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As E-tail Evolves, Selling CE Gets More Sophisticated

E-tailers must be doing something right.

While traditional retail was handed its worst Christmas in thirty years, cyber stores managed to overcome the economy, world politics and a shorter selling season to ring up nearly $8 billion in holiday sales — a 23 percent gain over the prior year period, according to

Their success can be attributed in large part to a basic tenet of retailing: Keep the customer satisfied. Indeed, customer satisfaction with e-commerce soared last year, and according to the American Customer Satisfaction Index (ACSI), a national economic indicator of customer evaluations of products and services, it readily surpassed that of brick-and-mortar retail during the fourth quarter.

“Customer satisfaction is of immense importance in e-commerce,” observed Claes Fornell, a professor at the University of Michigan Business School, which helps compile the ACSI. And in that regard, he said, “online retailing does well.”

A standout in the field is, which “is generating satisfaction at a level unheard of in the service industry,” Fornell said (see chart). Some of that, said Frank Sadowski, Amazon’s VP of CE, can be chalked up to basic blocking and tackling.

“We worked hard on the operational things, to extend our ability [during the holiday season] to get products into consumers’ hands four days later than we did last year,” Sadowski said.

Also contributing to Amazon’s success is its evolution from pure-play e-tailer to online hybrid, replete with auctions, brick-and-mortar affiliations and a steady stream of new formats and services, all designed to make the buying process easier and more compelling.

One such CE innovation is a new Early Adopter section, which allows technology enthusiasts to pre-order cutting edge products prior to their launch dates. Recent listings included the $550 Garmin iQue 3600, the first PDA to include integrated GPS technology, and JVC’s $3,500 GRHD1 high-definition video camcorder, both due out in July.

Dwarfing Amazon as a platform for new, used, returned, refurbished, end-of-life and overstocked CE is eBay, which last year played host to $2.2 billion worth of electronics transactions. According to VP Matt Halprin, who heads up eBay’s new standalone CE section, electronics sales were up 50 percent over 2001 and are still maintaining the same clip, making it the company’s fastest-growing category and second largest only to automobiles.

Halprin attributes the velocity to the tech-driven nature of CE itself. “CE has a short product lifecycle,” he said. “Sellers want to move older inventory off their shelves while buyers want to upgrade to the latest models — and then sell the ones they just replaced.”

Also fueling his CE business are cyber storefronts by such leading vendors and merchants as Abt, HP, Motorola, Palm, Sears and The Sharper Image, as well as large-lot wholesale sales that are reaping significantly better returns via eBay’s auction and fixed-price formats than through traditional liquidators, Halprin said.

Another e-commerce facilitator, Celebration, Fla.-based Channel Intelligence, has built a business around bridging the gap between manufacturers’ sites and online stores. The company’s Channel Buy Links service does dealer locators one better by whisking the consumer directly from a vendor’s product listing to the buy page of an in-stock retailer, rather than dropping him off at the e-tailer’s door.

According to president and co-founder Alan Fulmer, the service can cut shopping cart abandonment rates by as much as 15 percent and boost conversion rates by four to ten times over industry standards. It has generated some $4.5 billion in sales leads since it went live in April, and clients, which include Panasonic, Sharp, Palm, 3Com, HP, Fujifilm, Olympus, Canon, Monster and Lexmark, have reported higher average tickets and gross sales for their dealers. The service is free and non-invasive for retailers.

The company is currently taking its “deep links” concept a step further with Product Pinpointer, which lists the locations of nearby in-stock physical stores for consumers who wish to pick their purchases up. Iomega and Sharp were the first to sign on, and participating retailers, which are limited to those offering real-time inventory status online, include Best Buy, Circuit City, Sears and CompUSA.

Customer Satisfaction Scores

(on 100-point scale)