CUSTOMER SATISFACTION AND LOYALTY IN ONLINE SHOPS

Customer Satisfaction and Loyalty in Online Shops

Customer needs Proposal

Abstract

Online shopping can be considered as an exchange of time, effort, and money for receiving products or services. According to Zeithaml (1988), it is the overall assessment of what is received and what is given that shapes individuals' satisfaction with online shopping. Adams' (1965) equity theory theorises that individuals seek a fair balance between input (what is given) and output (what is received) and become satisfied and motivated whenever they feel their inputs are being fairly rewarded. Accordingly, a more complete study of the motivations underlying customers' satisfaction and loyalty intentions towards online shopping should address issues related to fairness. Marketing and organisational justice researchers (Niehoff and Moorman 1993, Blodgett et al. 1997, Ramaswami and Singh 2003) have identified three important dimensions of fairness: fairness of outcomes (distributive fairness), fairness of decision-making procedures (procedural fairness), and fairness of interpersonal treatment (interactional fairness). This study will follow prior research in arguing that customers' satisfaction with online shopping is influenced by distributive fairness, procedural fairness, and interactional fairness.

Customer Satisfaction and Loyalty in Online Shops

Introduction

Online shopping inherently involves higher levels of uncertainty than shopping in a bricks-and-mortar store because online transactions lack the physical assurances of traditional shopping experiences (Grabner-Kraeuter 2002). Information asymmetry is a problem in online shopping in which the customers often have incomplete or distorted information about the product (Ba and Pavlou 2002), the process, the outcome, and the e-vendor (Grabner-Kraeuter 2002). Fairness and trust are especially critical when uncertainty and information asymmetry are present (Kumar et al. 1995, Ba and Pavlou 2002, Pavlou 2003, Diekmann et al. 2004) and are at the heart of relationships of all kinds (Lind et al. 1993, Morgan and Hunt 1994). According to uncertainty management model, fairness can remove trust-related uncertainty and alleviate much of the discomfort that uncertainty would otherwise generate (Van den Bos and Lind 2002). Fairness offers a useful means through which to explain and understand individuals' feelings of trust or mistrust (Saunders and Thornhill 2003).

Purpose of Study

The goal of this study is to explore customers' loyalty intentions towards online shopping. As with any other information system (IS), the success of online shopping depends largely on user satisfaction and other factors that will eventually increase customers' loyalty intentions towards it (DeLone and McLean 2003). The importance of loyalty intentions is evident from the fact that customer turnover can be costly, given that it costs more to acquire new customers than to retain existing ones (Hart et al. 1990, Reichheld and Schefter 2000). In view of this, electronic vendors (e-vendors) should look for ways to increase customers' satisfaction levels and loyalty intentions. One approach an e-vendor can take is to improve technological attributes of the online shopping Web site (Pavlou 2003). However, having a Web site with good technological attributes does not guarantee the success of online shopping. Another promising approach involves the reduction of uncertainty (Pavlou 2003), and the development and maintenance of ...