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Introduction
Background
During the last 30 years the access to personal computers has increased all over the world. Along with the
development of new technology and computers, the ability to connect computers all over the world
emerged in the 1970s. This worldwide computer network was called the Internet (Laudon & Traver,
2011). Along with internet, an opportunity has emerged - the possibility to sell and buy goods and
services online (Joines et al. 2003) which is called Electronic Commerce (E-Commerce or simply EC).
Electronic Commerce (EC) refers to using the internet and intranets to purchase, sell, transport or trade
data, goods or services (Turban et al. 2015).
A common classification of electronic commerce is based on the type of the transactions and the
transacting members. The major types of e-commerce transactions are Business to Business (B2B) &
Business to Consumer (B2C) (Turban et al. 2015). B2B e-commerce refers to transactions between and
among organizations whereas B2C e-commerce includes retail transactions of products and services from
business to individual shoppers.
According to eMarketers 2014 forecasts, worldwide B2C e-commerce sales will increase by 15%
annually to reach $2.5 trillion by 2017 (eMarketer, 2014). In 2014, for the first time, consumers in APAC
region like China, India & Indonesia will spend more on e-commerce purchases than those in North
America, making it the largest regional e-commerce market in the world.
From a buzzword to a reality, e-commerce in India has been experiencing remarkable growth,
successfully changing the way people transact. People today can shop literally from everywhere and any
time. The B2C E-commerce Industry in India has come a long way since its early days. This market has
matured and new players have entered the market space. Indian digital consumers are showing a great
propensity and inclination to search and buy things online. Retail on Internet is witnessing very positive
growth trends with various new e-commerce vendors hitting the market and each diversifying to meet the
competition. As a result the B2C e-commerce space is witnessing a spurt in demand with diversified
range of services and offers.
In India, B2C e-commerce has the potential to grow more than hundred fold in the next 9 years to reach a
value of USD 76 billion by 2021. The countrys growing Internet-habituated consumer base, which will
comprise ~180 million broadband users by 2020, along with a burgeoning class of mobile Internet users,
will drive the B2C story (Technopark, 2013).
In e-commerce, the category that is seeing a lot of traction from consumers and sellers is fashion. Sales in
this category have doubled to reach $559 million from last year when compared with top categories like
electronics and books, with an estimated growth rate of 20 percent per year. Forbes India (2014) reported
that fashion is the next big bet for Indian e-commerce players. It's an important business for e-commerce
firms due to the high margins and faster growth potential. Online fashion retail gives gross margins of as
much as 30 to 40 percent compared with lower gross margins in electronics and single to negative gross
margins in books (Forbes India, 2014).

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The rapid growth of e-commerce attracted more players makes the Internet a giant forum for intense
competition (Nasir & Altinbasak, 2009). According to Kuttner (1998) The Internet is a nearly perfect
market, because information is instantaneous and buyers can compare the offerings of sellers worldwide.
The result is fierce price competition and vanishing brand loyalty. That means, in an online or ecommerce market, it easy for a customer to change provider with only a mouse click (Srinivasan et al.,
2002).
That means, to survive in such intense competition, companies operating online are forced to work with
increased customer loyalty, which is important for an online firm to stay competitive and profitable
(Srinivasan et al., 2002; Chang et al., 2009). Kim et al. (2009, b) and Kassim & Abdullah (2010)
emphasizes that trust and satisfaction are important factors to create customer loyalty. Lee & Lin (2010)
claim that it is not possible to just exist on the Internet anymore, companies need to include the e-service
quality for success.

Problem Discussion
According to Kim et al. (2009, b), customer loyalty is essential for a firm to grow and become profitable
in the long-term. Kassim & Abdullah (2010) claim that this is also the case for online retailers. Building
and maintaining a loyal customer base is considered to be a necessity for an online retailer that seeks to
remain competitive on the market (Lim & Dubinsky, 2005). Unless customers repeat their purchases from
an online retailer, it will be difficult to earn a profit from e-business. Loyal customers also bring new
customers to the e-tailer through the word of mouth mechanism. E-loyal customers are less price-sensitive
and more willing to pay premium price than other customers. In addition, the cost of serving existing
customers is always lower than serving newly acquired customers (Reichheld, Markey & Hopton, 2000).
Anderson & Srinivasan (2003) discuss that a loyal customer can be ten times more worth, than a regular
customer, when it comes to their lifetime purchase.
Thus increasing e-loyalty is the main objective of online retailers who want to enhance profitability and
gain competitive advantages (Valvi & Fragkos, 2012). For online retailers, the role of loyal customers is
even more important due to the low-switching cost and fierce price competition online (Lim & Dubinsky,
2005; Solomon et al, 2010). That is the reason why the former CEO of EBay, one of the biggest firms in
e-tailing, said that e-loyalty is the key to success in an online operation (Reichheld & Schefter, 2000).
Koufaris et al. (2002) claim that getting returning or repeat customers should be the primary goal of any
online retailer.
Creating and maintaining a loyal customer base is not an easy task, because the Internet gives customers
the ease of comparing different aspects of different products or services (Alba et al, 1997). Moreover,
millions of websites are joining online commerce every month, making it an intensively competitive
market for online retailers (Doong, Wang & Foxall, 2011).There are online retailers that achieve
significant success, for example Amazon.com (Lim & Dubinsky, 2005). On the other hand, there are
many companies that have gone out of business (Hantula, 2004).
Reichheld & Schefter (2000) states that the lack of e-loyalty will lead to the collapse of the whole
business of an online retailer. Therefore, Day (2000) suggests that maintaining e-loyalty will affect the
survivability, the performance and the success of an online retailer. Consequently, the failure of those

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companies might come from the problem of cultivating e-loyalty. One root of this problem is that the
companies do not understand the mechanism that impacts on e-loyalty (Ribbink et al, 2004).
According to Wolfinbarger & Gilly (2003), keeping customers satisfied with the purchase is the one of the
most important factor determine the success of an online retailer in building e-loyalty. Therefore, esatisfaction (customer satisfaction towards online commerce) is one of the most important emotional
responses that the scholars need to take into account when researching about e-loyalty (Chang, Wang &
Yang, 2009). However, satisfied customers still have the tendency to switch to competitors or stop
purchasing from an online retailer unless they trust the online retailer. Therefore, e-satisfaction is
necessary, but not sufficient to build e-loyalty. E-trust is another important emotional response that needs
to be brought to focus (Reichheld & Schefter, 2000).
In short, online customer loyalty is composed of trust, satisfaction & commitment. Satisfaction and trust
are particularly important because they will lead to commitment (Turban et al., 2015). For example, a
study by Cyr et al. (2008) found that e-loyalty is affected by satisfaction and trust across different
cultures. Lee & Turban (2001) states that customers trust are even more important for an online retailer
than for a regular one since the product is not possible to touch at the purchase point. Anderson &
Srinivasan (2003) argue that the recipe to create customer loyalty is to constantly satisfy the customer. It
is also the way to create a long lasting relationship between the business and customer. Chung et al.
(2009) suggest that in the world of online retailers, customers demand good e-service quality to be
satisfied. The term e-service quality subsumes different factors, and Kassim & Abdullah (2010) and
Ribbink et al. (2004) include ease of use, web design, responsiveness, customization and assurance.
Kassim & Abdullah (2010), sum up that e-service quality contains the customer's overall impression,
from website navigation to home delivery.
E-commerce companies are investing heavily in fashion category because the margins (20%) are higher
as compared to other categories for fashion products, which can go higher in the case of private labels
(50%-60%). This growth is further supported by the fact that India has been used as a sourcing hub by the
global fashion brands because of the textile clusters present in Coimbatore, Madurai, Bangalore and
others.
The fashion, which includes apparel and related accessories as a category was doubt to be successful
since the beginning of online commerce. One setback in online fashion retailing would be the touch and
feel factor that online fashion marketers are truly concerned about (Enhmann, 2000). Consumers are
expected to touch and try the products, especially apparel before doing any purchase.
Given the high impact on the bottom line by this category, top Indian online retailers are now vying to
increase and retain their customers, in addition to the traditional loyalty programs. Apart from the
standard loyalty programs, excellent customer service, special discounts, targeted marketing &
newsletters, free delivery, scheduled delivery and subscription based services, these portals are pulling out
all stops to create very innovative marketing strategies to engage with customers at a non-transactional
level to get them to spend more and spend often.

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Since consumer spends more and more money on fashion online, this area becomes of greater interest to
academics (Hines & Bruce, 2007). Given that e-loyalty is important to stay competitive, profitable and
grow but in particularly for companies to survive, loyal customers should be of interest and importance in
the world of online fashion retailers. However, it seems to be hard for companies to create e-loyalty and it
is limited knowledge in factors that affects loyalty online (Ribbink et al., 2004). This is especially tru for
new markets like India, where majority of customers are exposed first time to online retailing and
specifically on online fashion retailers. Accordingly, e-loyalty is essential and thereby it is of interest to
see what factors that influence e-loyalty in the online fashion industry.

Purpose & Research Questions

This study aims to evaluate the antecedents of online customer loyalty or e-loyalty in the online fashion
industry. This study will focus on relationships between e-loyalty and online trust (e-trust) & online
satisfaction (e-satisfaction). This study will also try to understand the relationships between e-trust / esatisfaction and online service quality (e-service quality). The specific questions to be answered with this
study are.
1. What antecedents for e-loyalty are most influential in the Indian fashion industry online?
2. What antecedents influence e-satisfaction in the Indian fashion industry online?
3. What antecedents influence e-trust in the Indian fashion industry online?

Delimitations
For this study delimitations were needed. The researchers decided only to investigate the online fashion
industry in India with a specific focus on customers currently based out of Trivandrum, with special
emphasis on high disposable income IT employees. Additionally, this investigation will only focus on
high value fashion items like apparel, jewelry, watches & other related accessories, even if fashion can
involve more. In addition, the investigation is delimited to factors commonly used when investigating
customer loyalty - satisfaction, trust, and service quality dimensions. Thereby, it might be other factors
that influence customer loyalty, which are not included in this investigation.

Outline of the Study

After the first chapter, this thesis has seven chapters in which different components of the paper are
presented.
In Literature Review, generic online customer behavior is introduced first followed by e-trust, which
is the central concept of this study. Following e-loyalty, the three other concepts are presented in the order
- e-satisfaction, e-trust and e-service quality. Various dimensions of e-service quality are discussed in
detail in this chapter.

In Research Model & Hypotheses chapter, the relationships between e-loyalty, e-satisfaction, e-trust
and e-service quality are discussed in detail and hypotheses are proposed. These 4 concepts are later
incorporated into a model, which shows the relationships between them and the hypotheses of the paper.
The next chapter is Methodology, which outlines the process of acquiring the data. This chapter
includes sub chapters on Research approach, Research design, Data sources, Research strategy, Data

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collection methods, Data collection instruments, Sampling, Data analysis methods and Quality criteria. In
every sub chapter, the theory will be presented followed by the justification of the chosen method for this
paper.
In Results & Analysis, the result of testing various hypotheses using bivariate regression analysis is
presented. The results include a table that summarizes the obtained statistical figure, followed by a text
explaining the results. The result of construct validity, concurrent validity and reliability is also presented
in the end of this chapter.
In Discussion and Interpretation, four sub chapters are included. << to be updated >>
In the Conclusions & Implications chapter, the authors made a conclusion for the whole paper with
consideration to the purpose.Both theoretical and managerial implications are discussed in detail.
Theoretical implication will propose how this paper contribute the current body of literature about eloyalty while managerial implication will give practical overview concerning the findings of the paper.
In Research Limitation chapter, a comprehensive list of all known limitations of this study are
presented.