Too often, retailers' Web sites don't work right, if at all...and they keep chasing after new customers instead of trying to retain their current ones. Are some big online retailers focusing too much on the competition at the expense of their own evolution?

NEW YORK CITY (BetaNews) - With retail Web sites that are too glitchy and search engines that don't always turn up the right stuff, a lot of retailers trying to sell online are still missing the boat with consumers, according to an analyst at Forrester Research.

During a conference session at this week's National Retail Federation (NRF) show in New York City, Forrester's Sucharita Mulpuru also pinpointed some big problems with Web site availability and on-time delivery of goods ordered online.

People who do try to buy online tend to move back and forth between competing Web sites, according to Mulpuru.

"Sixty-eight percent of CircuitCity.com shoppers have also shopped at BestBuy.com. Forty-five percent of Borders.com shoppers have also shopped at [BarnesandNoble.com]," she said. "Thirty-four percent of Staples.com shoppers have also shopped at OfficeDepot.com."

Yet some Web sites are growing obsessed with beating the competition, when they should be obsessing instead over meeting the needs of customers, the analyst said.

In a big room at the Javits Center packed with retail managers from throughout the US, Mulpuru pointed to sales depicting overall growth of e-commerce from $76 billion to $220 billion from 2002 to 2006.

But still, year-over-year growth has slowed from 51% between 2002 and 2003 to 25% -- or a level less than twice as high -- between 2005 and 2006, according to Forrester's numbers.

In surveys conducted by Forrester, consumers are still giving much higher customer satisfaction ratings to "going to a retail store" than to either "using a Web site" or attempting to do business through a self-service kiosk.

In a 2007 study by Forrester, more than 25% of Web shoppers said they'd experienced problems with online buying during the 2006 holiday season, with 17% complaining about shipping delays, 15% about out-of-stock or back-ordered merchandise, and 12% about "sluggish performance" of Web sites.

Meanwhile, some Web sites are paying too much attention to adding advanced technologies such as podcasts and streaming video when they "still haven't even nailed down the basics," the analyst said.

Even eBay's could be much easier to navigate, according to Mulpuru, who is a senior analyst at Forrester for the retail market.

But retail Web sites vary considerably in terms of availability as well as other factors, Mulpuru said.

The analyst gave numbers from Internet monitoring firm Gomez, Inc. showing an average unavailability rate of about 2% across the top 25 Internet retailer Web sites -- an average rate which is fairly consistent across the year.

Yet also according to Gomez' statistics, some major retail sites are down much more often than that, especially during periods of peak demand.

From October of 2006 to June of 2007, the "least available" of these sites was unavailable almost 12% of the time for stints during the key holiday shopping time of December, as well as in February and March.

Meanwhile, in a survey done by Forrester among online retailers, 51% said they're focusing mostly on customer acquisition, 24% on customer retention, 18% on driving sales to "other channels" such as brick-and-mortar stores, and 11% simply on brand recognition.

Mulpuru suggested, though, that maybe some of these retailers should concentrate more on keeping those customers they already have -- because right now, half of all online shoppers are responsible for two-thirds of the money spent at Web sites.

Also, the time is right for major store chains to stop "siloing" their online sales, she said, and to start integrating their Web divisions more closely with the operations of brick-and-mortar stores, on both the technology and sales and marketing sides.

Although Web sites are currently "cannibalizing" sales in stores, many untapped opportunities are still out there for retailers to leverage "cross-channel initiatives" involving the use of Web sites and stores to push sales back and forth between them.

For instance, some retailers use e-mail for delivering coupons that can be applied either online or at a store cash register. And many consumers use the Web to research products before going into stores to purchase products.

Beyond improving Web site performance and usability, Mulpuru also recommended the use of other tools for raising the satisfaction levels of online customers. For example, almost 82% of retail sites are using site analytics, only 59% are carrying out online surveys with customers.

Another 46% do online usability testing, but merely 23% conduct online focus groups, according to a report from Forrester called "The State of Retailing Online."

Mulpuru gave particularly high marks to some Web sites -- such as Netflix.com and Nordstrom.com -- for being proactive on the subject of online customer satisfaction.

But to illustrate how other Web sites are concentrating too much on their competitors rather than their customers, she cited another study by Forrester, conducted among e-business management-professionals, in which 83% said they agreed with the statement, "We look outside our company for illustrations of best practices."

Another 73% agreed that, "We gather whatever competitive intelligence we can to guide our business."

In terms of cross-channel initiatives, although they are widely regarded among many retailers as the wave of the future, carrying them out can be a lot more difficult than it might sound, as one veteran retail manager attending the conference in Manhattan told BetaNews.

Beyond coordinating sales and marketing efforts between different company divisions -- often with very different cultures and outlooks -- many traditional retailers also need to roll out better integration between computer systems used for corporate, in-store, and Web purposes, he said.

The retailer told us that, during times when the economy is shaky, it can be especially tough to convince corporate management to allocate the needed funds.