The Role of E-Service Quality in Consumers Purchase Intentions: China Online Retailer- JD.COM - Literature review Example

The role of e-service quality in consumers’ purchase intentions: An empirical study of China’s second largest online retailer- JD.COM

1.0 Introduction

Literature review section of a research intends to critically discuss the previous studies on the concerning topic. It enables the researcher to procure a thorough idea about the theories and concepts related to the research. Thus, it can be stated that literature review acts as a bridge between research objectives and proposed data analysis planning.

2.0 E-service quality

2.1 Definition

Most of the existing literature of e-service quality has mainly focused on identifying the dimensions and measurement techniques of e-service quality, online experience of the consumers, their purchase behaviour, satisfaction level and loyalty factor. However, none of these researches have provided an absolute definition of e-service. Considering the opinions of most of the scholars, Rowley (2006) defined e-service as an information technology based solution that provides support to the transaction system and performs sequential transportation of services. In addition, tracing and exchanging flow of business related information are also the functions of e-service (Rowley, 2006). Some of the scholars have further categorised e-service quality into online business service and self-help service (Santos, 2003).

According to Sheng and Liu (2010), e-service quality can be considered as one of the most vital parameters that indicate the features of the enterprises and creates competitive edge for the concerned organisations. On the other hand, Parasuraman, Zeithaml and Malhotra (2005) viewed that e-service quality implies to the efficacy of the online browsers, online purchase and delivery of the goods or services. On the other hand, Asubonteng, McCleary and Swan (1996) cited e-service quality as the difference between expectation of the customers related to the service performance before the service has been encountered and their acuity of the received service. Bitner, Booms and Tetreault (1990) defined e-service as the overall perception of the customers related to the inferiority or superiority of the online service provider and its services. However, in this context, Ojo (2010) stated that although the definitions of e-service quality varies in scholar to scholar, its main essence is related to the evaluation of whether the perceived online service meets, exceeds or fails to meet the customers’ expectation.

2.2 Dimensions of e-service quality

Parasuraman, Zeithaml and Malhotra (2005) proposed a model for measuring e-service quality and it is termed as E-S-QUAL. According to this measurement method, e-service quality comprises of four dimensions that include 22 items. The four dimensions are fulfilment, efficiency, privacy and system availability Parasuraman, Zeithaml and Malhotra (2005). However, considering the issues faced by the customers while utilising online services, Parasuraman, Zeithaml and Malhotra (2005) further postulated a sub-scale known as E-RecS-Qual. It consists of three dimensions such as responsiveness, compensation and contacts and 11 items. These scales have been proposed based on rigorous reliability and validity testing. In the later stage, Parasuraman, Zeithaml and Malhotra (2005) have verified these scales in the context of online shopping. The efficiency of these dimensions has considered the speed and easiness of the utilisation to the particular e-commerce site (Al-Nasser, et al. 2013). In this regards, Al-Nasser, et al. (2013) mentioned that dimensions of e-service quality mainly monitors the capacity of the customers to use a site and procure all the details about the products and services with the least effort and time. On the other hand, the dimension system availability measures the technical efficiency such as accessibility or proper functioning of the particular site (Al-Nasser, et al. 2013).

However, there have discrepancies in the dimensions of service quality on different researches. Yoo and Donthu (2001) proposed SITEQUAL model that indicates four dimensions of e-service quality such as accessibility, speed of handling of the memoriser, artistic design and the rate of response of the interaction process. In contrast, Loiacono, Watson and Hoodhue (2002) introduced WEBQUAL model of e-service quality and the same has stated 12 dimensions like adaptability of information, trust, design, visual essentials, flow of information, business process, interaction, response time, intuition, creativity, communication and replaceability. Again, Wolfinbarger and Gilly (2003) mentioned about EtailQ model with four dimensions like site design, reliability, privacy and customer service. In this context, Yaobin and Tao (2005) added that serviceability, accessibility, security and goodwill are the dimensions of e-service quality.

In majority of the e-service quality related researches, the researchers deal with E-S-QUAL model. Kim, Kim and Lennon (2006) used this model for identifying the prime factors that are related to the satisfaction of the consumers in the case of online shopping. In the practical case, most of the scholars have admitted that both the models such as E-S-QUAL and E-RecS-Qual are used to measure the performance of e-service quality. Some of the most important dimensions of E-RecS-Qual scales are responsiveness, compensation and contact to resolve customer issues and queries (Mekovec, Bubas and Vrcek, 2007).

3.0 Customer satisfaction

3.1 Definition

Most of the scholars have defined customer satisfaction as an evaluative judgement before taking the final decision of purchasing a product or services (Oliver, 1980). According to Oliver (1980), satisfaction of the customers can be considered as an attitude that is formed by comparing their pre-purchase expectations with the actual performance of the products or services. In this regards, Oliver (1980) mentioned about disconfirmation theory while discussing about the customer satisfaction. Based on this theory, customer satisfaction can be formed by the gap between expected performance and cognitive parameters like expectation or desires of the consumers (Liu and Khalifa, 2003). McKinney, Yoon and Zahedi (2002) explained customer expectation in an easier way by mentioning it as beliefs of the customers prior to the use of any products or services. Therefore, based on such definitions of customer satisfaction, it can be inferred that the customers can be satisfied only if the performance of goods and services go beyond their prior expectation. However, in the recent time, the scholars have agreed that customer satisfaction can also be directly affected by the quality of the products and services. Zeithaml, Parasuraman and Malhotra (2002) argued that the concept of expectation inconformity cannot be applied while discussing about the customer satisfaction in online business. Zeithaml, Parasuraman and Malhotra (2002) pointed that as in the case e-commence, there is no benchmark to estimate the expectation business the business, the concept of expectation inconformity is irrelevant in this case. In this context, Anderson and Srinivasan (2003) provided an appropriate definition of customer satisfaction for online business by mentioning it as comparing appreciation of the customers to an e-commerce company and that result in re-purchase.

3.2 Importance of customer satisfaction

According to Hennig‐Thurau and Klee (2008), customer satisfaction is an indicator of the repurchase decision of the customers. Supporting this, Andreassen and Lindestad (2008) also mentioned that only the satisfied customers considers repurchase products or services from the same brand and unsatisfied customers switch over the brand. On the other hand, Mittal, et al. (2008) added that in order to sustain in the highly competitive business environment, the companies focus on maximising satisfaction level of the customers. Mittal, et al. (2008) further cited that due to its immense role in improving bottom line performance of the companies, customer satisfaction can be considered as the point of differentiation. Based on a research, Hennig-Thurau (2014) showed that in most of the cases, the customers change brands because of the poor service quality. Anderson, Fornell and Lehmann (2011) also mentioned that in most of the cases, the customers can pay higher prices to obtain quality service from any company. According to Homburg, Koschate and Hoyer (2009) satisfied customers can contribute almost 2.5 times more to the revenues of a company. Discussing about the benefits of customer satisfaction, Mittal, et al. (2008) mentioned that it reduces the changes of negative word of mouth and improves brand image of the company. Mittal, et al. (2008) also viewed that as satisfied customers refer the brand to the others, it acts as a promotion for the brand and reduces the cost for acquiring new customers.

3.3 Effects of e-service quality on customer satisfaction

Service quality has been considered as one of the most important aspects to maximise customer satisfaction level of a majority of the scholars (Cronin and Taylor, 1992). Moreover, the scholars have also admitted that in an internet based business environment, e-service quality is a crucial factor that stimulates customer satisfaction (Cronin, et al. 2000). Supporting this, Jun, Yang and DaeSoo (2004) mentioned that the dimensions of service quality can immensely influence customer satisfaction.

In order to assess the impact of e-service quality on the customers of both foreign and public sector banks of Pakistan, Naeem, Akram and Saif (2009) conducted a comparative study. The research has been conducted with 200 customers of the banks. Based on the regression analysis, Naeem, Akram and Saif (2009) showed that service quality has a positive and significant impact on customer satisfaction level in the case foreign banks. However, such factor is insignificant in the case of private banks. According to this research, Naeem, Akram and Saif (2009) concluded that efficiently managed service quality can directly contribute towards maximisation of customers’ satisfaction. Ahmad and Iqbal (2010) conducted a research to investigate the role of service quality in telecommunication industry. In this case, the researcher has examined the satisfaction of the customers with the SMS service provided by the concerned telecommunication company. 331 SMS users have been considered for this research. Based on correlation and regression analysis, Ahmad and Iqbal (2010) concluded the positive impact of service quality on customer satisfaction.

However, Zafar, et al. (2009) has most prominently shown the impacts of online service quality in banking sector of Pakistan on customers ‘satisfaction. In this case, Zafar, et al. (2009) used the dimensions like reliability, responsiveness, efficiency, privacy, assurance and fulfilment as the dimensions for measuring e-service quality. The result of this empirical study has revealed that online service quality can boost up customer satisfaction on the banks. Therefore, the banks need to improve the web-service quality for enhancing the satisfaction level of their customers. Herington and Weaven (2007) also conducted research with 200 Australian respondents to investigate the connection between e-service quality and customer satisfaction in banks. In this case, Herington and Weaven (2007) have considered the dimensions like personal needs, site organisation, efficiency and user friendliness for estimating the e-service quality of bank. With the help of factor analysis and regression, the researcher has proved that online service quality can significantly improve customer satisfaction level in the banks.

On the other hand, Ganguli and Roy (2011) found that the technology based dimensions like technology convenience confidentiality in using technology, information quality, reliability and usage of the technology directly increase customer satisfaction. Rod, et al. (2009) also showed that service quality of the internet banking has direct relation with customer satisfaction in the case of New Zealand banks. Herington and Weaven (2009) proved that the service quality of the ATMs have correlation with the satisfaction level of the customers.

4.0 Customer loyalty

4.1 Concept and importance

The concepts of customer loyalty has significantly changed over the time. Initially, most of the scholars have represented customer loyalty as a factor that results in repetitive purchase decisions and referrals of the consumers (Homburg and Giering, 2011). Homburg and Giering (2011) also defined the concept of customer loyalty in terms of the behavioural aspects. However, Day (2008) first mentioned that behavioural aspects of the customer loyalty are inadequate to differentiate between the true loyalty and the fake one. Dick and Basu (2009) pointed out some of the additional dimensions of measuring customer loyalty. Supporting. Dick and Basu (2009), Baumann, Elliott and Hamin (2011) also identified some of the situational factors such as unavailability of the stocks, resistance related change, socio-cultural bonding may discriminate behavioural loyalty from the attitudinal loyalty. In this regards, Homburg and Giering (2011) mentioned loyalty as a strong commitment to re-purchase products or services from any brand. In addition, Homburg and Giering (2011) mentioned customer loyalty as an amalgamation of attitude and behaviour that compel the customers to switch over the brand. On the other hand, Dick and Basu (2009) mentioned that loyal customers promote the brand among others and reduces the cost of promotion for the brand. Dick and Basu (2009) further added that acquiring cost for new customers is lesser than retaining the existing one. Therefore, it can be inferred that by creating customer loyalty, the organisations can maximise profits by enhancing revenues and reducing cost.

4.2 Effects of e-service quality and customer satisfaction on customer loyalty

It has been shown by many scholars that e-service quality can positively stimulate customer loyalty (Lee and Lin, 2005). Moreover, in the context of C2C online shopping, some of the researches have examined the role of e-service quality dimensions in maximising satisfaction customers’ satisfaction and loyalty factor (Wolfinbarger and Gilly, 2003). In this regards, Ruyter, Wetzels and Kleijnen (2011) mentioned that as offering services is considered as an intangible process, in this case, overall customer satisfaction becomes more crucial. However, it may not be an easy task for the service providers to create customer loyalty in the dynamic business environment (Seiders, Berry and Gresham, 2000). According to Willcocks and Sauer (2000), like the traditional marketers, online marketers also intend to create customer loyalty with the help of quality and price. However, it can be understood that in online marketing, the convenience to market without visiting the shops can itself be considered as a factor that contributes satisfaction to the customers. However, in this regards, Louvieris, Driver and Powell-Perry (2003) argued that convenience cannot be an important factor to ensure customer satisfaction or high market share to the companies.

In this regards Monczka and Morgan (2000) mentioned that in the case of online based business, customer loyalty is mainly affected by the performance of online site and sensitivity of the e-service quality during the both the prior and after to the purchase process. For instance, in the online business, timely delivery of the products can also be a crucial factor that stimulates customer loyalty. Most of the models related to the online buying behaviour of the customers have emphasised on problem solving factors and sequential steps such as learning (cognitive), evaluating (affective) and purchasing (connotative) Willcocks and Sauer, 2000). However, in this regards, Louvieris, Driver and Powell-Perry (2003) argued that most of the researchers have ignored alternative buying behaviour process. Thus, the e-service providers have mainly concentrated on the quality of information substance in the webpages and concerns regarding the confidentiality of the e-payment process (Willcocks and Sauer, 2000). In this regards, Al-Nasser, et al. (2013) mentioned that for creating customer loyalty, it is important for the service providers to acquire trust of the consumers. Therefore, most of the service providers focus on maximising trust of the customers by enhancing satisfaction level. Al-Nasser, et al. (2013) showed that e-service quality and customer trust are positively correlated. Based on this research, Al-Nasser, et al. (2013) concluded that e-service quality can maximise customer satisfaction, procure trust and thereby create customer loyalty.

5.0 Situation of China’s online retailing and JD.com

Due to the strong development in the review period, internet retailing has become one of the most popular options for the consumers of China to shop. Hence, most of the foreign companies have selected to operate through online mode either by setting their on online platform or by integrating with the marketplaces like Tmall to start the business with flagship stores (Euromonitor International, 2016). For instance, the companies like Macy’s, Sainsbury’s and Costco have started to operate through online retailing rather than the physical stores.

In the year 2016, online retailing market of China has been dominated by the third party merchants that generate sales through online marketplaces (Euromonitor International, 2016). Online retailing has recorded a market share of 53% in China, in the year 2016 (Euromonitor International, 2016). Total transaction amount of China’s online retail market has reached to a figure of 1.15 trillion yuan up to third quarter of 2016 (CIW, 2016). Data revealed by the consulting firm iResearch has indicated a year-on-year growth of 23.6% in the online retail market business of China (CIW, 2016). B2C online retail business of China has been mainly dominated by the third party players like Tmall (56.2%), Jingdong (25.1%), Suning (4.4%) and VIPshop (3.2%) (CIW, 2016). In addition, by launching marketplace platforms, online retailers have been able to reduce the cost related to warehousing and shipping. Most importantly, such marketplace platforms have enabled the online retailers to operate with more diversified product range. According to the prediction of the market analysts, online retailing is China is expected to grow at 11% in the upcoming years (CIW, 2016). Technological advancement has ensured further improvement in the logistics and payment process and thereby supporting further improvement of the online retailing market.

JD.com is considered as one of the largest online B2C online retailing companies of China in terms of transaction volume and revenues and it is headquartered in Beijing (Lu, H, 2015). Having started its business as the online magneto optical store, JD.com has diversified its product ranges that include electronic gadgets such as mobile phones and computers. In the year 2015, the online retailing company has acquired a revenue of CNY 181.287 billion (Lu, H, 2015). Alibaba-run Tmall is considered as one of the major retailer of JD.com. Self-owned large network of JD.com has provided huge competitive advantage to the company (Lu, H, 2015). In the year 2017, the company is expecting a year-on-year growth of 60% (Lu, H, 2015). At present, the company has captured 25.2% of the online retail market of China.

6.0 Conclusion

This chapter has critically reviewed the previous studies conducted to derive the relation between e-service quality, customer satisfaction and customer loyalty. Based on the discussion, it has been found that e-service quality has played a crucial role to maximise satisfaction factor among the customers. In addition, e-service quality is also positive correlated to customer loyalty. In addition, this chapter has indicated that in the recent years, online retailing market has experienced huge positive growth that has also driven business performance of the companies like JD.com. Moreover, JD.com has achieved competitive advantage with the help of its self-owned network.

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