In the partial Fulfillment for the Degree of
Master of Business Administration
Department of Management Sciences
It is certified that this thesis titled ?Factors Affecting E-Commerce Customer Loyalty? by ######, Reg. No. #####, is approved for submission to IQRA University, Islamabad Campus.
I dedicate my effort to my family whose affection, love, encouragement and prays of day and night make me able to get such success and honor.
First of all, I am grateful to Almighty Lord for establishing me to complete this dissertation.
I would like to express my appreciation to Mr. #####, whose expertise, support and generous guidance made it possible for me to work on a topic that was of great interest to me.
In addition, I would like to express my gratitude to my family who put their faith in me and urged me to do better. At last but not least, also to Ms. ######, who encouraged and gave me moral support throughout the research.
I, #####, hereby declare that the thesis titled ?Factors Affecting E-commerce Customer Loyalty? submitted by me in fulfillment of the requirements for the degree of MBA. This thesis represents research carried out at Iqra University Islamabad Campus and aims encouraging discussion and comment. The observations and viewpoints expressed are the sole responsibility of the author. It does not necessarily to represent position of Iqra University Islamabad Campus or its faculty. I also understand that if evidence of plagiarism is found in my thesis at any stage, even after the award of degree, the work may be cancelled and the degree revoked.
TABLE OF CONTENTS TOC o “1-3” h z u CERTIFICATE PAGEREF _Toc475374996 h iiDEDICATION PAGEREF _Toc475374997 h iiiACKNOWLEDGMENT PAGEREF _Toc475374998 h ivDECLARATION PAGEREF _Toc475374999 h vTABLE OF CONTENTS PAGEREF _Toc475375000 h viLIST OF TABLES PAGEREF _Toc475375001 h viiiABSTRACT PAGEREF _Toc475375002 h ixCHAPTER 01: INTRODUCTION PAGEREF _Toc475375003 h 11.1 Background PAGEREF _Toc475375004 h 11.2 Introduction PAGEREF _Toc475375005 h 11.3 Problem Statement PAGEREF _Toc475375006 h 31.4 Research Question PAGEREF _Toc475375007 h 31.5 Objectives of the study PAGEREF _Toc475375008 h 31.6 Significance of the study PAGEREF _Toc475375009 h 31.7 Delimitation PAGEREF _Toc475375010 h 4CHAPTER 02: LITERATURE REVIEW PAGEREF _Toc475375011 h 52.1 Empirical Literature Review PAGEREF _Toc475375012 h 52.2 Theoretical Framework PAGEREF _Toc475375013 h 152.3 Adapted Framework PAGEREF _Toc475375014 h 162.2.1 Independent Variables PAGEREF _Toc475375015 h 172.2.2 Mediating Variable PAGEREF _Toc475375016 h 182.2.3 Dependent Variable PAGEREF _Toc475375017 h 192.4 Hypotheses PAGEREF _Toc475375018 h 20CHAPTER 03: RESEARCH METHODOLOGY PAGEREF _Toc475375019 h 213.1 Purpose of the Study PAGEREF _Toc475375020 h 21Hypothesis testing PAGEREF _Toc475375021 h 213.2 Types of Investigation PAGEREF _Toc475375022 h 21Causal Study PAGEREF _Toc475375023 h 213.3 Extent of Researcher Interference PAGEREF _Toc475375024 h 21Minimal Interference PAGEREF _Toc475375025 h 213.4 Data collection PAGEREF _Toc475375026 h 22Population PAGEREF _Toc475375027 h 223.4.1 Sample Size: PAGEREF _Toc475375028 h 223.4.2 Sampling Frame: PAGEREF _Toc475375029 h 223.4.3 Location PAGEREF _Toc475375030 h 223.4.5 Pilot testing PAGEREF _Toc475375031 h 223.5 Study Setting PAGEREF _Toc475375032 h 233.6 Unit of Analysis PAGEREF _Toc475375033 h 233.7 Time Horizon PAGEREF _Toc475375034 h 233.8 Instruments and measures PAGEREF _Toc475375035 h 233.9 Procedure PAGEREF _Toc475375036 h 243.10 Statistical Analysis PAGEREF _Toc475375037 h 24CHAPTER 04: RESULTS AND DISCUSSION PAGEREF _Toc475375038 h 264.1 Reliability Statistics PAGEREF _Toc475375039 h 264.2 Correlations PAGEREF _Toc475375040 h 274.3 Regression analysis by Andrew F. Hayes Process PAGEREF _Toc475375041 h 284.4 Discussion and Practical Implications PAGEREF _Toc475375042 h 33CHAPTER 05: CONCLUSION AND RECOMMENDATIONS PAGEREF _Toc475375043 h 355.1 Conclusion: PAGEREF _Toc475375044 h 355.2 Recommendations PAGEREF _Toc475375045 h 365.3 Future Research and Limitations PAGEREF _Toc475375046 h 37REFERENCES PAGEREF _Toc475375047 h 38APPENDIX PAGEREF _Toc475375048 h 42
TOC h z c “Table 4” Table 4.1 Reliability Statistics PAGEREF _Toc475011906 h 26
TOC h z c “4.2” TOC h z c “4.3”
Table 4.2 1 Correlations PAGEREF _Toc475011907 h 27
TOC h z c “4.4”
Table 4.3 1 Model CS Outcome PAGEREF _Toc475011899 h 28
Table 4.3 2 Model Trust Outcome PAGEREF _Toc475011900 h 29
Table 4.3 3 Model User Interface, CS, Trust and Loyalty Outcome PAGEREF _Toc475011901 h 30
Table 4.3 4 Model Service Info Quality, CS, Trust and Loyalty Outcome PAGEREF _Toc475011902 h 30
Table 4.3 5 Model Security, CS, Trust and Loyalty Outcome PAGEREF _Toc475011903 h 31
Table 4.3 6 Model Feedback, CS, Trust and Loyalty Outcome PAGEREF _Toc475011904 h 31
Table 4.3 7 Total Effect Model Loyalty Outcome PAGEREF _Toc475011905 h 32
The purpose of this study is to investigate the effect of e-commerce customer loyalty. The study is based on questionnaire that was adapted to calculate the influence of similar variables in current research. The data has been collected from 219 e-commerce customers. The study demonstrates thatÿsatisfactionÿdoes not influenceÿloyaltyÿwhile client trust does and that client trust is influenced by data quality. The study focused Islamabad and Rawalpindi which may lead to generalization issues in others parts. And only seven variables were studied in the current research. Additional variables can be introduced. It assists firms? managers to better understand what key factors of e-commerce applications they ought to focus on in order to improve satisfaction, trust, and loyalty for online customers thereby improving their e-commerce services and business success. It is concluded that e-commerce service user interface, e-commerce information quality, e-commerce perceived security and e-commerce feedback plays a vital role in maintaining e-commerce customer loyalty. It is suggested that in order to accomplish significant online marketing in Pakistan, clients should have understanding of number of advantages online shopping brings in increasing customer satisfaction.
Keywords: B2C e-commerce, customer trust, customer satisfaction, customer loyalty.
1.1 Background
In the recent years, a growing interest in customer loyalty has been revealed (Andres, 2007). The globalization of competition, saturation of markets, and development of information technology have enhanced the awareness of customers and produced a situation where the long-term success is no longer attained through optimized product price and qualities. Instead, the companies achieve their success on a long-term customer relationship. According to the studies, the cost of keeping an existing customer is 6 times more than winning a new customer (Rosenberg et al. 2009).
Depending on the particular industry, it is possible to increase profit by up to 60%after reducing potential migration by 5%. Thus, we can observe that the increase as well as the retention of loyal customers has become a key factor for long-term success in the companies. In this new era, the major attention of marketing field has shifted from winning new customers to the retention of existing ones. In emerging markets such as Pakistan, it is more vital to determine factors which affect the customer loyalty due to the constant influx of new players in potential industries (Hafeez et al. 2010). In Pakistan, the massive privatization triggered the need to examine the determinants of customer loyalty for achieving a long-term profitability (Afsar et al. 2010).
1.2 Introduction
The Internet and Web development have been the most exciting developments in the field of information and communications technology in recent years. With increasing Internet access, the use of e-commerce services by the population is booming globally (Marrilees, 2014).
At a global level, customer loyalty is generally very strongly related to the profitability and long-term growth of a firm. Small increases in customer retention rates can dramatically increase profit. Loyal customers visit their favorite websites twice as often as non-loyal customers, and loyal customers spend more money (Jones, 2013).
According to analysts, 35 to 40% of e-commerce website sales revenue comes from repeat visitors. As such, it is not surprising that customer loyalty has been found to be a critical asset for e-retailers. (Reichheld & Schefter, 2014) found that the high cost of acquiring new online customers could lead to unprofitable customer relationships for up to three years. Consequently, it is very useful to determine the key antecedents or factors that influence E- commerce customer loyalty.
Consumer decisions are influenced based on a complex interaction of consumer and the factors applicable in an online environment. As online shopping continues to evolve technologically, there is a need to understand how these various factors come together in influencing consumer decision-making (Teo, 2014). Retaining customers is a financial imperative for electronic vendor (e-vendor), especi…