• by Shankar Gupta , June 1, 2005

For consumers who shop online, purchase decisions are driven by factors other than price to a surprising degree, according to a study expected to be released today by research company ForeSee Results.

"While price can have a positive effect on satisfaction, loyalty, and buying behavior, it is seldom the key determinant of how satisfied a site visitor is--and never appears as the determining factor, on average, in whether a purchase is actually made," the study stated.

For the study, ForeSee surveyed 11,000 online consumers between March and April who had visited the top 40 online retailers as ranked by Internet Retailer; the respondents were culled from FGI Research's panel of 1.6 million consumer households.

The study, which looked at consumer satisfaction with sites, considered a variety of factors: price, selection of merchandise, and overall experience--including the look and feel, navigation, function, performance, and site capabilities.

Sites that scored well when all of these factors were considered had higher conversions than those that scored lower on the satisfaction scale. The five top-scoring online retailers in satisfaction--Netflix.com, Amazon.com, QVC.com, Newegg.com, and LLBean.com--had conversion rates 36 percent higher than those retailers at the bottom of the list. The study also found that loyalty and the likelihood of a browser to buy, or recommendations of the site to a friend, were directly correlated to a high satisfaction score.

Consumers at Netflix appeared particularly likely to return to the site, although its prices are higher than other online DVD rental services. Still, the report noted that long-term prospects are subject to change because of stiff competitors in the area, such as Blockbuster, which recently adopted a similar model. "Blockbuster seems to understand that a multi-channel solution may be stronger than a single channel," said Larry Freed, ForeSee's CEO and president, and the author of the study. "Because of these new competitors that are getting more and more serious about the competitive landscape, [Netflix] has a challenge ahead of them."

By and large, brick-and-mortar companies were less successful at building sites that satisfied consumers than the pure-play Internet companies, although the report noted that Barnes & Noble's e-commerce site ranked highly with consumers. "Barnes & Noble is kind of the cream of the crop here, because they've done a great job balancing their brick-and-mortar and their online shop," Freed said.

Other brick-and-mortar companies, however, will have to improve their online offerings. "More and more consumers are indicating that they're going to utilize more than one channel, so the pressure is on the brick-and-mortars to step up," Freed said.

The study did not find a significant correlation between browser satisfaction and overall sales figures. While the no. 1-ranked online retailer by sales volume, Amazon.com, was ranked number two in satisfaction, other large online retailers ranked much lower, with No. 2-ranked seller Dell ranking 20th in satisfaction, and number 3-ranked seller OfficeDepot.com coming in 25th in satisfaction.

According to Freed, consumer satisfaction numbers are a better indicator for the future of an online retailer than their pure sales figures. "The financial outcomes that we see--the Web sales, the market share--really tell us how these companies have performed in the past," he said. "If they're satisfying their customers or meeting their needs, that tells us how they're going to do in the future."