Another E-tail Slip for Amazon

One day after cash-strapped Buy.com announced it will be shuttering its operations in Australia, the e-tailer surged past Amazon.com (Nasdaq: AMZN) to secure the title of top online electronics seller in Forrester Research rankings.

The Aliso Viejo, California-based company's first-place showing was driven in part by free shipping and quick e-mail responses, said researchers.

Forrester conferred a 64.57 rating upon Buy.com in its PowerRankings index, which gauges e-tailer performance across a host of different categories, edging out Amazon.com with its 63.54 rating. Forrester said the Internet heavyweight's runner-up placement was due to its "dismal" customer service.

Rounding out the top four were BestBuy.com (59.29) and Egghead.com (55.55).

Best in Show

In compiling its PowerRankings of leading U.S. e-commerce sites, Cambridge, Massachusetts-based Forrester surveys consumers about their purchasing experiences and conducts independent shopping tests. Approximately 20,000 consumers were polled for its electronics seller survey.

Buy.com ranked first in cost and usability, while Amazon topped the delivery, features and transaction efficiency ratings. BestBuy.com finished No. 1 in customer service, squeaking past Buy.com in that category.

"Buy.com is usually the cost champion, but this is the first time the company has ranked first overall in a PowerRankings category," said Forrester senior analyst Tom Rhinelander. "While the shopping experience at Buy.com continues to improve, its victory was no doubt aided by the deteriorating customer service at Amazon."

E-tail Obstacles

Though Buy.com has long offered low prices for both products and shipping, Forrester said that its swift buying process, extensive online help and quick-loading pages put the site over the top.

Despite these features, the e-tailer still faces a few hurdles. Among the site's drawbacks, Forrester points out the lack of real-time inventory information, express checkout, gift-wrapping and customer reviews.

Forrester said that many of these features have already been successfully implemented by Amazon, noting that the e-tail giant had the fastest express checkout of all the sites tested.

However, Forrester insists that Amazon's customer service woes continue to mar the shopping experience. Researchers found that reaching a customer representative on the phone was "nearly impossible," and that e-mail responses to queries took an average of four days.

Close But No Cigar

Buy.com's dominance over Amazon in the electronics category means that Amazon currently holds the top ranking from Forrester only in the Toys & Games and Music departments.

Earlier this month, Amazon was bested by Borders in the Bookseller rankings and by Express.com in the movies category. Amazon also ranks second in the Computing and General Merchandise categories.

Some of these rankings were last released in the spring and, according to Forrester, will be updated in the coming weeks.

Dose of Good News

Buy.com's top PowerRanking should come as a welcome dose of good news for the e-tailer, which continues to stumble on its road to profitability.

Since its public offering earlier this year, Buy.com has seen its stock price drop from US$35 per share to just above $1. Industry analysts say that the company's inability to grow sales in recent months coupled with a slowdown in customer acquisition may set the company up as a possible shakeout victim.

Analysts also say that Buy.com needs to be more aggressive in diversifying its non-tech product offerings, since it appears the company may be closing in on the saturation point for its core electronics and computing goods business.