Shoppers may be rushing to online retail sites in record numbers this holiday season, but more than three-quarters (78 per cent) of them will never make it to the checkout line.
Poor online customer service is to blame, and according to a new report that seeks to quantify the lost sales opportunities, the problem is growing.
Businesses lost $US1.6 billion online last year by failing to Web-enable their customer service operations, according to Datamonitor, a market analyst in New York. This year, losses are expected to double to $3.2 billion.
`One of the great fallacies of selling on the Internet is that you'll save on customer service costs because customers will serve themselves,' said Bill Bass, vice president of e-commerce at US-based apparel retailer Lands' End.
But with 10 million new online shoppers expected during the holidays, customer service is needed more than ever, observers said`They don't want to have any less service than they have gotten in the real world,' said Norman Guadagno, vice president of marketing at Primus Knowledge Solutions, a Seattle e-commerce software provider.
The online customer service spectrum includes self service; assisted service, where customers make online queries that can be answered quickly; and directed service, where a sales representative offers specific items, interactive chat, telephone service and e-mail.
Lands' End is beefing up its customer service by pursuing the interactive approach. It has struck a deal with WebLine Communications in Massachusetts, for exclusive use of the technology behind its Lands' End Live service that gives online shoppers real-time access, either by phone or text-based chat, to a human operator as they shop the site.
Lands' End has exclusive use of the technology through to the end of this year. After that, it has an agreement whereby the technology can't be sold to its direct competitors for a certain period of time.
More than 350 customer service representatives are also available around the clock at the firm's three phone service centres.
Bass wouldn't say how much Lands' End has invested in customer service for its Web operations. But as more customers move online, the company expects savings to come from reduced printing and postage costs as it mails out fewer catalogues. Printing and mailing account for about 40 per cent of the firm's operating costs.
The Datamonitor report also points out that startups account for 70 per cent of the Web sites that offer customer service.
Toysmart.com is expecting 50,000 orders per day during the holiday shopping rush. The toy retailer rings up 60 per cent of its annual revenue during this period. With the competition just a click away, excellent customer service is a key differentiator, according to CEO David Lord.
Some observers expect a big turnaround in online customer service over the next year. Retailers are `starting to figure it out. They're in the business to win the customer's loyalty for the long haul,' said Robert Folaron, executive director of Internet media practices at Electronic Data Systems in Texas.