Why do websites fail to deliver Return on Investment (ROI): A quality evaluation framework - Literature review Example

?E-commerce Why do websites fail to deliver Return on Investment (ROI A quality evaluation framework? Table of Contents E-commerce 3 2. Reasons for failure of E-commerce 4 3. Website Quality evaluation Framework 10 4. Summary of other research 12 Reference List 14 Literature Review 1. E-commerce E-commerce has altered the ways the organizations used to conduct their business. For these business organizations e-commerce has moved from an alternative to an imperative. However most of the companies are still struggling to identify the best approach for establishing and conducting the business in the digital economy. Some of the companies are entirely moving towards Web, while some others are establishing subsidiaries and then converting it to separate entities dealing in online business (Gulati and Garino, 2000) and some others are looking for merging up with other online start ups. In simple terms there is no such prescription or model that helps to establish an e-commerce business in a particular industry. This is due to the fact that the industries are now fast moving since they are operating under an entirely different working rules and principles of the digital economy. E-commerce signifies a paradigm shift and not just another way that helps in enhancing and sustaining the business practices. It signifies a disruptive innovation that has changed the traditional ways of conducting business. 1.1. E-commerce as disruptive innovation The concept of sustaining innovation and disruptive innovation or technology was introduced by Bower and Christensen (1995). According to them sustaining innovation or technology are those that enhance the performance of the product or business operations, while on the other hand disruptive innovations are those that initially cause degradation in the business but promises to exhibit greater potential in the near future. There are two visible characteristics that can be found in the businesses that undergo technological changes. Firstly, they present a complete set of different performance attribute that may not be valued by the existing customers. Secondly, the performance attributes which are valued by the existing customers are seen to improve at such a rapid rate that the new innovation or technology can occupy the existing market. However, the practices in the e-commerce business cannot match the key performance attributes of the traditional business model. For instance, the security and privacy that is present in the business-to-customer commerce, the capacity and robustness that are present in the system of electronics data transfer in business-to-business commerce. However there are many technological innovations that help in improving the disruptive technology’s key performance attributes. For instance, the “streams of incremental innovations in certificate signature technologies will eventually replace the current secure socket layer technology to improve online transaction security” (Lee, 2001, p. 350). The performance attributes that are associated with disruptive innovations and does not gains support from the customers at their commencement are assumed to rise along a steep trajectory and satisfy the requirement of the mainstream customers through a stream of sustained innovation. For example e-commerce helps in reducing the transaction cost of both the suppliers and the customers and ensures that the information reaches to a large number of consumers without affecting the richness of the content (Evans and Wurster, 1997). 2. Reasons for failure of E-commerce 2.1 Lack of strategic direction A “spray and pray” approach is adopted when a strategy is improperly accounted. This situation includes when the website designed by a business fails into engaging the customers that they are targeting or meet their expectations. Like all other business strategies e-commerce strategy also requires planning, research and execution in order to deliver the right business objectives and needs of the customers. The business is expected to adopt some strategic approach as if they are operating offline. It is same as designing a product and service that is targeted to cater to the requirement of a particular customer segment, in similar way the website of the business should also be treated in the similar way. A website which is designed for the purpose of advertising and marketing should also reflect the customers it is targeting that has been established in the offline business through design, content and functionality of its online assets. H1: There is a positive correlation between lack of strategic direction and failure of e-commerce. 2.2 Failure in managing the customers The very common problem among most of the businesses is that they consider their own viewpoint rather than considering that of the customers. This is identical for all types of online assets like online retail websites, newsletter, social media, web copy and material marketing. To save themselves from falling into the trap the organizations must learn from behaviour, experiences and preferences of the customers. There are several ways by which the organizations can save themselves from falling into the trap. The organization can collect and analyse the data of the customers on a regular basis. At the same time the organization dealing online should offer opportunity to the customers for signing up for newsletters, participating in social media, subscribing in blogs and conduct some personalised direct marketing initiatives through the email of the customers in order to keep them informed with the useful information that are based on their interest and activities. The business through its e-commerce facilities can provide opportunities that help in communicating with the customers and hear from them regarding the improvement they are expecting so that the business and the customers can benefit from them. H2: There is a positive correlation between failure in managing the customers and failure of e-commerce. 2.3 No Personalization It is not always true that one size will fit in all. The website that is designed by the organization should provide a variety of styles, prices and product that fits to the taste of each target customers and helps in increasing the probability of purchase. This strategy has to be done in the same way as the business would have done if it was operating offline. Differentiated promotion and pricing strategy for different point of sale and entry points should be incorporated in the website. Apart from this, the organization should also tailor the online experience in the best possible way, which allows the visitors to comment in detail on their interests. The past behaviour of the customers can be used by the organization to create personalised communications that replicates their interest since the business has a large number of options, which depends on the outcome they want to achieve. Personalization is a powerful tool, which when implemented correctly can generate huge rewards. H3: There is a positive correlation between lack of personalization and failure of e-commerce. 2.4 No incentives It does not require any arguments that sales can be boosted by sales and customers are seen to go online for the purpose of bargaining. Hence it calls for the business to provide incentive for the customers so that they tend to visit the website again and again. If the website lacks the incentive parameter then it is difficult for the business to attract customers and the business ends up in losing the business. The business should follow the same principle as it would have followed when operating offline and offer loyalty programs, promotions and sales, which provide added perks to the customers. Depending on the customer base the online tools like email and social media are the effective platforms that assist in sharing these incentives. Incentives not necessarily include providing discounts. Free returns, free shipping and in store returns are excellent techniques that adds value to the online retail experiences of the customers. H4: There is a positive correlation between lack of incentives and failure of e-commerce. 2.5 Poor user experiences The customers who are using offline services have the privilege to view the services or products offered in a detailed manner and can approach the customer representative in case of any enquiry. In the same way the business should accommodate all these features when they are reaching the customers through online websites. While operating online the information should be readily available to the customers. The website and the product page should provide all the information that the customer requires while they are going for purchasing. A help section should be incorporated that provides all the information required by the customer. A contact detail should also be provided in order to assist the customer by calling the customer service representative in case of any problem. H5: There is a positive correlation between poor experience of the consumers and failure of e-commerce. 2.6 Payment gateway Issues One of the common reasons for the failure of e-commerce business is the poor quality of the check-out process. For instance smaller number of payment options, improper post-transaction communication and complicated check-out process are the primary reason that prevents the existing or the potential customers from purchasing again and again. The offline customers are provided with an option of purchase by card or cash and also receive a receipt that records the purchase. H6: There is a positive correlation between issues related to payment gateway and failure of e-commerce. 2.7 Poor Technology As the unkempt and shabby retail outlet speaks about the poor quality, in the same way outdated technology also speaks about the poor quality of service or product. E-commerce technologies are always experiencing dramatic changes from the perspective of the user’s and the online retailers are expected to adopt the changing requirement. The customers are seen to move towards the competitors if they get additional benefits like social media activities, access the shopping cart at one click, product review and product comparison or if the competitors are easily accessible. On the other hand from the perspective of business the technology used in website that simplifies the process of stock control, streamlines the distribution, increases the effectiveness of the overall organization via integration with accounting system and CRM databases, which in turn increases the operational efficiency and reduces costs. Thus, this provides the organization with a competitive advantage over the competitors who lack these technologies. H7: There is a positive correlation between poor technology and failure of e-commerce. 2.8 Chasing trends In order to sustain in the competition the organization dealing in e-commerce needs to incorporate the latest technology and stay on the top of the rising trend. This in turn helps the company to enhance the experience of the customers and supports the business objective of the organization. For example, the mobile web is a rising trend through which the customers can access the e-commerce website of the organization from anywhere and at any time but the organization should consider every detail very minutely before jumping into the bandwagon. H4: There is a positive correlation between lack of development and failure of e-commerce. 2.9 Lack of Trust Credibility and trust are the most important assets of an organization whether it is operating online or offline. Any security issue in the web can deter both the existing and the prospective customers from buying the products and services. The online purchasing environment is different from that of offline purchase. During online purchases the customers has to provide the details of the credit card while placing the order. The organization should provide security of this information. Use of SSL, trusted and known payment gateways and clear display of privacy policies enhances the credibility and trust of the organization. H9: There is a positive correlation between lack of trust and failure of e-commerce. 2.10 Ease to access The customers should be made aware of the e-commerce website of the organization. Building of a new website or adding a shopping cart will not affect the business until and unless these features are properly promoted and the customers are made aware of their presence. E-commerce business should be supported by advertising and marketing strategies in order to make them a part of the business plan. H10: There is a positive correlation between ease of access and failure of e-commerce. 3. Website Quality evaluation Framework 3.1 E-SEQUAL Petre, Minocha and Roberts (2006) has conducted a cross-disciplinary research on relationship marketing and human-computer interaction (HCI), which aimed towards investigating how CRM can be integrated with HCI in e-commerce so that customer’s loyalty, trust and retention can be ensured. In this context customer’s perception towards the service quality of the e-shopping environment was studied. From these studies the research scholars have developed evaluation instrument E-SEQUAL. E-SEQUAL can be applied during e-commerce development in order to integrate the service factors those are significant to the customers into the design, marketing and evaluation of e-commerce. Its main strength lies in the integration of theories from different disciplines. It is the basis of resultant modelling, empirical studies and decisive feedback from the industry. Previously Zhang and von Dran (2002) has developed a model WebQUAL that emphasized on significance and quality at the pre-purchase stage where the customer is about to decide whether to purchase or not. But E-SEQUAL is the only model that considers the expectation and perception of the customers towards the service quality over the total experience of eth customers. E-SEQUAL is the model that considers heuristics and sub-heuristics and is empirically grounded unlike other models. E-SEQUAL bridges the gap between the design and evaluation practice and user experience. Many organization of UK are seen to use this model (Petre, Minocha and Roberts, 2006). 3.2 DEMATEL Method DEMATEL technique is used to determine the critical characteristics of web design based on the interaction among them. DEMATEL (decision-making trial and evaluation laboratory method) was introduced during the period of 1772 and 1976 that represents a relationship between the cause and effect of some standards into comprehensible structure. It was used to extract the interrelationship between the characteristics of multiple designs. DEMATEL defines the design features of a system as a group of cause and effect relationship that are relevant to the decision (Chang and Cheng, 2011). If a criterion has more effect on the other then the criterion goes under high priority and is assigned under cause criterion. Whereas on the other hand if a criterion is affected by another then it will have lower priority and will be under effect criteria (Tseng and Lin, 2009, Tzeng, et al., 2011a). 3.3 Global Quality Evaluation The quality of the website can be based on the content quality, service quality and technical quality. Bernstam, et al., (2005), D.R. Hargrave, U.A. Hargrave and Bouffet (2006), Caro, et al., (2008), C. Moraga, M.A. Moraga and Caro (2009), Richard et al. (2007) and Parker et al. (2006) have evaluated the quality of the content using the methodology of Likert scale, which conducts the evaluation of the content amongst the respondents. However, the evaluation of the content can be done by following the format given by C. Moraga, M.A. Moraga and Caro (2009), which is aligned to the standards of ISO 25012. The analyser under this method needs to analyse the content of the webpage in depth and finally evaluate its quality based on the five point Likert scale. Again Al-Momani and Noor (2009), Cernea, S??rbu and Ma?rginean, (2009), Arshad, Ahmad and Janom (2007), Li and Suomi (2007, 2009), Hamadi (2010), Zhao, (2005) and Parasuraman, Zeithaml and Malhotra, (2005) has conducted research for evaluating the online service quality. In this context major contribution was done by Parasuraman, Zeithaml and Malhotra, (2005) who classified the service quality of the website in a five point Likert scale. On the other hand technical quality evaluation signifies the ways in which services and qualities are assembled and made available on the website. However, in this context the research of Machado and Rocha, (2008); Olsina, (2000) and Reis, (2004) have contributed significant information. Rocha, (2012) has proposed a high level structure that evaluates the quality of a website in a broad, detailed and traversal ways. The structure is based on the three main quality dimensions of service which in turn consist several attributes. The characteristics are also seen to have more than one level of sub-characteristics. (Source: Rocha, 2012) 4. Summary of other research Author’s name and year Description of the research Anon., (2005) The reasons for failure and success of e-commerce. Martinsons, (2006) The key factors of failure, their impact on the business and learning for the management. Forbes, Kelley and Hoffman, (2005) Focuses on the failure of e-commerce service and presents the recovery strategies employed by e-commerce service firms. Razi, Tarn and Siddiqui, (2004) The reasons for failure and success of e-commerce. Thus it is clear from the above literature review that the frameworks that have been used previously were evaluating the content quality, technical quality, service quality, CRM integrated in HCI and interaction between the characteristics of the website. But the reason for which the e-commerce fails to generate the Return on Investment (ROI) are not only the reasons that has been considered in the previous framework but trust, ease of access, how organizations are adopting to the recent trends and other reasons are also discussed in the literature review. Hence, this research evaluates the website quality using a framework that is based on the characteristics discussed above. Reference List Al-Momani, K. and Noor, N., 2009. E-service quality, ease of use, usability and enjoyment as antecedents of e-CRM performance: an empirical investigation in Jordan mobile phone services. The Asian Journal of Technology Management, 2(2), pp. 11-25. Anonymous, 2005. DotCom boom and bust. Strategic Direction, 21(2), pp. 30-31. Arshad, N., Ahmad, F. and Janom, N., 2007. Empirical study on electronic service quality. Public Sector ICT Management Review, 2(1), pp. 29-37. Bernstam, E.V., Shelton, D., Walji, M. and Meric-Bernstam, F., 2005. Instruments to assess the quality of health information on the World Wide Web: What can our patients actually use? International Journal of Medical Informatics, 74(1), pp. 13-19. Bower, J.L. and Christensen, C.M., 1995. Disruptive technologies: catching the wave. Harvard Business Review, pp. 43-53. Bwired, n.d. 10 Reasons Why E-Commerce Fails [pdf] Available at [Accessed 8 July 2013]. Caro, A., Calero, C., Caballero, I. and Piattini, M., 2008. A proposal for a set of attributes relevant for web portal data quality. Software Quality Journal, 16(4), pp. 513-42. Cernea, S.O., S??rbu, J. and Ma?rginean, N., 2009. Determination of users’ satisfaction level regarding the quality of e-services provided by Bogdan-Voda University. Annales Universitatis Apulensis Series Oeconomica, 11(2), pp. 652-61. Chang, K. H., and Cheng, C. H., 2011. Evaluating the risk of failure using the fuzzy OWA and DEMATEL method. Journal of Intelligent Manufacturing, 22(2), pp. 113–129. Evans, P.B. and Wurster, T.S., 1997. Strategy and the new economics of information. Harvard Business Review, September-October, pp. 70-82. Forbes, L.P., Kelley, S.W. and Hoffman, K.D., 2005. Typologies of e-commerce retail failures and recovery strategies. Journal of Services Marketing, 19(5), pp. 280–292. Gulati, R., and Garino, J., 2000. Get the right mix of bricks and clicks. Harvard Business Review, May-June, pp. 107-14. Hamadi, C., 2010. The impact of quality of online banking on customer commitment. Communications of the IBIMA, pp. 1-8. Hargrave, D.R., Hargrave, U.A. and Bouffet, E., 2006. Quality of health information on the internet in pediatric neuro-oncology. Neuro-Oncology, 8(2), pp. 175-82. Lee, C. S., 2001. 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Olsina, L., 2000. Metodolog??a cuantitativa para la evaluacio?n y comparacio?n de la calidad de sitios web. Ph.D. National University de La Plata. Parasuraman, A., Zeithaml, V.A. and Malhotra, A., 2005. E-S-QUAL: a multiple-item scale for assessing electronic service quality. Journal of Service Research, 7(3), pp. 213-33. Parker, M.B., Moleshe, V., De la Harpe, R. and Wills, G.B., 2006. An evaluation of information quality frameworks for the world wide web, 8th Annual Conference on WWW Applications. Bloemfontein 6-8 September 2006. Petre, M., Minocha, S. and Roberts, D., 2006. Usability beyond the website: an empirically-grounded e-commerce evaluation instrument for the total customer experience. Behaviour & Information Technology, 25(2), pp. 189 – 203. Razi, M.A., Tarn, J.M. and Siddiqui, F.A., 2004. Exploring the failure and success of DotComs. Information Management & Computer Security, 12(3), pp. 228-43. Reis, T., 2004. REQE – uma metodologia para medic?a?o de qualidade de aplicac?o?es web na fase de requisites, Master’s thesis, University of Pernambuco, Pernambuco. Richard, J.L., Schuldiner, S., Jourdan, N., Daure`s, J.P., Vannerau, D., Rodier, M. and Lavit, P., 2007. The internet and the diabetic foot: quality of online information in French language. Diabetes and Metabolism, 33(3), pp. 197-204. Rocha, A., 2012. Framework for a global quality evaluation of a website. Online Information Review, 36(3), pp. 374-382. Tseng, M. L., and Lin, Y. H., 2002. Application of fuzzy DEMATEL to develop a cause and effect model of municipal solid waste management in metro Manila. Environmental Monitoring and Assessment, 158(1–4), pp. 519–533. Tzeng, G. H., Chen, W. H., Yu, R., and Shih, M. L., 2010. Fuzzy decision maps: A generalization of the DEMATEL methods. Soft Computing, 14(11), pp. 1141–1150. Zhang, P. and Von Dran, G.M., 2002. User Expectations and Rankings of Quality factors in different website domains. International Journal of Electronic Commerce, 6, pp. 9 – 33. Zhao, P., 2005. Relationship between online service quality and customer satisfaction: a study in internet banking. Master’s thesis, Lulea University of Technology. Read More