Press Release

PERFORMANCE OF ON-LINE RETAILERS RATED AS DEPLORABLE!

FINAL SCORE ON HOLIDAY E-SHOPPING COMPLAINTS IS IN:
OVER 60% OF ONLINE HOLIDAY SHOPPERS EXPERIENCED AT LEAST ONE PROBLEM!

Indianapolis, IN - January 19, 2000 - WebAssured.com, the Internet's premiere Online consumer advocacy group, today announced the final results of its comprehensive study of holiday e-shopping complaints for the 1999 season.

In a poll conducted by WebAssured in January, 62% of respondents claimed they had experienced at least one problem with an Online transaction over the holidays.

"Having seen such a dramatic increase in e-complaints this past holiday season WebAssured felt compelled to share our unique insight into the performance of Internet commerce - as perceived by consumers," said Travis A. Morgan, President and CEO of WebAssured.com.

In addition to the poll, WebAssured also analyzed a sample of consumer complaints filed through its free Online dispute resolution service during the period from November 25, 1999 through January 18, 2000. Consumers frustrated that an item was received too late (or never at all) topped the list at 33% of the complaints in the study. Misrepresentation of the product, delivery of a defective product, and improper billing comprised roughly equal portions of the remaining complaints.

"This research demonstrates that, despite the hype, Internet commerce is still in its infancy," said Tim Minahan, Research Director of Aberdeen Group's e-Business practice. "There remains a significant disconnect between virtual promises being made by Web retailers and actual fulfillment of those promises in the real world. However, we are beginning to see a shift on the part of Web merchants to expand their order fulfillment and logistics capabilities as well as improve their customer service operations. We expect that the 1999 holiday shopping season will serve as a benchmark on which Web merchants will improve," added Minahan.

As more people come Online to do their shopping, more people are getting fed up enough to complain about the poor service - the overall volume of complaints facilitated by WebAssured increased to more than four times the same prior year period!

"Any traditional business which failed to satisfy two out of three customers wouldn't be around very long," said Morgan. "Yet this deplorable level of service seems to be the current standard on the Internet. The study demonstrates that in spite of its recent growth, the E-commerce community still has 'a lot to learn' about providing quality customer service," he added.

Excerpts From The Holiday Shopping Study:.

ELECTRONICS AND ONLINE SERVICES GENERATE MOST COMPLAINTS
According to the survey, roughly one in every 10 Online transactions resulted in some significant failure. Consumers reported having purchased an average of 12 items Online over the holidays, at an average cost of $161 per item. Among the sample of actual complaints filed, the average amount paid was over $331, supporting the logic that as more money is involved, consumers are more likely to take action through a third party.

Complaints about purchases in the Computers and Electronics category were the most prominent this season, representing 17% of all complaints in the sample. Close behind, however, were complaints about Online Services (14%), followed by Toys and Games (11%). Other product categories receiving a significant portion of the overall complaint volume were Food Products, Apparel, Books/CDs, and Pet Supplies. Over 90% of the complaints were about items ordered from special interest or niche sites, and 4% were about purchases from companies located outside the United States, reflecting a growing international component of the E-commerce experience.

IT'S NOT JUST THE SMALL GUYS CAUSING THE TROUBLE
If you are under the delusion that you will be safe Online by shopping only with the big brands, think again! Over 11% of the complaints in the study were filed against sites counted among the 50 most popular. Neither is it safe to assume simply because a company has a strong off-line presence that it will have its act together on the web. Nearly one fourth of complaints were about "click-and-mortar" companies, not pure cyberspace e-tailers. The most complained about companies were AOL, Buy.com, Egghead, e-toys, Petopia, and Toys-R-Us. "It's not surprising that we should see a larger number of complaints about larger companies, one would expect that. What may be significant however, is the conspicuous absence of complaints about other popular sites like Amazon, Barnes and Noble, and CDNow. Maybe there are some e-tailers who have started to figure this out," said Morgan.

MOST NEW INTERNET CONSUMERS HAD A BAD FIRST EXPERIENCE
First impressions die hard, and with millions of consumers taking their first leap into the Internet shopping revolution this season, this was an important test for the E-commerce model. Well folks, we failed the test. Nearly 38% of the survey respondents admitted that this season was their first Online shopping experience. With over 62% being burned at least once, the collective E-commerce community apparently gave millions of consumers a lousy first impression.

The significance of this was demonstrated when consumers were asked whether they planned to shop Online again in the future. All of the consumers who made purchases Online without a problem said they would buy Online again, but over 12% of those who still had unresolved problems said they definitely would not. Consumers who had a problem, but were able to get it fixed, unanimously proclaimed their intention to shop again. This emphasizes the importance of making a good first impression, and responding to problems quickly when they occur. Whether in a traditional business or in cyberspace, satisfied customers are return customers. In spite of the abysmal performance overall, consumers seem to be willing to forgive and forget, if they can obtain satisfaction after getting burned.

Only 44% of polled consumers reported that they had been able to get Online problems resolved on their own, but 74% of the complaints filed with WebAssured had been resolved within two weeks of filing.

"The fact that consumers were almost twice as likely to get an issue resolved with our help proves that the WebAssured system is working for the benefit of both consumers and merchants," said Mr. Morgan. "What the E-commerce community must recognize is that novice Internet users don't distinguish between web-sites the same way they distinguish between physical stores - everything happens while sitting in front of the same cold computer screen and is interpreted as a collective Internet Experience. Bad impressions given by any website, therefore, reflect poorly on all websites and impact the confidence consumers have in buying from anyone Online. We must do a better job of raising our customer service standards as a community if the Internet is to become a pervasive medium for conducting commerce."

WEBASSURED.COM - BUILDING DOT.CONFIDENCE
WebAssured.com was the first entity to offer an independent web-site certification program and on-line dispute resolution service. A complete description of the consumer protection tools offered by WebAssured, including the On-line Purchase Protection^SM program underwritten at Lloyd's, can be found at http://www.WebAssured.com. WebAssured is dedicated to increasing consumer confidence in the Internet and to helping e-commerce grow and thrive through free-market forces, not government regulation.

The Holiday E-Shopping Complaints Study is the first in a series of studies designed to track the collective experience consumers are having as they shop Online.

1999 WEBASSURED.COM HOLIDAY
E-SHOPPING COMPLAINTS STUDY

SUMMARY OF RESULTS

January 13, 2000 E-mail poll of approximately 140 people who had purchased on-line over the holidays:

For 37.6% of buyers, this was their first on-line shopping experience

On average, the respondents had purchased approximately 12 items online

Average purchase price - $161

9.5% of transactions had failures of some type
56% of the failures remain unresolved

62.4% of the respondents had at least one problem with an on-line transaction

Types of problems occurring:
Item never delivered - 39.3%
Item delivered too late - 17.8%
Wrong item was delivered - 17.2%
Incorrect billing - 3.7%
Other issues - 22%

Overall, 4.3% of respondents said they do not plan to shop on-line in the future
100% of respondents who had no problems said they would shop on-line in the future
100% of respondents who had problems which were resolved said they would shop on-line in the future
12.2% of respondents with unresolved problems said they do not plan to shop on-line in the future

Sample of approximately 200 complaints filed between November 25, 1999 and January 13, 2000:

Complaint volume is up 404% over same period last year.

Average cost per transaction - $331

Types of Complaints:
Received too late or never at all - 33%
Mis-representation/ Mis-information - 23%
Improperly Billed - 22%
Defective Product - 22%

Most complained about companies:
AOL
Buy.com
Egghead
E-toys
Petopia
Toys R Us

Types of Products complained about:
Computers/ Electronics Equipment - 17%
ISP/ Web Services - 14.2%
Toys/ Games - 10.6%
Food - 5.6%
Apparel - 5%
Books/ CDs - 4.3%
Pet Supplies - 2.8%
All Other - 40.5%

78% of complaints were about purely on-line companies
22% of complaints were about "click-and-mortar" companies

91% of complaints were about niche/special interest websites
9% of complaints were about "department store" type sites

11% of complaints were about sites among the 50 most popular

4.2% of complaints were about companies located outside the United States

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