Skip to main content
Skip main navigation
No Access

An empirical analysis on the impact of risk on customer loyalty in electronic commerce

Published Online:pp 183-201https://doi.org/10.1504/IJSOM.2011.040707

In this paper, we discuss a research study that explores the role of risk on the influence of various performance attributes on customer loyalty in the context of the electronic marketplace. We use data from online customer ratings of 532 e-commerce websites for the purpose. Seven attributes linked to various performance options available to managers of e-commerce websites are considered. Websites are grouped into risk and non-risk groups based on the nature of products sold. Empirical analysis is conducted using a combination of multivariate statistical techniques: multivariate analysis of variance (MANOVA), factor analysis and multiple regression. Our results show that online customer ratings differ significantly in terms of risk characteristics of the products sold for all the performance attributes, except for ‘comparative prices’. Service-oriented attributes, pre-purchase attributes and post-purchase attributes are significant for both risk groups (risk and non-risk).

Keywords

customer loyalty, risk, performance attributes, e-commerce, multivariate analysis of variance, MANOVA, factor analysis, regression

References

  • 1. V. Agrawal, L.D. Arjona, R. Lemmens, '‘E-performance: The path to rational exuberance’' McKinsey Quarterly (2001) Google Scholar
  • 2. S. Balasubramanian, P. Konana, B.M. Menon, '‘Customer satisfaction in virtual environments: a study of online investing’' Management Science (2003) Google Scholar
  • 3. S. Burt, L. Sparks, '‘E-commerce and the retail process: A review’' Journal of Retailing and Consumer Services (2003) Google Scholar
  • 4. Y. Chen, J. Xie, '‘Online consumer review: Word-of-mouth as a new element of marketing communication mix’' Management Science (2008) Google Scholar
  • 5. J.E. Collier, C.C. Bienstock, '‘How do customers judge quality in an e-tailor?’' MIT Sloan Management Review (2006) Google Scholar
  • 6. A.J. Cullen, M. Taylor, '‘Critical success factors for B2B e-commerce use within the UK NHS pharmaceutical supply chain’' International Journal of Operations & Production Management (2009) Google Scholar
  • 7. C. Dellarocas, C.A. Wood, '‘The sound of silence inonline feedback: Estimating trading risks in the presence of reporting bias’' Management Science (2008) Google Scholar
  • 8. C. Demangeot, A.J. Broderick, '‘Conceptualising consumer behaviour in online shopping environment’' International Journal of Retail & Distribution Management (2007) Google Scholar
  • 9. A.S. Dick, K. Basu, '‘Customer loyalty: Toward an integrated conceptual framework’' Journal of the Academy of Marketing Science (1994) Google Scholar
  • 10. B. Doolin, S. Dillon, F. Thompson, J.L. Corner, '‘Perceived risk, the internet shopping experience and online purchasing behavior: A New Zealand perspective’' Journal of Global Information Management (2005) Google Scholar
  • 11. T.L. Esper, T.D. Jensen, F.L. Turnipseed, S. Burton, '‘The last mile: an examination of effects of online retail delivery strategies on consumers’' Journal of Business Logistics (2003) Google Scholar
  • 12. B.J. Finch, '‘Customer expectations in online auction environments: An exploratory study of customer feedback and risk’' Journal of Operations Management (2007) Google Scholar
  • 13. J.A. Fitzsimmons, M.J. Fitzsimmons, Service Management: Operations, Strategy, Information Technology (2008) Google Scholar
  • 14. M.M.H. Goode, L.C. Harris, '‘Online behavioural intentions: an empirical investigation of antecedents and moderators’' European Journal of Marketing (2007) Google Scholar
  • 15. D.D. Gremler, W.W. Brown, B. Edvardsson Ed., S.W. Brown Ed., R. Johnston Ed., E.E. Scheuing Ed., '‘Service loyalty: its nature, importance and implications’' Proceedings of American Marketing Association (1996) Google Scholar
  • 16. J.F. Hair, W.C. Black, B.J. Babin, R.E. Anderson, R.L. Tatham, Multivariate Data Analysis (2006) Google Scholar
  • 17. G.R. Heim, K.K. Sinha, '‘Operational drivers of customer loyalty in electronic retailing: An empirical analysis of electronic food retailers’' Manufacturing & Service Operations Management (2001) Google Scholar
  • 18. G.R. Heim, J.M. Field, '‘Process drivers of e-service quality: Analysis of data from an online rating site’' Journal of Operations Management (2007) Google Scholar
  • 19. J.L. Heskett, T.O. Jones, G.W. Loveman, W.E. Sasser, L.A. Schlesinger, '‘Putting the service-profit chain to work’' Harvard Business Review (1994) Google Scholar
  • 20. C.F. Hofacker, Internet Marketing (2000) Google Scholar
  • 21. T. Jelassi, A. Enders, Strategies for E-Business: Creating Value through Electronic and Mobile Commerce (2008) Google Scholar
  • 22. P. Jiang, B. Rosenbloom, '‘Customer intention to return online: price perception, attribute-level performance, and satisfaction unfolding over time’' European Journal of Marketing (2005) Google Scholar
  • 23. W.A. Kamakura, V. Mittal, F.D. Rosa, J.A. Mazzon, '‘Assessing the service profit chain’' Marketing Science (2002) Google Scholar
  • 24. S. Kaplan, M. Sawhney, '‘E-hubs: The new B2B marketplaces’' Harvard Business Review (2000) Google Scholar
  • 25. D.J. Kim, D.L. Ferrin, H.R. Rao, '‘A trust-based consumer decision-making model in electronic commerce: The role of trust, perceived risk, and their antecedents’' Decision Support Systems (2008) Google Scholar
  • 26. T.J. Kull, K. Boyer, R. Calantone, '‘Last-mile supply chain efficiency: an analysis of learning curves in online ordering’' International Journal of Operations & Production Management (2007) Google Scholar
  • 27. H. Lacohee, A.D. Phippen, S.M. Furnell, '‘Risk and restitution: Assessing how users establish online trust’' Computers & Security (2006) Google Scholar
  • 28. H.L. Lee, S. Whang, '‘Winning the last mile of e-commerce’' MIT Sloan Management Review (2001) Google Scholar
  • 29. N. Lim, '‘Consumers’ perceived risk: sources versus consequences’' Electronic Commerce Research and Applications (2003) Google Scholar
  • 30. B. Mahadevan, '‘Business models for internet-based e-commerce: An anatomy’' California Management Review (2000) Google Scholar
  • 31. V.J. Massad, J.M. Tucker, '‘Comparing bidding and pricing between in-person and online auctions’' Journal of Product & Brand Management (2000) Google Scholar
  • 32. A.D. Miyazaki, A. Fernandez, '‘Consumer perceptions of privacy and security risks for online shopping’' Journal of Consumer Affairs (2001) Google Scholar
  • 33. S. Moon, G.J. Russell, '‘Predicting product purchase from inferred customer similarity: An autologistic model approach’' Management Science (2008) Google Scholar
  • 34. M.D. Odom, A. Kumar, L. Saunders, '‘Web assurance seals: How and why they influence consumers’ decisions’' Journal of Information Systems (2002) Google Scholar
  • 35. S. Olafsson, X. Li, S. Wu, '‘Operations research and data mining’' European Journal of Operational Research (2008) Google Scholar
  • 36. S. Otim, V. Grover, '‘An empirical study on Web-based services and customer loyalty’' European Journal of Information Systems (2006) Google Scholar
  • 37. E. Rabinovich, J.P. Bailey, '‘Physical distribution service quality in internet retailing: service pricing, transaction attributes, and firm attributes’' Journal of Operations Management (2004) Google Scholar
  • 38. C. Ranaweera, A. Neely, '‘Some moderating effects on the service quality-customer retention link’' International Journal of Operations & Production Management (2003) Google Scholar
  • 39. L.M. Sehwail, R.G. Ingalls, D.B. Pratt, '‘Business-to-business online reverse auctions: a literature review and a call for research’' International Journal of Services and Operations Management (2008) Google Scholar
  • 40. R. Sousa, C.A. Voss, '‘The effects of service failures and recovery on customer loyalty in e-services: An empirical investigation’' International Journal of Operations & Production Management (2009) Google Scholar
  • 41. T.S.H. Teo, J. Liu, '‘Consumer trust in e-commerce in the United States, Singapore and China’' Omega (2007) Google Scholar
  • 42. S. Thirumalai, K.K. Sinha, '‘Customer satisfaction with order fulfilment in retail supply chains: implications of product type in electronic B2C transactions’' Journal of Operations Management (2005) Google Scholar
  • 43. M. Turner, D. Callaghan, '‘Is shopping online now risk free for UK consumers?’' Computer Law & Security Report (2006) Google Scholar
  • 44. G. Vaidyanathan, S. Devaraj, '‘The role of quality in e-procurement performance: An empirical analysis’' Journal of Operations Management (2008) Google Scholar
  • 45. S. Wang, N. Archer, '‘Business-to-business collaboration through electronic marketplaces: An exploratory study’' Journal of Purchasing and Supply Management (2007) Google Scholar
  • 46. Y. Yang, '‘Business service quality in an e-commerce environment’' Supply Chain Management: An International Journal (2006) Google Scholar