Customer Satisfaction Towards Online Shopping

Customer satisfaction is the degree to which customer expectations of a product or service are met or exceeded. It is seen as a key performance indicator within business. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.

In the era of globalization electronic marketing is a great revolution. Over the last decade maximum business organizations are running with technological change. Online shopping or marketing is the use of technology for better marketing performance. And retailers are devising strategies to meet the demand of online shoppers; they are busy in studying consumer behavior in the field of online shopping, to see the consumer attitudes towards online shopping. Therefore we have also decided to study the factors that affect MMU students’ satisfaction of their online shopping provider.

Research Background

Online shopping is basically a process of selling and buying of goods and services on World Wide Web. As (Forsythe and Shi, 2003) explains” Internet shopping has become the fastest-growing use of the Internet; most online consumers, however, use information gathered online to make purchases off-line”.

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According to a report (ACNielsen Report on Global Consumer Attitudes towards Online Shopping, 2005) published on www.acnielsen.com, one tenth of the world population is shopping online , till October 2005, 627 million people have done online shopping , and according to the same report Germans and British are on the top of the list on Online Shopping. Additionally in the report published, it was confirmed that products most purchased online included books followed by DVDs, video’s, games and Plane Reservations, with credit cards being the most sought method of payments for the purchases made regarding the items offered for purchase online.

So many countries all over the world pour millions of dollars into online shopping as a means to purchase goods and services through the internet. The improving use of the internet has provided for fast purchase of online services as this is evident in the rapid growing internet usage activity all over Europe, with Sweden being ranked one of the high heels in Internet Usage and online Shopping in Europe coming in ninth with Japan and USA following in close competition (ACNielsen Report on Global Consumer Attitudes towards Online Shopping, 2005).

During 1994, Netscape introduced SSL encryption method for data transformation online through the web, which became so important for secure online shopping. The first online shopping system was introduced by a German Company called Intershop in 1994. Follow by Amazon in 1995 and eBay in 1996.

Online shopping has been getting famous since the last few years after the internet was being widely used. It began to appeal to a larger number of consumers as it gradually evolved to serve and satisfy millions of people from all over the world. Consequently, e-commerce industry has seen rapid growth.

An online consumer or online seller must at least have one electronic gadget to access to the internet. Online banking system had been launched before the era of online shopping. Therefore, online banking system made online shopping much convenient. Hence, payment can be made in several forms such as cheques, debit card, electronic money or various types, cash deposit using ATM machine, gift cards and etc.

Problem Statement

The online retail industry is going the new era of competition. These online shopping provider need to differentiate themselves from others and present it well to become the one of the market leader in online retails industry. Competition has become more aggressive among these companies, therefore it is important for companies to figure out the factors that affects MMU students’ satisfaction towards their online shopping providers.

Research Objective

The purpose of this research is to analyze and identify the overall attitude towards online shopping and the key factors that influences MMU students’ satisfaction of their online shopping providers.

Significance of Study

The online retail is undergoing dramatic changes. This study will provide insights of the factors that affect the MMU students’ satisfaction of their online shopping provider. In other words it will indicate the consumer behavior in the competitive market. This research can contribute to the society and country.

The result of this research will be beneficial for the online shopping provider to serve as a guideline in implementing their business strategy. With the information, the online shopping providers will be able to design packages that are satisfying consumers. They can also improve their company performance as well as to maintain their market share. This research is important because it can outline what are the factors that are affecting the MMU students’ satisfaction of their online shopping provider.

Also, this research able to provides the factors that cause the satisfaction level. When online shopping provider understand what is the wants and needs of the consumer. Thus, it helps to reduce their cost in research and development. By then, online shopping provider can focus to increase their product features or quality that serves to the consumers.

Through this study, online shopping provider can focus on what is the best business quality and services to consumers in order to maintain their life long relationship to create maximum life time value to the company itself.

Before taking any actions to change the satisfaction level, the most crucial thing is to understand what factors influence customer satisfaction, and then try to make improvements in these critical areas so that they can have more satisfied and loyal customers.

Scope of the Study

This research is particularly interested in investigating customer satisfaction level. This paper is tending to find out what are the factors that affecting MMU students’ satisfaction of online shopping provider through this study. All respondents are assumed to have online shopping knowledge. There are many factors that cause the different satisfaction level of their online shopping provider.

1.7 Operational Definition

1.7.1 Online Shopping

Online shopping or online retailing is a form of electronic commerce allowing consumers to directly buy goods or services from a seller over the Internet without an intermediary service. An online shop, e-shop, e-store, Internet shop, web-shop, web-store, online store, or virtual store extorts the analogy of purchasing goods or services at a retails stores or shopping center.

1.7.2 Convenience

Online retail store are support the available for 24 hour 7days a week. This is a means by retailers and wholesalers to provide customers with a very convenient way to be able to do all the shopping from one spot or by just a mouse click.

1.7.3 User friendly web features and designs

Online web stores need to be user friendly and easy to navigate, these being very vital influencing factors of online shopping website designs, privacy or confidentiality, website reliability, navigation, and website customer services incorporated with the website security are the most attractive features which influence the perception of consumers to buy goods and services online.

1.7.4 Time Saving

With the rapid development of the World Wide Web online shopping has come to be the most sought means to purchase goods and services at the convenience for the customers as it saves time whereby being an important influencing factor towards online shopping. Browsing through the internet or searching through online catalogues can be time saving as one needs not to move from place to place and less effort is put into shopping, thus less effort is required and only patience becomes vital during the shopping process.

1.7.5 Security

Security issues which is involved in keeping the information safe and accurate.

1.8 Organizational of Research

These research papers are categories into five chapters.

Chapter 1: Introduction

In this chapter is all about the overall question and the relevant topic are being carried out for discussion. There are includes the objectives and the problem statement of this study. Besides that, the explanations of who is gaining benefits from this study are included. However, to prevent the confusion and misunderstanding of the reader those important terms are clearly defined.

Chapter 2: Literature Review

In this chapter cite those relevant studies related to this research. The dependent and independent variables will then be identified and use as a basis to build the theoretical framework and hypotheses development. In the other hand the arguments and opinions from different authors are add in for the purpose to support the study carry out.

Chapter 3: Research Methodology

In this chapter the theoretical framework and hypothesis of study will be stated. Theoretical framework shows the relationship between variables. Next, by identify the relationship those testable hypotheses are formed based .Moreover all these hypothesis are been use to examine whether the framework is in effect by using appropriate statistical analysis. The research instrument, sample size, source of data and the statistical data to be used in the study are discussed.

Chapter 4: Research Findings and Discussion

This chapter will present the results and discussion based on the data analyzed.

Chapter 5: Conclusion

In this chapter we will review the entire research from the introduction, the main details and the justification on the hypothesis constructed in the study and well as a brief look into the findings obtained from the hypothesis. The limitation and implication of the study will also be presented.

Chapter 2 : Literature Review

2.1 Overview

There are few causes that influencing the customer satisfaction from their online shopping provider due to the changing preferences and satisfaction toward the demand and services provided .However the literature review of the factors will be discussed as below.

2.2 Dependent Variable

2.2.1 Customer Satisfaction

Customer satisfaction is an output, resulting from the customer’s pre-purchase comparison of expected performance with perceived actual performance and incurred cost (Churchill and Surprenant, 1982). According to Vance Christensen (2006), customer satisfaction is very different from customer loyalty. One is a requirement to do business; the other is the basis for sustained profitability and growth. It is believe that satisfied customers will lead to their loyalty and improve revenues. Customer loyalty is the degree of a customer staying with a specific vendor or brand. If the customer is satisfied with the firm’s products or services, it eventually will help the firm to increase its customer loyalty. In other words, high customer satisfaction lead to high customer loyalty while low customer satisfaction lead to low customer loyalty.

Customer satisfaction is a measure of expectations being exceeded, met, or not met. Besides, when thinking of customer satisfaction measurement, the firm wanted to know whether the firm is meeting or exceeding customer expectations. The marketing literature suggests that customer satisfaction operates in two different ways: transaction-specific and general-overall (Yi, 1991). Transaction-specific concept concerns customer satisfaction as the assessment made after a specific purchase occasion. Besides, it may also provide specific diagnostic information about a particular product or service encounter. General-overall satisfaction refers to the customer’s rating of the brand, based on all encounters and experiences (Johnson and Fornell, 1991). It can be viewed as a function of all previous transaction-specific satisfactions (Jones and Suh, 2000). Overall satisfaction is a more fundamental indicator of the firm’s past, current and future performance (Anderson et al., 1994). This is because customers make repurchase evaluations and decision based on their purchase and consumption experience to date, not just on a particular transaction or episode (Johnson et al., 2001, p.219). Many other studies (eg. Gronholdt et al., 2000; Kristensen et al., 2000; Gerpott et al., 2001; Sharma,2003; Bruhn and Grund, 2000) have shown that customer satisfaction positively affected loyalty.

2.3 Independent Variables

2.3.1 Convenience

It is an investment or a cost when consumers spending their time making purchases. It takes quite a lot of time for a consumer to make purchases from shop to shop, thus online shopping helps to save a lot of their precious time and effort. The time spent plays a very important role in consumer perceptions especially the time used for shopping. Bitner, 1990; Taylor, 1994 have pointed out that waiting created a negative impact on customer service satisfaction. Consumers’ time will be wasted a lot if have to keep waiting for such a long time and definitely will cause the consumers to have bad impressions to the seller or company. Time and energy saving are in the same concept (Brown, 1990). Time and effort play an important role because these two factors might affect consumers’ convenience during shopping. Online shopping definitely can help consumers to save time and effort in purchasing process by bringing a lot of convenience. Convenience factor refers that it is easy to browse or search the information through online is easier than the traditional retail shopping. Through online, consumers can easily search product catalog but if the consumer look generally for the same product or item in a traditional store manually it is difficult to visit physically and time consuming also. Convenience has always been a prime factor for consumers to shop online. Darian (1987) mentioned that online shoppers carry multiple benefits in terms of convenience, such as less time consuming, flexibility, very less physical effort etc. Bhatnagar and Ghose (2004) claims that convenience as one of the most important advantage for engaging in online shopping. According to the Robinson, Riley, Rettie and Wilsonz (2007) the major motivation for online purchasing is convince in terms of shop at any time and having bundles of items delivered at door step.

Rohm and Swaminathan’s (2004) claims in “typology of online shoppers into”: Convenience shoppers, balanced buyers, variety seekers and store-oriented shoppers, based upon their preset shopping motivation. Rohm and Swaminathan’s (2004) findings about ‘convenience and variety seeking’ are major motivating factors of online shopping and this study is consistent with Morganosky and Cude’s (2000) research findings. Webcheck’s (1999) study shows that convenience factor is one of the biggest advantages of online shopping. Through online purchase consumers can easily compare the price than the traditional purchase. So price comparison is also another convenience factor of online shopping.

2.3.2 Website Design/Features

Web site design of a web page is one of the most important factors that influence online shopping. Shergill and Chen, (2005) identified web site design characteristics as the dominant factor which influences customer satisfaction towards online purchasing.

The quality of website design is very important for any online store to attract customers. Cho and Park (2001) have found in their study that customer satisfaction in e-commerce is related to the quality of website design. According to Ranganathan and Grandon (2002), website design represents the way in which the content is arranged in the website.

Wolfinbarger and Gilly (2003) argued that when customers interact with an online store they prefer to do so via a technical interface and not through any employee. Therefore the design of the website, which acts as the interface, would play an important role in influencing customer satisfaction. Lee and Lin (2005) had empirically found that website design positively influences overall customer satisfaction and perceived service quality. Besides, Ranganathan and Ganapathy (2002) have empirically established that website design positively affects purchase intention.

Kamariah and Salwani (2005) claims the higher website quality, the higher consumer intends to shop from internet. Web design quality has important impacts on consumer choice of electronic stores, stated by Liang and Lai (2000). Website design one of the important factor motivating consumers for online shopping. Almost 100,000 on-line shopper’s surveyed by (Reibstein, 2000) shows that web site design was rated as important factor for online shopping. Another study conducted by Zhang, Dran, Small, and Barcellos (1999, 2000), and Zhang and Dran (2000) indicated that website design features of the website are important and influencing factors that leads consumer’s satisfaction and dissatisfaction with a specific website.

A study conducted by Yasmin and Nik (2010) shows a significant relationship between online shopping activity and website features. Website design features can be considered as a motivational factor that can create positive or negative feelings with a website (Zhang, et al 1999). A study by Li and Zhang (2002), if website is designed with quality features it can guide the customers for successful transactions and attract the customers to revisit the website again. However, worse quality website features can also hamper online shopping. According to Liang and Lai (2000), web design quality or website features has direct impact on user to shop online.

Moreover researchers such as Belanger, Hiller and Smith (2002) concluded that a large segment of internet users have serious concerns of security.

2.3.3 Time Saving

According to Rohm and Swaminathan’s (2004), one possible explanation that online shopping saves time during the purchasing of goods and it can eliminate the traveling time required to go to the traditional store. On the other side, some respondent think that it is also time taken for delivery of goods or services over online shopping.

To most consumers important attributes of online shopping are convenience and accessibility (Wolfinbarger and Gilly, 2001): because consumers can shop on the Internet in the comfort of their home environment, it saves time and effort, and they are able to shop any time of the day or night. Especially for consumers that, owing to their extended working hours, only have a small amount of free time, online shopping is an excellent opportunity. Thus, the situational factor “time pressure” has an attenuating impact on the relationship between attitude and consumers’ intention to shop online. Because the Internet is time saving and accessible 24 hours a day, this becomes the main drive for online shopping and attitude toward Internet shopping is less important.

Unexpectedly time saving is not the motivating factor for the consumers to shop online (Corbett, 2001) because it takes time receiving goods or delivery. But time saving factor can be seen through different dimensions i.e. “person living in Florida can shop at Harod’s in London (through the web) in less time than it takes to visit the local Burdines department store” (Alba et al. 1997, p. 41,emphasis added). Morganosky and Cude (2000) have concluded that time saving factor was reported to be primary reason among those consumers who have already experienced the online grocery buying. So the importance of the time saving factor cannot be neglected as motivation behind online purchasing. Additionally Goldsmith and Bridges (2000) emphasize that there is a discrimination between online shopper and non online shoppers, online shoppers are more worried about convenience, time saving and selection whereas non online shoppers are worried about security, privacy and on time delivery. A study by Kamariah and Salwani (2005) shows higher website quality can highly influence customers to shop online.

2.3.4 Security

Security is another dominant factor which affects consumers to shop online. However many internet users avoid online shopping because of credit card fraud, privacy factors, non delivery risk, post purchase service and so on. But transaction security on the online shopping has received attention. Safe and secured transaction of money and credit card information increases trust and decreases transaction risk. In 1995, UK has introduced Fraud free electronic shopping and later on Europe and Singapore introduced secured electronic transaction (SET). According to Bhatnagar and Ghose (2004) Security is one of the attribute which limits buying on the web as they claim that there is a large segment of internet shoppers who don’t like to buy online because of their thinking about the security of their sensitive information.

Cuneyt and Gautam (2004) claims trust in the internet shopping with advanced technology, and frequent online shopping to the internet being secured as a trustworthy shopping channel.

Chapter 3: Research Methodology

This chapter includes the research framework which identifies and helps explain the steps taken in investigating the research done. Discussion in this section will cover the research design and procedure, variables and measurement, data collection method, questionnaire design and data analysis. The research instruments, sampling process and data analysis techniques also will be discussed in this chapter.

3.1 Theoretical Framework

Below is the theoretical framework for the research paper. The dependent and independent variables are clearly identified. The customer satisfaction is the dependent variable; the convenience, website design and features, time saving and security are been use for independent variables part.

Convenience

Customer Satisfaction toward online shopping provider

Website design/features

Time Saving

Security

The dependent variable been analyzed for the purpose to get know the solution causes problem occurs. However, both variables are link either positive or negative relationship with each others.

3.2 Hypothesis Development

Hypothesis is the sate used by marketing researcher about the population parameter (Burns and Bush 2005), using prior knowledge, assumptions or intuition to form an exact specification of what the population parameter value is. Once the variables have been identified, the independent and dependent variables are then established through logical reasoning in the theoretical framework. Then the next step is to examine the relationship formed and find out whether the facts are actually accurate.

In Figure 2 are clearly explain the relationship between dependent variable and independent variable that influence the perception of consumer select online shopping provider .Moreover , based on the literature review and the theoretical framework ,the hypothesis are been formed

H1: There is an association between convenience and customer satisfaction of their online shopping provider

H2: There is an association between the website design/features and customer satisfaction of their online shopping provider

H3: There is an association between time saving and customer satisfaction of their online shopping provider

H4: There is an association between security and customer satisfaction of their online shopping provider

3.3 Research Design

The questionnaire design is categorized in few choices. Students from MMU will be selected as our sample of study. Questionnaires are given to respondents via online and also in hardcopy form. All the respondents are given 15 minutes to fill in the questionnaires. After this, students start collecting the data based on the questionnaires.

3.4 Research Instrument

In this study questionnaire method are been chooses as a tool for the purpose of collect the data.

3.5 Sampling method

Questionnaire development is a rather important element in this research yet there are many limitation of setting the questions. Hence, questionnaire developed must be clear and avoid ambiguous questions

As questionnaire need to appear in a reasonable sequence that could convinced the respondent and also increasingly gives the respondent confidence and trust in both the survey and the surveyor. Hence, questionnaire development process will start by identifying the related information used to develop the question such as the independent variable that had been identify in the earlier stage of the research process. After that, it proceed by choosing the best out of the questions, so that this questionnaire can directly targeted towards the respondent’s behavior and perceptions of being a telecommunication users.

The questionnaire is designed to draw out information on respondents’ demographic, their experience in using mobile hand phones, their daily average expenditures, and their awareness with various available mobile phone services. The questionnaire is divided into two sections which is section A and section B. Section A measures the demographic variables and personal information towards their choosing behavior whereas, section B measures about the independent variables differently. The methods using for each section are discussed as below:

A) Multiple Choice Questions: In section A, the respondent’s personal basic background and perception toward the online shopping was appearing in this section. It consists of the respondents’ demography such as ethnicity, gender, race, age and usage of online shopping.

B) Likert Scale: Section B consists of questions concerned with the dependent variables towards online in the research model such as convenience, website design/features, time saving, and security. The measurement of this research is based on Likert scale which ranging from “1” to “5.” Researchers Perez, Abad, Carrilo and Fernandez (2007) found that the Likert scale to be effective in their research on the “Effects of Service Quality Dimensions on Behavioral Purchase Intentions”.

Below is the rating scale format from strongly disagree to strongly agree:

1

2

3

4

5

Strongly disagree

Disagree

Neutral

Agree

Strongly agree

3.6 Data collection method

Questionnaire

3.5.1 Primary Data

The data been collected by using questionnaire method which is distributed to students in Multimedia University Melaka campus and the questionnaire is divided into two parts; part A and part B. For part A of the questionnaire is focuses on the demographic background of the respondents For part B the questionnaire consists of certain questions all divided according to the relevant independent variables. Next , all the potential relevance variable are been covered in this survey questionnaire .In order to get better understanding 5 point scale are been applied in this questionnaire form to get know clearly what the respondent actual think about their personal preferences toward online shopping and to help to reduces the hesitation for the answer may be chooses by respondents

This data is used as foundation reading materials to strengthen the understanding the topic research. The secondary data for this paper included journals, books, and article been chooses to provided a lot of insight for the creation of the literature review. In addition, secondary data provided for added credibility to the paper.

Research Population and Sample

The MMU Melaka students will be represent the population for this research, there will be 200 questionnaire form are filled for the students in campus area of MMU .Those respondents are covered the students in all fields of education background offered by MMU Melaka who have been gone through the online shopping before . Also, the questionnaire was structured in such a way to ensure that the research objective and hypothesis of this research can be achieve .

3.7 Data analysis method

Once the all the 200 completed questionnaires are gathered, the data analysis will be done according to the dissertation. Thus, all the data collected from respondents will be analyzed based on descriptive statistical analysis by using the SPSS software so as to obtain a more statistical analysis of the study. One of the strong points of SPSS is that it can perform almost any statistical analysis (Huizing 1994).

Basic tests that were used in the beginning of analysis were checking for the central tendency and the dispersion of data. The mean, standard deviation, range and variance was used. There were preliminary tests done for all the sections.

Descriptive Analysis: the information obtained for the frequency distribution was from the first section of the questionnaire on the demography; here a frequency table was used to explain it, with mean and standard deviation for some of the data being computed. This was done for the independent, moderator and dependent variables. The statistics obtained are useful for describing the data, for example. In a study with large data, the summary statistics for the scale variables and measures of the data helps us to manage the data and present it in a summary table. For instance in a cricket match, player records are stored and compared with records of another player.

Reliability Analysis:  a measurement is reliable if it reflects mostly true score, relative to the error. The reliability of the scales is analyzed by using Cronbachs Alpha. An alpha above 0.70 is considered as reasonably reliable while an alpha scale above 0.80 is regarded as being perfect.

Spearman rank order correlation: measures the strength of association between ranked variable, whether the hypothesized variables are associates with customer satisfaction.

Multiple regression analysis: It is used to analyze a single dependent variable with two or more independent variables to test which variables is the most important lead to customer satisfaction in their mobile service provider.

CHAPTER 4: DATA ANALYSIS AND FINDING

4.1 Introduction

The chapter is divided into three different parts which are descriptive analysis, reliability analysis and results of hypothesis testing.

This chapter entails the detailed analysis of variables and also data which were distributed and gathered from the MMU students. Of all 200 questionnaires that were distributed, 200 copies of the completed survey were collected. All 200 surveys form were evaluated and screened for any imperfect or missing data. After checking through the questionnaires for uncompleted as well as unanswered questionnaires, 200 of them were found to be utilizable for the purpose of this research. Data is then analyzed and tabulated for simplicity and easy understanding of the research.

4.2 Descriptive Analysis

In this analysis, frequency analysis will be carried out to analyze the demographic aspects in the questionnaires. The 200 survey forms are measured demographically with regards to:

Gender of respondents

Age group of respondents

Nationality of respondents

Ethnicity of respondents

Faculty of respondents

Current year of respondents

Respondents do online shopping or not

Experience of online shopping towards respondents

Amount of expense on online shopping towards respondents

Amount of shopping hours on online shopping in a week towards respondents

4.2.1 DEMOGRAPHIC

GENDER

Table 4.2.1: Gender

Gender

Frequency

Percentage (%)

Male

92

46.0

Female

108

54.0

 

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