Low prices aren't everything - on the Web

By Parija Kavilanz, senior writer

NEW YORK (CNNMoney.com) -- If online retailers think slashing prices to the bone is the best -- and only way -- to grab holiday shoppers this year, they're mistaken.

Prices, despite the economy, weren't top of mind for many online gift shoppers in 2010, according to a new industry report Wednesday that ranked holiday winners and losers among major online merchants based on customer satisfaction.

"Retailers are slashing prices this time of the year to attract customers, and not all of them need to be doing that," said Larry Freed, president and CEO of market research firm ForeSee Results.

To his point, Wal-Mart and WalMart.com (WMT, Fortune 500) were among the most aggressive this year with holiday discounts and free shipping offers on more than 60,000 gift items. Many competitors quickly followed suit.

But according to the sixth annual "Top 40 Online Retail Satisfaction Index" from ForeSee, WalMart.com's customer satisfaction score was still beaten by ten other e-tailers.

While it's true that the recession made households become more price conscious over the past two years, Freed said consumers started to back away from extreme bargain hunting in 2010.

"In a recovering economy, a lot of us assume that declining satisfaction is a result of frustration with prices. Our research shows that is not always the case, said Freed.

ForeSee asked consumers to rate the biggest commerce sites, including Amazon (AMZN, Fortune 500), Walmart.com, eBay (EBAY, Fortune 500), Macys.com and Target.com in terms of price, merchandise, functionality and content of their websites during the holiday season.

This year, merchandise mix and functionality were more important aspects of the online shopping experience to shoppers.

"Price is no longer a big differentiator between e-tailers because almost everyone offered great deals and promotions this season," he said.

Most satisfying sellers: Amazon, QVC.com, Avon.com, LLBean.com, Newegg.com, Walmart.com and Apple.com received scores of 80 or higher on satisfaction out of a possible 100. Although Amazon topped the index with a score of 86, that was still one point lower than its score the previous year.

Freed said these e-tailers were competitive on price but consumers applauded them more for other reasons, including the browsing experience, accuracy of product information and availability as well as functions such as consumer reviews of products.

In a match-up between titans Amazon and Walmart.com, Amazon won in content, functionality and merchandise. But Walmart.com, which scored 80 in the index, tied Amazon on consumers' perception of their prices.

In the battle of PC manufacturer websites, Apple dominated Dell and HP, with a score of 82. Dell scored 76 and HP scored 78 in the satisfaction index.

But while Apple (AAPL, Fortune 500) scored the highest among its rivals on satisfaction, it ranked below them on perception of prices.

And movie rental service Netflix (NFLX), which isn't a typical holiday ecommerce destination, ranked No. 2 on the index, just below Amazon.

High satisfaction scores can have a quantifiable impact on the future success of a website. The Foresee report said highly-satisfied visitors say they are 61% more likely to purchase from the e-tailer again.

Laggards this year included online electronics seller TigerDirect.com, which experienced a 7-point drop in satisfaction scores, Macys.com with a 4-point drop in its score and jcpenney.com with a 3-point dip.

Freed said the most common complaints from consumers surveyed were that they couldn't find products on the website or a product search would take them to the wrong item.

Overall, the Index showed customer satisfaction among all Web shoppers edged down one percent to 78, showing consumers were slightly less satisfied with their online shopping experience this year versus last year.

The report said this year's nominal dip in satisfaction was largely due to declining satisfaction scores for some computer, electronics and mass merchants sellers.

The Foresee index is based on a survey of about 10,000 visitors to the 40-biggest ecommerce websites according to sales revenue. To top of page

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