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Globalization continues to drive the rapid growth of international trade, global corporations, and non-local consumption alternatives (Alden, Steenkamp, & Batra, 2006; Holt, Quelch, & Taylor, 2004), and advances in Internet technology and e-commerce have diminished trade boundaries. E-commerce and e-shopping create opportunities for businesses to reach consumers globally and directly, and in turn, business and social science research focuses specifically on cross-national and cross-cultural Internet marketing (Griffith, Myers, & Harvey, 2006).
The Internet thus has changed how businesses and customers customize, distribute, and consume products. Its low cost gives both businesses and consumers a new and powerful channel for information and communication. In 1991, the Internet attracted fewer than 3 million users worldwide and hosted no e-commerce applications; by 1999, about 250 million users appeared online, and 63 million engaged in online transactions, for a total value of $110 billion (Coppel, 2000). Business-to-consumer online sales in the United States grew by 120% between 1998 and 1999 (Shop.org and Boston Consulting Group, 2000). According to a U.K. payment association, the number of consumers who shop online has increased by more than 157%, from 11 million in 2001 to more than 28 million in 2006 (cited in Alsajjan & Dennis, 2009). E-commerce transactions also are growing in the Middle East (19.5 million Internet users) and in the Gulf States. In Saudi Arabia, online transactions have increased by 100%, from $278 million in 2002 to $556 million in 2005 (Al Riyadh, 2006). In 2007, Internet sales reached more than $1.2 billion worldwide and are expected to continue to rise (World Internet Users and Population Stats, 2007).
An unpublished study by the Centre for Customer Driven Quality also highlights potential savings online: For one retailer, the cost of an in-store customer contact was estimated to be $10, the cost of a phone contact $5, and the cost of a Web contact $0.01 (Feinberg, Kadam, Hokama, & Kim, 2002). According to the International Air Transport Association (IATA), airlines issue approximately 300 million paper tickets per year, at a cost of $10 per ticket to process, whereas an e-ticket costs the airlines only about $1 to create (Arab News Newspaper, 2007).
Yet despite impressive online purchasing rates, compelling evidence indicates that many consumers search different online retail sites and then abandon their purposes. This trend and the proliferation of business-to-consumer e-shopping require that online businesses understand which factors encourage consumers to complete their e-shopping with a purchase. Such continuance is critical, because acquiring new customers may cost as much as five times as much as retaining existing ones (Bhattacherjee, 2001b; Crego & Schiffrin, 1995; Petrissans, 1999). At the same time, online customer retention can be particularly difficult. Modern customers demand that their needs be met immediately, perfectly, and for free, and they are empowered with more information to make decisions (Bhattacherjee, 2001b; Crego & Schiffrin, 1995). They also have various online and offline options from which to choose, and without a compelling reason to choose one retailer over another, they experiment or rotate purchases among multiple firms (Bhattacherjee, 2001b; Crego & Schiffrin, 1995).
To use e-business cost reductions strategically and increase switching costs to retain customers, e-retailers might recall the customer, which can reduce the effort associated with future transactions, or learn more about the customer to tailor future interactions to the customer’s needs (Straub & Watson, 2001). Better product quality, lower prices, better services, and outcome value provide the means to serve customers effectively and efficiently, which should help build sustainable relationships.