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Online Retail Competition Heating Up as Consumers Become Savvier on the Web, Says Keynote

The competition among online retailers is getting more intense as consumers become savvier about online shopping, and increasingly judge retailers based on their experiences across the Web, according to a study. The syndicated research study conducted by Keynote Systems (Nasdaq “KEYN”), The Internet Performance Authority®, provides a competitive benchmarking of leading retail Web sites. The Keynote studies are performed regularly allowing for key industries to be tracked over time from an online customer experience standpoint. The next Keynote study covering the online retail industry will be issued in July 2005.

The Best Retail Web Sites
According to the current study, the Amazon.com, Barnes & Noble and Circuit City Web sites provide the best online shopping experience for consumers. The rankings are based on research with 2,000 customers as they interacted with leading retail Web sites. In addition to traditional opinion data, Keynote’s proprietary research technology collects detailed qualitative and behavioral data as these customers performed tasks at each site. The sites topping the Keynote Customer Experience Rankings performed best, in aggregate, across all 250+ measured metrics and the indices compiled from these metrics.

Keynote Customer Experience Rankings
1	Amazon.com
2	Barnes & Noble
3	Circuit City
4	eBay
5	Lands’ End

The Amazon.com, Barnes & Noble, Best Buy, Circuit City, eBay, Eddie Bauer, Froogle, Gap, L.L. Bean, Lands’ End, Macy’s, Nordstrom, Office Depot, Sears, Staples, Target, Wal-Mart and Yahoo! Shopping sites were among those evaluated as part of the study.

Consumers Getting Savvy About Online Shopping
The study also indicated that customers have become increasingly savvy when it comes to online shopping, and that their expectations are increasingly set by what they experience at other retail sites across the Web.

“It is becoming increasingly imperative for retailers to provide a strongly positive online shopping experience,” said Dr. Bonny Brown, director of research and public services at Keynote. “Our research shows that the sites that perform best in customer experience have a significant advantage in driving online sales.”

In fact, Keynote found a direct correlation between the customer experience online and purchase impact rates on retail Web sites, as measured by the Keynote Purchase Impact Index. The top-ranked retailers in terms of customer experience performed significantly better than all other retailers evaluated; and that performance paid off with consumers expressing more likelihood to purchase products from those sites and to return to those sites again in the future.

Specialty Apparel Retailers Provide Best Customer Experience
In general, specialty apparel retailers provided the best online customer experience of all retail verticals, and had the best conversion rates as compared to all other traditional retail categories. Their success was based on the strong visual appeal of their sites, their product content and the depth of their site functionality.

“The specialty apparel retailers do an excellent job of creating a personal, customer-focused online shopping experience,” said Brown.

Those companies with an extensive history of catalog selling, including L.L Bean and Land’s End, were among the best performing apparel sites, and were joined by the Gap in the top-tier of apparel retailers online. Most traditional department store retailers did not score as well in terms of online customer experience.

The study also found that, aside from Amazon and eBay, retailers that focused on one retail category (e.g., books, electronics, apparel) faired better with consumers than department store retailers with multiple product categories.

Category Competitions Intensify
The most closely competitive retail category is among office supply retailers, where Staples and Office Depot are not only among the leading retailers in terms of percentage of their overall sales from the online channel (exceeding 15% of sales according to Internet Retailer), but the companies are also extremely closely matched in terms of customer experience. The competitors performed equally well in the Keynote CE Rankings.

In contrast, in the electronics category, there was a significant gap between leading competitors with Circuit City outperforming its competitors. Consumers ranked Circuit City as better organized for browsing, providing better search capabilities and customer support. Again, Circuit City’s strong customer experience ranking directly correlated with better conversion and purchase impact rankings than its competitors.

What Consumers Want: Best of the Web
“It is critical for retailers to look at their competition and learn from the leaders,” said Dr. Brown. “Consumers have become very savvy about shopping online. They know what they want and they reward sites that provide it with increased business.”

To provide a picture of what consumers want from the ideal retail website, Keynote compiled a list of the retailers that performed best in leading Web site attributes:

Best of the Web Keynote Evaluation
Check Out Process	Amazon
Product Research/Browsing	eBay
Search Engine	Barnes & Noble
Online Help & Support	Nordstrom
In-Store Pick-Up	Circuit City

The entire report, Keynote Customer Experience (CE) Rankings for the Online Retail Industry, is a large scale competitive benchmarking study of the online retail industry containing hundreds of additional data points and a detailed analysis of the findings. For information about purchasing the full report, visit http://www.keynote.com/syndicated.html.

Keynote Customer Experience Research
Keynote is the leading provider of customer experience research services, offering both syndicated and custom research examining consumer behavior on the Web. Keynote’s research provides critical business insight into online customer experiences, industry trends and competitive Web strategies for a variety of vertical industries. In addition to traditional opinion data, Keynote’s proprietary research technology and access to a panel of 160,000+ consumers allows for the collection of detailed qualitative and behavioral data that inform its reports.

Keynote’s syndicated research includes two distinct types of reports: the Keynote Customer Experience (CE) Rankings, which provide competitive benchmarking and rankings of the leading Web sites in a specific industry; and Open Web Research (OWR), which takes a broader look at the customer’s experience across the entire Web when performing specific tasks, such as booking business travel.

Keynote CE (CE) Rankings are available for a number of industries including the retail, banking and credit card industries, as well as several travel verticals, including the lodging, cruise and rental car industries. The Keynote CE Rankings are the successor to the Keynote CE Rankings following Keynote’s acquisition of Keynote in September 2004.

About Keynote
Founded in 1995, Keynote Systems (Nasdaq “KEYN”), The Internet Performance Authority®, is the worldwide leader in e-business performance management services. Over 2,100 corporate IT and marketing departments and 16,000 individual subscribers rely on Keynote’s growing range of measurement and monitoring, service level and customer experience management services to improve e-business performance by reducing costs, improving customer satisfaction and increasing profitability.
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