Customer Loyalty in the Auction E-Service

Introduction

Customer loyalty is a vital determinant in predicting profit levels (Reichheld & Teal, 1996) and market share (Baldinger & Rubinson, 1997) of an organisation. It is an essential factor in business survival and development. Previous researches have made sound contributions to the knowledge of defining the predicting factors of customer loyalty. A literature review of the relevant studies suggests some critical factors that drive, or lead to, customer loyalty. In general, customer satisfaction is regarded as the prerequisite for customer loyalty. A satisfied customer is more likely to stay with a business (Reichheld & Teal, 1996). Some researchers have argued, however, that a satisfied customer may not be a loyal customer (Oliver, 1999). In addition to customer satisfaction, there are other variables that may influence customer loyalty development (Voss, Godfrey & Seiders, 2010) and need to be examined. Call for a further study of motivational constructs related to satisfaction and loyalty has also been made by researchers (e.g., Olsen, 2007; Christodoulides & Michaelidou, 2011; Chen & Quester, 2015) in order to improve the knowledge of motivation in the loyalty formation process.

In addition, research into internet-based business practices remains scarce. Few studies have examined customer loyalty in the e-commerce context (Balabanis, Reynolds & Simintiras, 2006; Christodoulides & Michaelidou, 2011). Although consumers currently show increasingly favourable attitudes toward online shopping; it is not easy to keep customers loyal on the web. In particular, the intense competition in the e-retail market emphasizes the need to retain existing customers. Understanding which factors may influence the current customer’s loyalty development in the e-commerce context is critical in business management.

This is particularly the case in regards to research into e-service provided by auction type e-retailers. Auction type e-retailers are classified by Korgaonkar, Silverblatt and Girard (2006) in their study of online retailing as the pure e-retailer, which conducts a purely e-retail based business, offers a flat-site for individuals to sell and buy products on their website and provides auction functions for individuals to sell and purchase products on-line. This type of e-retailer also provides marketing services to those who sell items on the sites and, thus, by its nature it is itself a service. Moreover, research into auctions are “increasingly prevalent in all aspects of commerce” and offer “fresh angles on issues not addressed previously, such as customer retention [and] relationship development….” (Haruvy et al., 2008, p.432).

Online auctions have become popularized among consumers and present a new research domain of online consumer behaviour (Haruvy et al., 2008; Darley, Blankson and Luethge, 2010). This article, therefore, aims to provide insights into customer loyalty in the auction e-service from the aspect of some influential factors in the relation between customer satisfaction and loyalty. Specifically, commitment, trust, involvement and perceived value are suggested in several studies as influencing the relation between customer satisfaction and loyalty (Caceres & Paparoidamis, 2007; Cyr et al., 2007; Olsen, 2007; Hume & Mort, 2008). This study should provide a meaningful contribution toward the area of e-commerce implementation and management.