Consumers Raise the Bar for Web Merchandisers

Cathy Shufelt thought she’d stumbled across a steal when she spotted 400 CD-ROMs on special for $112 on Aliso Viejo-based Buy.com’s Web site. Point, click, sale, she thought.

A few weeks later, though, the company sent the Dallas resident e-mail saying the price was a mistake and her order would cost $443. She demanded that Buy.com honor its price, she says, but the company canceled her order instead. Then it took another 10 days before refunding her original payment.

Greg Hawkins, chief executive of the fourth-largest online retailer, said unanticipated demand led to Buy.com’s pricing and availability problems and that new procedures have cut down on complaints.

But Buy.com can kiss Shufelt’s business goodbye. “I will never buy another thing from them,” she said.

Satisfying the Cathy Shufelts out there might determine who grabs most of the $12 billion that analysts predict will be spent at Web stores this holiday season. And online retailers are beefing up their technological and human resources to meet the challenge.

For Web merchants, the focus this holiday season will be on reaching out to new consumers, said Ken Cassar, an electronic-commerce analyst at New York-based Jupiter Communications. “It’s these people and those who come on in the next couple of years who will generate the $78 billion in sales that we’ve forecast in 2003,” he said.

As in the real world, the majority of online transactions go off without a hitch. But online consumers are becoming as demanding as their real-world counterparts.

Early Internet shoppers tended to be more computer-savvy, accepting that online stores--much like initial versions of software and hardware--would have bugs. Now, however, the bar has been raised for those consumers and others who have tasted the high service standards set by such merchants as Amazon.com, Gap.com and CDNow.com.

Shoppers expect online retailers to have their acts together, and they’re willing to quickly abandon those who don’t, said Farhad Mohit, president and chief executive of BizRate.com, a Los Angeles-based firm that surveys online consumers.

“You don’t have a chance to blow it with these guys,” Mohit said. Competing stores are just a mouse click away.

Also a mouse click away are sites that allow shoppers to come together to air their online grievances. Numerous Internet sites that give angry consumers an outlet to vent have sprung up. Brought together both by news reports and chat groups, buyers with complaints similar to Shufelt’s have filed a class-action lawsuit against Buy.com.

Internet shoppers--particularly first-timers--often feel at a loss when they encounter problems because they can’t just walk into cyber-stores and demand redress.

Government regulators stress, however, that the same consumer protection laws that govern mail-order and telephone sales apply to online purchases. Federal rules make it illegal for online merchants to make false or unsubstantiated claims and mandate that they deliver purchases within the time advertised or, if none is specified, within 30 days.

“Otherwise, they have to give consumers a series of notifications and the chance to cancel,” said Larry Hodapp, assistant director for enforcement with the Federal Trade Commission’s Bureau of Consumer Protection.

Consumers should be aware there are still gray areas, though, including the one Shufelt fell into. State laws vary on the precise moment at which stores must honor their posted price for an item, and no standard exists yet for which statute to apply when purchases cross state lines, Hodapp acknowledged.

Company policies vary too on when exactly a deal’s a deal.

Hawkins said Buy.com now does not bill customers until the company ensures it has enough inventory to meet their orders at the listed prices. Catalog and online seller Fingerhut Cos. views a transaction’s terms as set “when we put the package in the semi,” a company spokesman said.

Consumer agencies also warn that retail-world guarantees do not extend to person-to-person transactions conducted on auction sites such as EBay. Auctions have drawn increasing numbers of complaints about merchandise that never arrives or doesn’t meet expectations, said Susan Grant, director of the National Consumer League’s Internet Fraud Project.

Escrow companies have emerged to address auction issues, holding payment until a customer accepts the merchandise. But the safety net comes at a hefty cost--as much as 6% of the item’s purchase price--and can be cumbersome since both the money and the product must pass through the escrow agent’s hands for the transaction to proceed.

Retailers are heeding the urgency of customer service demands. Online shoppers, who tend to be more pressed for time than money, rank service as more important even than getting the lowest price, most surveys show. In fact, on-time delivery, customer support and the presentation of the product all rank higher than price with online customers, according to a BizRate survey.

To address these priorities, Web merchants are using both new technology and old-fashioned personal attention.

Their first step is simply helping customers navigate online stores better. Some retailers now let customers do online what they do when they can’t find what they want at an actual store: Grab a salesperson.

Santa Ana-based Firstsource.com, which sells business supplies and equipment, offers live Internet chat sessions in which service representatives guide customers as they shop. The company’s salespeople answer questions, suggest products and direct shoppers to parts of the Web site without forcing customers to go offline.

The chat service sometimes fails when customers are on corporate computer networks that prevent such communication or when too many people use it at once. But even imperfect online direction is an improvement, said Azhar Hameed, Firstsource’s executive vice president and chief information officer.

Once customers make their choices, they want products delivered when promised--or, at least, a swift explanation for why they haven’t been. This was a sore spot during last year’s holiday rush, when, all too often, customers’ e-mails went unanswered, products were delivered late or not at all, and many Web stores were infuriatingly unreachable by telephone.

San Jose resident Dave Mervis tried several routes to get a satisfactory response from Irvine-based Shopping.com, an online retail site owned by Web search engine AltaVista, after ordering a $1,800 notebook computer that didn’t arrive when promised.

First, he sent e-mail. Company officials answered promptly, saying they were behind on orders and promising his purchase would be shipped within 10 days. When the computer still didn’t come, Mervis tried phoning the 800 number listed on the company’s Web site.

His first call drew the same response as his e-mail. On Mervis’ second try--about two weeks later--the phone rang 30 times before a service representative answered, he said.

“I counted,” he said. “I thought, ‘Damn it, I’m just going to let it ring off the hook.’ ”

Once he reached a live person, he wasn’t much happier with the results.

“I started getting the runaround, stuff like, ‘Well, we don’t know why it didn’t ship,’ ” he said. “Come on.”

Mervis complained to his credit card company, the Better Business Bureau and the California attorney general’s office. Shopping.com came through with a refund and later sent Mervis an apologetic letter and a $250 gift certificate.

Many retailers are exploring innovative ways to head off such frustrations in the online shopping experience.

Some have installed software that sorts customers’ inquiries more efficiently, scanning e-mail for key words and phrases, then routing messages to the appropriate person. The programs can even suggest possible responses or generate automatic replies.

Other Web vendors have added a more personal touch.

Apparel retailer Lands’ End Inc., which also offers a Web-based chat program, has employees answer all customer e-mail individually. The policy is an extension of how the company treats traditional mail, which is answered with handwritten notes.

“We could probably do some stuff to save money, but that isn’t the culture here,” said Bill Bass, vice president of electronic-commerce for the Dodgeville, Wis.-based catalog company.

Despite online retailing’s spotty customer-service record, merchants can take some solace from signs of consumers’ increasing comfort with shopping this way. Even after last Christmas’ well-publicized problems, surveys showed that three of four online shoppers came away satisfied.

Even once-burned consumers come back, convinced virtual shopping beats lurking like a vulture for a parking space and wrestling for the last cashmere sweater at the mall.

Shufelt still makes almost all her computer-related purchases online, saying she saves money by comparison shopping without the inconvenience of physically driving from one store to another.

Mervis said he recently ordered an espresso machine from Starbucks’ Web site, and it arrived days earlier than expected. He might even use Shopping.com’s $250 peace offering.

“I’m still sort of gunshy there,” he said. “But if they had something I really wanted, sure I’d go back.”