Online shopping: Who deserves your trust?

This column appeared in the March 5, 1999, issue of the Industry Standard. Here’s the version that appeared in the Industry Standard.

When it comes to shopping online, who deserves your trust?

The big guys, certainly: Amazon, CDnow. But what about small outfits you’ve never dealt with? How do you know whether you’re dealing with a reputable Web merchant or a fly-by-night operator? And if they are legitimate, are they also reliable?

Users seeking to size up an online merchant can go about it in different ways: independent research; queries to a Usenet newsgroup; relying on a seal of approval by a private watchdog group; or visiting an independent Web site that monitors e-commerce retailers.

Few of us can devote the time to conduct a thorough background check of an online business. Pursuing the other two approaches takes some consumer savvy.

Take seals. A bumper crop of business-watchdog groups has sprouted up in the past year. Invariably, they charge merchants to enroll in the program, with fees ranging in the hundreds to thousands of dollars. A background check is made, questionnaires filled out, and the companies agree to abide by a set of principles. Finally, shiny seals of approval are awarded. Which is to say, just about everybody gets a gold star.

A few of these groups are legit, like WebTrust, a seal program run by certified private accountants, and the venture-capital-backed Business Ethics Bureau of Investigation, which will receive a “SafeSearch” link from Netscape’s NetSearch page on February 12. (The well-known TRUSTe seal program deals only with privacy.) But other outfits merely list information provided by the businesses.

“Some of the smaller seal programs are little more than for-profit operations that hand out a seal and have no ability to police anything. Everyone wants to get on this bandwagon,” says Russ Bodoff, chief operating officer for BBBOnLine, the Web arm of the Council of Better Business Bureaus.

Clearly, BBBOnLine is the Rolls Royce of seal programs. More than 2,200 companies have been certified, and while most of them are brick-and-mortar businesses with an online presence, others are virtual businesses, such as eBay, Quotesmith and Travelocity. BBBOnLine conducts a rigorous investigation of a company’s credentials; the company must agree to abide by BBB’s advertising code and dispute resolution program, and consumers may challenge any claim of brand superiority made on the Web site. Finally, these guys actually visit the physical workplace of every business before issuing a seal of approval.

“The process ensures the public that these businesses are who they say they are and that they can deliver on what they promise,” says Steve Salter, who heads the reliability seal program.

But BBBOnLine has its own shortcomings. Only businesses open for a year are eligible to apply — an eternity in Internet time. No overseas merchants are included. Users’ complaints about poor customer service or outright fraud aren’t posted. Only a limited number of Web-based commerce sites have enrolled. And the task of scouting out businesses that aren’t BBB-approved is cumbersome.

BBBOnLine is your best recourse for resolving serious complaints after a purchase, and it’s useful for verifying the street cred of insurance brokers, financial institutions and the like. But what if you just want to go online to buy a VCR or send flowers to Mom?

Enter A shopping portal startup in Marina del Rey with a staff of 35, BizRate is the only site that posts consumer evaluations of online merchants based on surveys filled out at the virtual cash register — the point of sale. Nearly 500 merchants participate in the program, including eToys, Egghead and Music Boulevard, and the company is shooting for 1,000 by year’s end. Unlike most shopping-comparison sites, BizRate accepts no advertising, sponsorships or merchant fees. (It provides consulting services and sells market research based on aggregated customer data.)

Says CEO Farhad Mohit: “Our model leverages what is best about the Internet: real consumers banding together across the Web to help create content and value for other consumers. We’re focused on helping users select the right merchants so they can avoid problems before things go wrong.”

The company relies on more than 1,000 customer surveys a day evaluating online merchants by 40 criteria, such as the product’s condition, whether you got what you ordered, and customer support. In addition, staff reviewers place orders from each merchant to evaluate the shopping experience.

Users can search through categories such as computers, music or housewares to summon up ratings criteria most important to them. America Online, Excite and Lycos use the company’s shopping ratings, and agreed on Jan. 11 to rate merchants listed on Microsoft’s MSN Shopping site.

“According to our surveys,” Mohit says, “customers are chiefly concerned about the quality of service and on-time delivery.”

As e-commerce really begins to take off, online merchants who reliably deliver the goods will ultimately win consumers’ confidence.

JD Lasica
Written by JD Lasica
JD Lasica is an entrepreneur, author, journalist, photographer and blogger. | CONTACT