251,933
> 12-month change: +24.78%
> Revenue: n/a

QVC, and key competitor HSN, are first and foremost television channels for home shopping. While most e-retailers follow the model of online stores supplementing brick-and-mortar sales (or surpassing them), QVC and HSN are exceptions to this. These two companies have increased their stake in e-commerce. QVC, however, which is owned by Liberty Media, has far more visitors to its site. Also, its holiday season customer satisfaction rating is seven points higher than HSN.com.

3. JCP.com (JCPenney)
> Score: 83
> Point change from last year: +5
> Audience size: 44,961
> 12-month change: +20.3%
> Revenue: $17.7 billion

JCP.com has a very small audience size of less than 45,000 unique visitors per month. JCPenney has had many problems recently, including poor store performance in the face of competition from Macy’s (NYSE: M) and Sears (NASDAQ: SHLD). The company also recently fired CEO Myron Ullman. As a replacement, it has hired Ronald Johnson, the former retail chief of Apple. Johnson has told analysts that he gets “more excited every day about the potential of J.C. Penney,” and that he is there “to transform.” This change, along with the JCP.com’s high customer satisfaction rating, may have fortunate results for the company.

2. Avon.com
> Score: 83
> Point change from last year: +0
> Audience size: 2,563,010
> 12-month change: -20.83
> Revenue: $10.8 billion

Avon’s anachronistic business model has been hurting for years. Company revenue and income have been stagnant. In the most recent reported quarter, however, the true dire situation of the company came to light as the company said it no longer expects to hit its former sales targets, and CEO Andrea Jung was fired. The company stock is down more than 40% over the past year. However, the company’s incredibly positive customer satisfaction is good news for Avon’s last hope — a successful transition to e-commerce.

1. Amazon.com
> Score: 88
> Point change from last year: +2
> Audience size: 96,426,469
> 12-month change: +23.06%
> Revenue: $24.5 billion

Amazon.com has the year’s highest customer satisfaction score by a wide margin. The company is also the world’s largest online retailer. Revenue increased from slightly more than $24 billion in 2009 to over $34 billion in 2010. Over the past five years, shares soared by 370%. Shares of Overstock.com, which has the lowest customer satisfaction score, plunged by 50%. With incredibly popular products, such as the Kindle and Kindle Fire, it is unlikely Amazon will slow down anytime soon.

The Worst Online Stores This Holiday

10. Target.com
> Score: 76
> Point change from last year: -1
> Audience size: 59,284,283
> 12-month change: +12.86%
> Revenue: $67.4 billion

Target (NYSE: TGT) has the second-most sales of any company in the world and the third-most visits among e-retailer sites, behind Amazon.com and Walmart.com. However, while Walmart’s site rated average for customer satisfaction during the holiday shopping season and Amazon.com rated the highest, Target.com falls among the 10 worst e-retailers, with a score of 76. Earlier this year, the big-box retailer chose not to renew its contract with Amazon, which had been running Target’s site. Since Target transitioned to running its own website, Target.com has experienced repeated crashes.

9. Blockbuster.com
> Score: 75
> Point change from last year: +0
> Audience size: 3,194,674
> 12 month change: +8.40%
> Revenue: n/a

Blockbuster currently has one of the worst brand reputations. The company filed for Chapter 11 bankruptcy in September 2010 and was subsequently acquired by Dish Network (NASDAQ: DISH). The brand now barely exists, and one could argue that the company may not be around much longer.

8. OfficeDepot.com
> Score: 75
> Point change from last year: -1
> Audience size: 5,949,331
> 12-month change: +0.08%
> Revenue: $11.6 billion

Office Depot (NYSE: ODP), along with OfficeMax (NYSE: OMX) and Staples (NASDAQ: SPLS), is suffering as a business. Revenue has dropped each year since 2007. Office Depot’s online presence is also doing poorly. This has clearly hurt customer service, as OfficeDepot.com has among the lowest customer satisfaction scores.

7. OfficeMax.com
> Score: 75
> Point change from last year: +0
> Audience size: 3,650,460
> 12-month change: -2.86%
> Revenue: $7.2 billion

Like Office Depot and Staples, Office Max is part of a dying breed of large-scale brick-and-mortar office supply centers. Compared to closest competitor Office Depot, it is doing somewhat better, turning a reasonable profit in 2010 for the first time in three years. And that’s after earning just $1 million two years ago. However, site traffic is down compared to 12 months ago, and with a customer satisfaction rate during the holidays of just 75, OfficeMax.com is going to struggle to keep customers away from Amazon.

6. Sears.com
> Score: 75
> Point change from last year: +1
> Audience size: 31,007,405
> 12 month change: +19.06%
>Revenue: $43.3 billion

While Office Max and Office Depot struggle, Sears is in a league of its own. After reporting even worse-than-expected holiday sales, the company shares dropped nearly 30% in one day. The company has also announced it would be closing 120 locations. The fact that the company’s website had the sixth-worst customer satisfaction among e-retailers does not bode well for the Sears’ long-term recovery.

5. ToysRUs.com
> Score: 75
> Point change from last year: -2
> Audience size: 23,247,431
> 12-month change: +13.86%
> Revenue:

Toys “R” Us is currently a private company, but it is about to have its initial public offering. However, it has been 15 months since the company filed the initial paperwork, and according to sources in The Wall Street Journal, the transaction will not happen until at least early 2012. Toys “R” Us brick-and-mortar sales are down. Same-store sales for the 13 weeks that ended October 29th have declined 2.2% in the U.S. and 3.9% overseas.

4. Buy.com
> Score: 74
> Point change from last year: -3
> Audience size: 4,435,356
> 12-month change: -27.29%
> Revenue: n/a

Buy.com was founded in 1997 and is one of the oldest e-retailers in the world. Originally selling overstock items, the company has since moved to directly compete with Amazon. However, the company has not been half as successful as Jeff Bezos’s company. Traffic on Buy.com has dropped more than 27% over the past 12 months. Customer satisfaction during the all-important holiday shopping period dropped three points, from an already poor score of 77 to a 74.

3. Store.Sony.com
> Score: 74
> Point change from last year: -2
> Audience size: 2,938,348
> 12-month change: N/A
> Revenue: n/a

Sony (NYSE: SNE), like Apple 30 years ago, does not have many new products to drive its brand. Revenue has decreased significantly since 2007. The customer satisfaction score for the company’s online store has dropped two points from last year. These facts imply a growing unhappiness among consumers.

2. Gap.com
> Score: 73
> Point change from last year: -5
> Audience size: 13,153,291
> 12 month change: +7.86%
>Revenue: $14.6 billion

Gap (NYSE: GPS) has been a profitable company for years, but it is struggling of late. The American retailer has just announced it would be closing 21% of their North American locations by 2013. This shift away from bricks-and-mortar may be a wise move, but for a website that had more than 13 million unique visitors in November, the company should invest more in its customer service. Online shopper satisfaction at Gap.com dropped an incredible 5 points from the last holiday season to this. Gap.com now has the second-worst score among all e-retailers.

1. Overstock.com
> Score: 72
> Point change from last year: -4
> Audience size: 17,106,353
> 12-month change: -15.04%
> Revenue: $1 billion

Overstock.com has the lowest customer satisfaction score for 2011. Additionally, the number of unique visitors the site receives has dropped dramatically over the past year. The company’s CEO, Patrick M. Byrne, has frequently been referred to as one of the worst CEOs in the U.S. At this point, it is hard to imagine the company improving in such a significant way that it could rival competitors such as Amazon.com, which is doing just about everything right.

Douglas A. McIntyre, Charles B. Stockdale, Michael B. Sauter