A Study on the Relationship Between Customer Loyalty and Customer Trust in Online Shopping

A Study on the Relationship Between Customer Loyalty and Customer Trust in Online Shopping

Umama Nasrin Haque (University of Engineering and Management, Kolkata, India) and Rabin Mazumder (Institute of Engineering and Management, Kolkata, India)
Copyright: © 2020 |Pages: 16
DOI: 10.4018/IJOM.2020040101

Abstract

Recently, the online market environment is quite competitive, and the organizations have to make sure to focus on continuously meeting the current and potential needs of the customers. Customer loyalty is primarily achieved by satisfying customer's expectations. In online shopping, since the products are intangible, it is important to build trust among the customers. Organizations need to thoroughly understand the consumer behavior and consumer needs in order to create and implement effective customer retention strategies. This study attempts to study the relationship between customer loyalty and customer trust in online shopping since trust is the glue that holds the customer relationship together in the current competitive market. Data is collected through the structured questionnaire. The results of this study legitimate the idea that trust of the customer acts as a mediating factor which enhances the loyalty of the customer in regard to the further purchase and consumption of the particular product or service in the online environment.
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Introduction

Online shopping is the process of purchasing goods and services from sellers who sell on the internet (Jusoh & Ling, 2012). The number of internet users is increasing which shows the popularity of the internet. A great number of opportunities for the e- vendors have risen. E-commerce modifies the business pattern, influencing the manufacturers, distributors and customers to utilize the internet as a means for communication and transaction and hence creating new base for a competitive strategy (Celuch, Godwin, & Taylor, 2007). With reference to marketing, it is observed that many companies are conducting business online and treating their websites as a showroom for displaying their products and services. In e- commerce, customers strive for utilitarian benefits like comparing prices and also hedonic benefits like visually appealing website designs since they give enjoyment of the online shopping experience (Bilgihan, Okumus, Nusair, & Bujisic, 2014; Biligihan & Bujistic, 2015; Loiacono, Watson, & Goodhue, 2002).

Online shopping displays different characteristics from traditional shopping (Burke, 2002; Eroglu, Machleit & Davis, 2003; Koernig, 2003). Online shopping can provide better product selection, accessibility and convenience since there is no restriction of space and time (Brynjolfsson and Smith, 2000). There are fewer tangible and intangible transaction costs in online shopping process (Blake, Neuendorf, & Valdiserri, 2005). However, in e-commerce, it is more difficult to build a social connection between firms and customers since there is a lack of physical environment (Schijns, 2003). Marketing managers are interested to know the level of trust or loyalty which can be used to increase customer retention. Attracting new customers costs online vendors at least 20 percent to 40 percent more than it costs vendors who are engaged in doing business in the similar traditional market (Reichheld & Schefter, 2000). Loyalty is a physical and emotional commitment given by the customers in exchange for meeting their expectations. A loyal customer has trust in the product/service and intends to purchase it repeatedly in the future. Trust of the consumer plays the main role in determining the willingness of the customers to purchase the product. Trust is an important antecedent for engaging in online business since it increases the simplicity with which online stores can act opportunistically (Reichheld & Schefter, 2000). Loyal customers always have intention to buy from the same website and are averse to switching (Flavian, Guinaliu & Gurrea, 2006).

Although for a company not all customers are the same. Those who spend more money and purchase more often are the most important ones. In an online environment, in spite of being satisfied by a particular website, customers are still likely to search another alternative sites and switch to them. Since customers can simply compare information and search other websites that offer similar products and services (Anderson and Srinivasan, 2003: Terblanche and Boshoff, 2010). A number of studies have stated the important role of website technology factors and service quality in affecting customer e- satisfaction and e- loyalty pertaining to the customers’ attitude, behavior and psychological state acquired from how they perceive their online shopping experiences (Szymanski and Hise, 2000; Anderson and Srinivasan, 2003 ; Ribbink, Van Riel, Liljander & Streukens, 2004; Flavian et al., 2006).

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