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International Journal of Advanced Scientific

e-ISSN: 2395-6089
Research & Development
Vol. 03, Spl. Iss. 03, Ver. I, Sep 2016, pp. 09 15

p-ISSN: 2394-8906

Customers Loyalty towards Online Retail Stores

R. VIJAYALAKSHMI
Senior Asst. Prof., Dept. of Corporate Secretaryship, Ethiraj College for Women, Chennai.

VENU THYAGARAJAN
Associate Professor (Retired), Dept. of Commerce, Pachaiyappas College, Chennai.

ARTICLE INFO

ABSTRACT

Article History:

Rapid growth of e-retailing reflects the compelling

advantages that it offers over conventional brick- andmortar stores, including greater flexibility, enhanced
market outreach, lower cost structures, faster transactions,
broader product lines, greater convenience, and
customization. However, e-retailing also comes with its own
set of challenges which hinders the enhancement of
customer loyalty. Customers loyalty is the key for
improving the sales performance and also to establish a
better customer relationship which is more important for
electronic commercial enterprises to retain and sustain the
advantage of competition. The speedy development of
technology and the internet penetration has diverted the
companys direction to retain customer e-loyalty.
Maintaining customer loyalty has been recognized as one of
the essential factor for business survival and growth. The
purpose of this research is to study the factors affecting the
customers e- loyalty in an online shopping environment. In
order to assess the customer loyalty the Questionnaires
were given to customers who purchased products from
online retail stores and the results are evaluated to give an
understanding of the factors which affect loyalty of
consumers towards online retail stores.

Received: 22 Sep 2016;

Accepted: 22 Sep 2016;
Published online: 28 Sep 2016.

Key words:
Online shopping,
e-loyalty,
trust, website design.

JEC Classification:

Copyright 2016 IJASRD. This is an open access article distributed under the Creative Common Attibution
License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original
work is properly cited.

INTRODUCTION
The domain of marketing deals with the selling of goods and services online to
final consumers. The consumer can buy almost everything from music, movies, clothing,
How to cite this article: Vijayalakshmi, R., & Thyagarajan, V. (2016). Customers Loyalty towards Online Retail
Stores. International Journal of Advanced Scientific Research & Development (IJASRD), 03 (03/I), [Special Issue Sep
2016], pp. 09 15.

Emerging Innovative Strategies in Business Creating a Competitive Edge | Organized by PG

Department of Banking & Insurance Management and Department of Bank Management,
Ethiraj College for Women (Autonomous), Chennai 600 008.

airline tickets to computers and cars. Online consumers are continuously increasing.
This marketing has wide range and globally accessible to all consumers and there is no
boundaries for business. This is more cost effective and result oriented marketing
domain.
E-commerce has made life simple and convenience for individuals and groups:
customer expectation in online shopping is different from the physical market where he
has access to see the product. Although consumers continue to purchase from a physical
store, consumers feel very convenient to shop online since it frees the customer from
personally visiting the store. Online shopping has lots of advantages like it saves time
and energy of the consumer while buying. Due to the global reach of the internet,
consumers can buy goods and services with a wide range of categories anywhere, any
time and at any location. Besides, online sellers deliver the goods to the buyers home,
and customers can order as many items as they can afford with wide range of product
selection and also better product comparison which improve the customer purchase
decision process and enhance the customer loyalty.
1.1 Review of Literature
According to Best (2005), customer loyalty is a psychological commitment that a
customer has towards a specific brand or company or to a product category. A customer
recommends a brand only when he is completely satisfied and trusts the quality and
value of the product or service. In fact, customer satisfaction, customer recommendation
and customer retention are seen as components of customer loyalty. Customer loyalty is
a psychological predisposition that influences the customer to make repeat purchases
from a specific product or service provider. Decreased customer complaints and
increased customer loyalty are the important drivers of increased customer satisfaction
(Johnson, Gustafsson, Andreasson, Lervik & Cha 2001). Customer loyalty can be built
when the online business focuses on providing exceptional customer support services
and exceeding the expectations of the customer. Such an excellent support service will
help in retaining customers. By enhancing customer service, the online business can
increase their customers loyalty. E-Loyalty is the notion of customer loyalty in ecommerce domain. In e-commerce, loyal customers are considered extremely valuable.
Today e-tailors are seeking information on how to build customer loyalty. Loyal
customers not only require more information themselves, but they serve as an
information source for other customers. Building customer loyalty is one of the biggest
challenges to B2C e-commerce. Customer loyalty is a major subject in marketing
research (Bodet, 2008). Customer satisfaction and trust have been brought forward as a
precondition for patronage behavior (Pavlou, 2003) and the long-term customer
relationships (Papadopoulou, Andreou, Kanellis, and Martakos 2001). Jeff Bezos, the
founder and CEO of Amazon.com stated that creating a compelling online experience of
the cyber consumers is the key to attaining competitive advantage on the internet.
The use of online word of mouth has the potential of impacting product sales.
Kim et al. (2008) studied the antecedents of online loyalty development process. They
hypothesized that e-tail quality, e-satisfaction and e-trust play important roles in
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Customers Loyalty towards Online Retail Stores

building e-retention. Zhu and Zhang (2006) conclude that it is particularly important
for organizations to manage reviews for less popular products because reviews can be
even more influential for these items. Srinivasan et al. (2002) stated that e-loyalty is
widely defined as customers favorable attitude and commitment towards the online
retailer that results in repeat purchase behavior.
1.2 Research Objectives
(i) To evaluate the impact of factors on prediction of e-loyalty towards online retail
stores.
(ii) To study the influences of these factors on repurchase intention.
RESEARCH METHODOLOGY
The study is based on both primary and secondary data. The primary data were
collected from the 100 respondents by means of structured questionnaires to the online
consumers of Chennai city. Secondary data were also collected from online journals to
provide a theoretical base to the current study. SPSS was used for data analysis.
Analysis were done by using multiple regressions and one way ANOVA.
2.1 Proposed Model for the Current Study
In the current study website design, trust, perceived product and service quality
and electronic word of mouth were identified as major factors which influence on
customers loyalty. These determinants were decided based on extensive survey of
literature. In addition, the effect of Customer loyalty towards online retail store has
effects on repeated purchase intention thus the study was extended to evaluate the
effect of customer loyalty on the repurchase intention of the consumers. The
diagrammatic representation of the study is given in the following pages.

Website Design

Trust

Electronic Word of
Mouth

E-Loyalty of
the Customers

Repeated
Purchase
Intention

Product
Quality/Perceived
Service
DIRECT EFFECT OF WEBSITE DESIGN, TRUST, ELECTRONIC WORD OF MOUTH
AND PRODUCT QUALITY/ PERCEIVED SERVICE ON CUSTOMER LOYALTY AND
ALSO ITS IMPACT ON REPURCHASE INTENTION
11

Volume 03, Special Issue 03, Version I | 28th September 2016

Emerging Innovative Strategies in Business Creating a Competitive Edge | Organized by PG

Department of Banking & Insurance Management and Department of Bank Management,
Ethiraj College for Women (Autonomous), Chennai 600 008.

The various factors that have an impact on e-loyalty towards online retail stores
are Website design, Product Quality/Perceived Service, Trust and electronic word of
mouth. The importance of these variables are discussed in the following pages.
(i) Website Design: Website design plays an important role in online retailing,
as it affects customer directly during the purchasing process. The characteristics of the
website determine customers perception towards the online store. A well-established
website is attracting, ease-of-use, enhancing the users skills and building up long term
relationship with buyers and sellers and predicting success of online business. A great
website design has good accessibility and good quality of website support system.
(ii) Trust: Trust is a critical success factor in successful service relationships
because before conduct of business with the company, consumers need to trust the
company. Online trust includes consumer perception of how the website would deliver
on expectation, how believable the websites information is, and the level of confidence
in site channel. Trust appears to be especially important for creating loyalty in online
service as it is perceived as high level risk transaction since customers lack direct
contact with the company and have to hand over sensitive personal information, such as
credit card numbers, in order to complete the transaction. Trust is seen as being of
considerable importance in the process of building and maintaining relationships,
although it is also recognized as being difficult to manage.
(iii) Product Quality/Perceived Service: In an e-commerce setting, perceived
service quality refers the consumers overall judgement of the excellence and the quality
of e-service offerings in the virtual market place where there are almost no face-to-face
interactions. Service quality has a direct impact on customer in keeping strong and loyal
relationship with the online retailers. Online retailers with excellent service quality
have the advantage of learning about their customers expectation, thus improving their
satisfaction.
(iv) Electronic Word of Mouth: Electronic word of mouth is any positive or
negative statement made by potential, actual or former customers about a product or
company which is made available to a multitude of people and institutions via the
internet. Electronic word of mouth communication can take place in various settings.
Consumers can post their opinions, comments and reviews of products on weblogs,
discussion forums, review websites, e-bulletin board systems, newsgroup and social
networking sites.
2.2 Repurchase Intention
Customers intent to rebuy a particular service depends on present situation and
several possible circumstances. Customers repurchase behavior depends largely on
benefit received in the past encounters. Customers repurchase intentions mainly
depends on their past experiences during several service encounters and presupposition
of future services. Value added benefits will generate satisfied loyal customers, thus will
strengthen the competitive position. A review of loyalty literature indicates that,
customer loyalty and online repurchase intention is positively related. For example,
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Customers Loyalty towards Online Retail Stores

Wang et al. (2006) concluded that website loyalty is a predictor for online repurchase
intention.
2.3 Multiple Regression Analysis
Regression analysis provides the importance of different independent variables
on the dependent variable. This analysis provides the statistical relationship between
two or more variables. In the current study the Regression analysis was used to
determine the influence of different identified factors such as website design, trust,
perceived service and electronic word of mouth in influencing the customer loyalty and
which in turn predicting repurchase intention of online consumers towards online retail
store.
Model Summary
Model

R Square

Adjusted R
Square

Std. Error of the

Estimate

.854a

.730

.718

.384

F Value 64.125 with the significance value of 0.000

a. Predictors: (Constant), Electronic Word of Mouth, Product Quality/Perceived Service,
Website Design, Trust.
b. Dependent Variable: E-Loyalty of the Customer

The F value of 64.125 with the significance value of 0.000 signifies that the
independent variables chosen for the study namely Web site design, Trust, Electronic
word of mouth, and Product quality /perceived service of online purchases makes a
meaningful contribution to the e-loyalty. The R value and R square value provides the
quantum of influence on the dependent variable. 71.8% of the e-loyalty of online
consumers from online retail store is influenced by four factors such as website design,
trust, perceived service and electronic word of mouth and 27% is due to other external
influences. In addition the quantum of influence can be assessed with the help of
unstandardized coefficients and standardized coefficients values which is given in the
following table. It is inferred that Website design, perceived service, trust and electronic
word of mouth are good predictors of consumers e-loyalty towards online retail stores.
Coefficients a
Model

Unstandardized
Coefficients

Standardized
Coefficients

Sig.

-1.932

.056

.261

2.880

.005

.097

.225

2.825

.006

.207

.066

.199

3.125

.002

.337

.083

.342

4.048

.000

Std. Error

(Constant)

-.550

.285

Trust

.285

.099

Website Design

.275

Product Quality/ Perceived

Service
Electronic Word of Mouth

Beta

a. Dependent Variable: E-Loyalty of the Customer

Multiple Regression was conducted to determine the best linear combination of

factors like trust, website design, product quality/ perceived service and electronic word
13

Volume 03, Special Issue 03, Version I | 28th September 2016

Emerging Innovative Strategies in Business Creating a Competitive Edge | Organized by PG

Department of Banking & Insurance Management and Department of Bank Management,
Ethiraj College for Women (Autonomous), Chennai 600 008.

of mouth for predicting e-loyalty towards online retail stores. The combination of all the
four variables significantly predicts the dependent variable, i.e., e-loyalty. Out of four
independent variables, electronic word of mouth (.342) is the strongest influencing factor
which predicts dependent variable. The beta weights suggest that the electronic word of
mouth contributes most (.342) to predict e-loyalty. Trust is the second most influencing
factor that predicts e-loyalty followed by website design (0.225). Perceived service
(0.199) is the least influencing factor.
2.4 One Way ANOVA
2.4.1 Repeat Purchase Intention and E-Loyalty of the Customers
Sum of Squares

Df

Mean Square

Sig.

Between Groups

26.620

16

1.664

8.627

.000

Within Groups

16.008

83

.193

Total

42.628

99

The output of the ANOVA analysis proves that there is a statistically significant
difference between loyal and disloyal customer with regards to repeated purchase
intention. As the p-value is less than 0.05 in the above table, it could be interpreted that
the loyal customers alone intend to purchase repeatedly from the online retail store.
CONCLUSION
The research was aimed to study the factors that have an impact on customer
loyalty. According to the results of the study, it was found that website design, perceived
service, trust and electronic word of mouth has a direct impact on e-loyalty of customers
towards online retail store. Electronic word of mouth is the most influencing factor for
predicting e-loyalty and thus showed great impact on e-loyalty towards online store. The
study indicates that loyal customers alone intend to purchase repeatedly from the online
retail store. E-Loyalty plays a major role in retaining customers towards online retail
store. The experience that was gained during the first transaction increases the
possibility of purchasing in the same online store again. Online retail stores must offer
discounts or incentives to encourage feedback from consumers. Weightage should be
given to both positive and negative reviews that would increase the credibility of the
seller. Feedback should be obtained in the form of star rating to make it more visually
appealing to the prospective buyers.
REFERENCES
[1] Best, R. J. (2005), Market-Based Management: Strategies for Growing Customer
Value and Profitability, Pearson Prentice Hall, New Jersey, pp. 7 - 20.
[2] Bodet, Guillaume. (2008), Customer Satisfaction and Loyalty in Service: Two
Concepts, Four Constructs, Several Relationships, Journal of Retailing and
Consumer Services, 15, pp. 156 - 162.
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Customers Loyalty towards Online Retail Stores

[3] Johnson, M.D., Andreasson, T.W., Lervik, L. & Cha, J. (2001), The Evolution and
Future of National Customer Satisfaction Index Models, Journal of Economic
Psychology, 22, pp. 217 - 245.
[4] Jones, T.O. & Sasser, W.E. (1995), Why Satisfied Customers Defect, Harvard
Business Review 73 (6), pp. 88 - 89.
[5] Kim, C., Zhao, W. & Yang, K. H. (2008), An Empirical Study on the Integrated
Framework of e-CRM in Online Shopping: Evaluating the Relationships among
Perceived Value, Satisfaction and Trust Based on Customers Perspectives,
Journal of Electronic Commerce in Organizations, 6 (3), pp. 1 - 19.
[6] Pavlou, P., (2003). Consumer Acceptance of Electronic Commerce-Integrating Trust
and Risk with the Technology Acceptance Model, International Journal of
Electronic Commerce, 7 (3), pp. 11 - 34.
[7] Papadopoulou, P. A., Andreou, P., Kanellis, & Martakos, D. (2001). Trust and
Relationship Building in Electronic Commerce, Internet Research, 11 (4), pp. 322
- 332.
[8] Srinivasan, S. S., Anderson, R. E., & Ponnavolub, K. (2002), Customer Loyalty in eCommerce: An Exploration of its Antecedents and Consequences, Journal of
Retailing, 78, pp. 41 - 50.
[9] Wang, C., Pallster, J. G. & Foxall, G. R. (2006), Innovativeness and Involvement as
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e-Commerce, Technovation, 26, pp. 1366 - 1373.
[10] Zhu, F. & Zhang, X. (2006). The Influence of Online Consumer Reviews on the
Demand for Experience Goods: The Case of Video Games, in Proceedings of the
27th International Conference on Information Systems, Milwaukee, WI.

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