Bachelor thesis marketing 2009-2010

Supermarketing:
Online supermarkets

Words:
8262

Name of the supervisor:

Drs. Mark Vroegrijk

Kristy van den Schoor

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Table of Contents

Abstract………………….………………………………………………..………………2
Chapter 1: Introduction…………………………………………………………………3
§ 1.1 Problem background…………………………………………………………..…….3
§ 1.2 Problem statement. ……………………………………………….…………………4
§ 1.3 Research questions……………………………………………….………………….4
§ 1.4 Conceptual framework………………………………………………………………4
§ 1.5 Definitions……………………………………………………………………...……5
§ 1.6 Relevance……………………………………………………………………………5
§ 1.6.1 Academic Relevance………………………………………………………5
§ 1.6.2 Managerial relevance………………………………………………...……6
§ 1.7 Structure……………………………………………………………………………..7
Chapter 2: Research question 1………………………………………………………... 8
§ 2.1 Assortment and brands………………………………………………………………9
§ 2.2 Convenience…………………………………………………………..……………10
§ 2.3 Price and price promotions…………………………………………………...……12
§ 2.4 Store environment and atmosphere………………………………...………………13
§ 2.5 Customer service quality…………………………………………...………………14
§ 2.6 Conclusion.………………………………………………………………...………15
Chapter 3: Research question 2………………………………………………………. 16
§ 3.1 E-S-QUAL model………………….....……………………………………………17
§ 3.2 TAM model…………………………...……………………………………………20
§ 3.3 Perceived risk………………………………………………………………………22
§ 3.4 Price…………………………………..……………………………………………23
§ 3.5 Conclusion…………………………………………………………………………24
Chapter 4: Research question 3………………………………………………………. 25
§ 4.1 Assortment and brands………………………..……………………………………26
§ 4.2 Convenience………………………………………………………………………..27
§ 4.3 Price and price promotions………...………………………………………………28
§ 4.4 Store environment and atmosphere………………………….……………………..29
§ 4.5 Customer service quality……………………………………………...……………30
Chapter 5: Discussion…………………………………………..………………………31
§ 5.1 Conclusion and problem statement…………………………………...……………31
§ 5.2 Recommendations……………………………………………….…………………32
§ 5.3 Limitation and future research……………………………………..………………32
Reference list……………………………………………………………………………34

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Abstract

Not much research is done about online supermarkets. Since the choice factors for a
traditional supermarket and/or online shop are not the same as the choice factors for an
online supermarket, research about this is needed. This paper investigates what aspects
should be central in an online supermarket‟s positioning to influence the choice of a
customer.
First, the most relevant store choice attributes of a traditional supermarket are
considered. Convenience, customer service quality, store environment and atmosphere,
assortment and brands and price and price promotions are the most important attributes.
Second, some models that explain the online purchasing process are mentioned;
the TAM model and the E-S-QUAL model.
After this, the effect of the moderator on these store choice factor is discussed.
The results show that convenience is the most important store choice attribute in offline
and online supermarkets. The customer service quality becomes more important in an
online supermarket, especially the privacy of the customer. The website is the
environment of an online supermarket. The importance of brands decreases while the
relation of size and assortment stays the same. The target group of customers who shop
online, because of time pressure, is less price sensitive. All these store attributes
influence the choice of a customer for an online supermarket.

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Chapter 1: Introduction

§ 1.1 Problem background

Nowadays we live in a world where the technology is rapidly growing. Complex systems
as internet have an enormous impact on our daily life. Almost all people have access to
the internet and make use of it for numerous things such as paying bills, phone someone
or shopping. Most people buy a lot on the internet, such as books, clothes and multimedia
(Monsuwé et al, 2004). However, groceries are not very popular in comparison with other
products; the online shopping rate for groceries is below the average online shopping rate
(Huang & Oppewal, 2006). This is very remarkable because “a study by the University of
Michigan found that among 22 favorite household tasks, (physical) grocery shopping
came in next-to-last, just ahead of cleaning” (Richards, 1996). In addition to this,
according to Geuens et al. (2003) consumers have six positive associations with
traditional grocery shopping like meeting other people and animations while they have
fifteen negative associations such as waiting lines, no parking space and old people.
When consumers buy their grocery sales online, many of these negative associations
could be avoided. Combining these two papers one would expect that online grocery
shopping would be very successful and many people make use of it. However, several
studies determine that online consumer expenditure on grocery sales is only a couple of
percent of its total group sales (Huang & Oppewal, 2006). There are not many online
supermarkets but “even for Tesco, the most successful online grocery retailer, the internet
division represents only less than 2 per cent of its total group sales” (Rigby, 2005).
Because of the negative associations with grocery shopping it is strange that only a few
people buy their groceries online. Since people buy so many things on the internet, the
online supermarkets are running behind while it could be a gap in the market. Because of
the little use of online supermarkets there is also little experience in setting up an online
supermarket and know how to do this successfully. There are almost no studies that
examine the most important aspects in positioning an online supermarket or question why
online supermarkets are not (yet) successful. Therefore it is needed to examine how a
company can set up a successful online supermarket and what are the things it has to pay
attention to.

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§ 1.2 Problem statement
What aspects should be central in an online supermarket‟s positioning to
influence the choice of a customer?

§ 1.3 Research questions

Which store attributes determine the choice of the customer for a traditional
supermarket?
How do customers‟ online purchasing processes takes place compared to
customers‟ offline purchasing process?
Which store attributes determine the choice of the customer for an online
supermarket?

§ 1.4 Conceptual framework

§ 1.5 Definitions
The factors influencing the choice for a supermarket are based on the study of
Parasuraman et al. (1988).
Online purchase process: is defined as the use of online stores by consumers up until the
transactional stage of purchasing and logistics (Monsuwé et al, 2004).
Store attributes: can be defined as the “summation of all attributes of a store as perceived
by the shoppers through their experience of that store” (Omar, 1999).
Choice for a supermarket: in this paper it is the choice for a grocery store to buy the
groceries in this supermarket.
Assortment: “the number of different items in a merchandise category” (Levy & Weitz
1995).

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Brands: A brand can be defined as “a name, term, sign, symbol, or design, or
combination of them which is intended to identify the goods and services of one seller or
group of sellers and to differentiate them from those of competitors” (Kotler, 1991).
Convenience: anything that tries to save resources (time, costs and energy) and/or affect
time and effort perceptions (Pan & Zinkhan, 2006).
Price: „price is what is given up or sacrificed to obtain a product (Zeithaml, 1988).
Price promotions: reducing prices and in this way customers receive a discount (Bell &
Lattin, 1998).
Store environment and atmosphere: deals with the physical store attributes (Pan &
Zinkhan, 2006).
Customer service quality: the quality of customer interactions (Parasuraman, 1988).

§ 1.6 Relevance
§ 1.6.1 Academic Relevance
The last ten years several studies were done about supermarkets. Many papers describe
what factors are influencing the choice for a particular supermarket (Saridakis, 2009;
Baltas & Papastathopoulou, 2003). These papers focus on a traditional supermarket.
There are also studies about the factors that determine the choice for an online shop,
because the choice for an online shop is influenced by different factors than for an offline
shop (Degeratu et al., 2000) Through the internet customers have to use a new
technology which encompasses interactions between humans and technology (Kim et al,
2006). The choice factors for an online shop are not the same as the choice factors for an
online supermarket, because it differs in two ways. “First grocery shopping is a frequent
and repetitive activity and second competition for groceries tend to be local, while that
for nongroceries such as books is global” (Chu et al., 2008). So the combination from
this two research fields is unique and not yet enough examined.
To set up an online supermarket there are many aspects that companies have to
take into account. Less research is done about the choice factors for an online
supermarket while this is needed to set up a successful online supermarket. There is need
for a paper that includes the most important aspects and factors influencing the choice for
an online supermarket. By considering the choice factors for a supermarket, influenced

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by the moderator, differences in online and online shopping processes, the aspects which
should be central in an online supermarket‟s positioning to increase its online sales
should be explained.

§ 1.6.2 Managerial relevance

Managers and entrepreneurs can use the results of this research very well. Nowadays,
online shops are exponentially growing and more and more people buy on the internet,
however there are only a few online supermarkets. Since there are so little online
supermarkets, it can be very profitable to set up an online supermarket. Online
supermarkets can be a gap in the market by which companies can gain several first mover
advantages. There are some significant differences between offline and online shopping
processes which are very important for managers to fully understand (Degeratu et al.,
2000). The consumer preferences are important, because the preferences for online
supermarkets are probably different from an offline supermarket. This complete research
can be very helpful in setting up an online supermarket since it includes all the aspects
that need extra attention.
Also the few online supermarkets that already exist can use this research very
well. The company can take a close look at their own online supermarket and see if their
supermarket includes all the important aspects needed to be successful.

§ 1.7 Structure
In the second chapter the factors determining the choice for a particular supermarket will
be explained. Factors like price, convenience and assortment are influencing the choice of
the customer. In the third chapter the effect of the moderator is considered; the
differences between the online and offline consumers‟ purchasing process. In the fourth
chapter the factors of chapter two will be modified into specific factors influencing the
choice for an online supermarket. Factors like price sensitivity and brand names have a
different influence on online supermarkets compared to offline supermarkets. At the end
of each relevant topic there will follow a hypothesis. In chapter five there will follow an
answer to the research questions, the conclusions and recommendations.

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Chapter 2: Research question 1

“Supermarket competition has increased tremendously during recent years and the need
for a deeper understanding of the key criteria for consumers‟ store patronage has never
been greater (Saridakis, 2009)”. The main goal of this research question is to understand
the store attributes that determine the choice for a particular supermarket. Store attributes
can be defined as the “summation of all attributes of a store as perceived by the shoppers
through their experience of that store” (Omar, 1999). Therefore the following research
question is answered:

Which store attributes determine the choice of the consumer for a traditional
supermarket?

The store attributes influencing the choice for a supermarket are based on the study of
Parasuraman et al. (1988). The most relevant store attributes for this study are;
assortment and brands; convenience; price and price promotions; store environment and
atmosphere and customer service quality. These will be discussed in this chapter and the
effect of them on the choice for a supermarket will be considered.

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§ 2.1 Assortment and brands

Size
Although there are some researches that did not find a positive relationship between
assortment size and sales (Dreze et al., 1994), there is no strong evidence because smaller
assortments are associated with substantially lower revenues (Fox et al, 2005). In addition
to this there are several studies that have found an important positive relationship (Arnold
et al, 1983; Huff, 1964). Fox et al. (2005) found in their research that the store attribute,
assortment, has the greatest effect on the retail patronage and the spending at a retail
store. When customers spend at a retail store they have made a choice for that particular
store and therefore assortment size also positively affects the probability that shoppers
will choose for a particular supermarket. Also according to Pan & Zinkhan (2006) a
greater variety and larger assortment help a retailer attract more customers. They also
found that supermarkets with a great variety in product categories make it easier for
consumers to combine their visits, because now one supermarket offers everything and
they do not have visit more than one store. This can be a reason that influences the
customer to choose for a supermarket with a larger assortment and great variety.

H1: There is a positive relation between the assortment size and the choice for a
supermarket.

Brands
According to Degeratu et al. (2000) brands are important because when there is not much
information available about the products in a supermarket, the brand name becomes a
surrogate for the non-price information. Many customers find it difficult to compare
many unknown brands in a supermarket, because there is not much information available
to compare. When the available information decreases, the importance of the brand
names increases, because many customers think that well-known brands have automatic a
high quality (Mazarsky & Jacoby; 1985). So it is important for a supermarket to offer
well-known brands.

H2: The number of brands positively affects the choice of a customer for a supermarket.

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§ 2.2 Convenience
The convenience is a very important determinant for supermarket choice and is examined
by many researchers who think it is one of the most important determinants. As
mentioned before, the research of Briesch et al. (2009) tested four attributes and found
that convenience has a greater effect on store choice decision than the other attributes.

Travel distance and location

Saridakis (2009) examined the relative impact of various supermarket attributes on the
choice for a supermarket by applying a large-scale hybrid conjoint experiment. He found
that the distance to a supermarket is by far the most important attribute for store choice.
He compared only three possibilities; a 5-minute, 15-minute and 25-minute distance to
the supermarket. “A 5-minute distance from the supermarket is most preferable and a 15-
minute distance may be acceptable, but a 25-minute distance from the supermarket is not
only the least preferable but it may also have a negative impact on the overall consumer‟s
utility” (Saridakis, 2009). There is also evidence that there is a difference in the travel
time that customers are willing to travel between different supermarket formats (Baumol
& Ide, 1956; Brown, 1978). They examined that consumers are willing to travel further to
stores that offer more products in their assortment.

Several researches highlight the importance of location as a basic explanatory variable of

store choice (Kim & Jin, 2001; Stanley & Sewall, 1976). Bell, Ho and Tang (1998) even
claim that “location explains up to 70% of the store choice variations”. In the research of
Saridakis (2009), as mentioned above, the second most important attribute is the parking
facilities a location offers. He also examined the importance of location in terms of
neighborhood image and found that consumers are negative towards supermarkets that
are located in poor neighborhoods, because these are associated with high levels of
criminality.

H3: The location with parking facilities, a short travel time (15-minutes or less) and a
good neighborhood image positively influence the choice for a supermarket.

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“Several researchers have found a negative relationship between a long waiting time and
customer satisfaction” (Chebat & Filiatrault, 1993; Katz et al., 1991). Customers become
dissatisfied when the wait is longer than expected and often this depends on the reasons
for this longer wait. When customers are dissatisfied about the waiting line this can make
them decide to choose for another supermarket so it influences the choice for a
supermarket (Gail & Scott, 1995).

H4: A long waiting time (or longer than expected) has a negative influence on the choice
for a supermarket.

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§ 2.3 Price and promotions

Price
Price is an important determinant for the choice of a supermarket. It is difficult to explain
in short because the price sensitivity of a consumer depends on several things, such as
different store formats, different product categories and several demographics (income
and household size) (Bell & Lattin, 1998).
Several researches mentioned that customers of supermarkets are price sensitive and
notice changes in prices (Guadagni & Little, 1983; Zbytniewski, 1979). Others say that
customers do not have much price knowledge and Dickson and Sawyers (1990) say that
only 47,1% of the customers remember the price of the product after the purchase
(Zeithaml, 1988). This can be explained by the distinction that customers make between
the objective price (actual price) and the perceived price (encoded by the customer).
Customers do not always remember the actual price of a product but they encode prices
in ways that are meaningful to them (Jacoby & Olson, 1977).
For many consumers is the price a signal for the quality of the product. Especially new
customers have the intention to believe that a high price stands for high quality.
Supermarkets have to take care that their prices are not too low, because then customers
think that the products of that supermarket have a low quality and this can be a reason for
not choosing that supermarket (Solomon, 2009).
H5: The encoded price by a customer and the quality signal of a price have an effect on
the choice for a supermarket.

Price promotions
Several studies examined the effect of price promotion and find out that the effect on
store choice is weak. Walters and Rinne (1986) find out that cutting prices in most cases
did not lead to significantly increased traffic and also Walters shows that advertised
promotions have no impact. In addition to this, Volle (2001) studied this effect and
concluded that “the effect of store-level promotions on store choice probabilities is (at
best) weak, compared to the inertia of household store choices”.

H6 = The effect of price promotion on the customers’ choice for a supermarket is weak.

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§ 2.4 Store environment and atmosphere
“The store itself can offer a unique atmosphere, or environment, that may influence the
consumer's patronage decision” (Kotler, 1973). The store environment has an influence
on the image of a store, which influences the choice for a particular shop (Baker et al.,
1994).

“Characteristics of a store's environment influence the inferences that customers make

about the store's merchandise and service quality” (Baker et al., 1994). Ambient and
social characteristics, for example more sales personnel on the floor and greeting
customers, can easily be modified in a store and has a positive influence on the image of
a store. The impact of design factors on the image is weak and this means that managers
can influence their store image by just modifying some ambient and social characteristics
and do not have to make big changes in design (Baker et al., 1994). In addition to this, in
the study of Donovan et al. (1994) they found that the emotional state of consumers
within the store has a big influence on the actual purchase behavior. This emotional state
can be influenced by the store environment. Pleasure and arousal encouraged by store
environment has a strong influence on the shopping behavior of the consumer.

Molina et al. (2009) explained that “the store‟s atmospherics deal with the physical store
attributes and can be enhanced through visual communications (signs and graphics),
lighting, colors, and even scents. Music is also very important, because it is very cheap
but can have a significant influence. Atmospherics are also having a function of making
customers less aware of their wait. He also stated that “experienced pleasantness of the
in-store environment was a significant predictor of willingness to spend time in the store
and eventually come more frequently to the supermarket which increases the customer
base”.

H7= A pleasant store environment and atmosphere has a positive effect on supermarket
choice.

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§ 2.5 Customer service quality
Several studies examined that customer service is a key factor towards generating loyal
retail customers, and this leads to successful retail stores (Morey, 1980; Parasuraman et
al., 1988).

According to Molina et al. (2009) every supermarket needs to examine what customer
service is relevant for their store in order to increase their sales. There are different
format of supermarkets and therefore there will be differences in expectations about the
customer service, for example consumers do not expect great customer service shopping
at the Lidl. Supermarkets should communicate in a clear way to the consumers the
services that they are offering so that the consumers know what to expect. Also Carmen
(1990) found that retailers must use effective ways to offer services that meet or exceed
the expectations of their customers. He even mentioned that customer service satisfaction
can be increased by lowering the expectations of the customers.

Paulins (2005) indicates that “retailers must be aware that a responsive service is
particularly important to customers and can be a differentiating factor with competitors”.
The salesclerks must adopt this behavior and should for example offer prompt service,
help and give a customer their full attention. Other behaviors of the salesclerks that
enhance customers‟ perception of service quality is assurance and empathy, such as
offering courteous and individual attention and demonstrating that you have the
customers‟ best interests. Molina et al. (2009) also state that companies must offer their
customers reward programs such as loyalty programs. In this way they also build a long-
term relationship with their customers.

H8 = Good customer service (in terms of responsiveness, assurance, empathy and reward
programs) positively influences the choice for a supermarket.

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§ 2.6 Conclusion

There is a positive relation between the assortment size of a supermarket and the
choice customers make. Also the number of brands has a positive effect on this.
The location and distance of a supermarket are very important. Parking facilities,
a short travel time and a good neighborhood image influence the choice of a
customer for a supermarket. A long waiting time (or longer than expected) has a
negative influence on the choice for a supermarket.
The encoded price by a customer and the quality signal of a price have an effect
on the choice for a supermarket while the effect of price promotions on the
customers‟ choice is weak.
A pleasant store environment and atmosphere has a positive effect on supermarket
choice. It can be enhanced by social and ambient characteristics and visual
communications.
A good customer service pays attention to responsiveness, assurance, empathy
and reward programs. These all have a positive influence on the choice for a
supermarket.

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Chapter 3: Research question 2

The online shopping behavior really differs from the shopping behavior in a traditional
store (Peterson et al., 1997). Since there is no physical store in online shops everything
revolves around the quality of the service that is delivered through the internet. Because
of this difference companies must understand how consumers perceive and evaluate the
services of online shops. Therefore the following research question will be answered:

How do customers‟ online purchasing processes takes place compared to

customers‟ offline purchasing process?

First the E-S-QUAL model will be discussed. The E-S-QUAL model is derived from the
SERVQUAL model which measures the quality of non-internet based customer
interactions and determines the strengths and weaknesses in the service quality of a
company. The E-S-QUAL model is made to measure the online service quality and is
therefore appropriate to answer this research question. Then, a modified TAM model will
be explained to predict the acceptance of new technology by using two variables that
have a great impact on the technology acceptance behavior. Since customers who want to
buy their groceries online make use of a new technology, this study is also appropriate. In
the last part the increased influence of perceived risk on online shopping will be
considered.
Because the previous models do not take into account the difference in price sensitivity
between online and traditional supermarkets, this will be explained in the last part.

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§ 3.1 E-S-QUAL model
The SERVQUAL model was developed by Parasuraman et al. (1988) to measure the
quality of non-internet based customer interactions and determine the strengths and
weaknesses in the service quality of a company. In 2005 the authors mentioned that “the
way people perceive service quality in web-based settings differs from the service quality
in non-web-based settings because the acceptance and usage of technologies differ
among customers with different beliefs about technology” (Parasuraman, 2005). Because
they mentioned this difference between online and traditional shopping, they developed
the E-S-QUAL model which measures the online service quality. This model is relevant
in this paper because it will give more understanding in the differences between the
online service quality and the offline service quality. According to Zeithaml et al. (2000),
online service quality is “the extent to which a web site facilitates efficient and effective
shopping, purchasing, and delivery”. Also Yang (2001) mentioned the importance of
service quality because it is an important factor in determining the success of an online
shop. The delivery of good superior service has a positive effect on customers‟ perceived
service quality and subsequently increases a firm‟s sales and thus its profitability (Leung
& Fung, 1996). When the firm has an increase in sales its customer base will become
larger. Because the model contains all phases of a customer‟s interaction with the web; it
captures all online service attributes available in retail websites (Kim et al., 2006).
The E-S-QUAL model of Parasuraman et al. (2005) includes four dimensions:

1. Efficiency
According to Parasuraman et al. (2005), efficiency is defined as “the ease and speed of
accessing and using the site”. Evidence from other studies support the importance of
efficiency in online retailing. According to Ranganathan and Ganapathy (2002)
convenience and the saving of time are the most important reasons to shop online.
Efficiency is different in a traditional store and does not have many similarities, but
efficiency is very important in both traditional and online stores.

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2. Fulfillment
According to Parasuraman et al. (2005) fulfillment is defined as “the extent to which the
site‟s promises about order delivery and item availability are fulfilled”. Zeithaml et al.
(2002) explains that having products in stock, delivering the products on time and fulfill
the service promises that are made, are important within this dimension. Also
Wolfinbarger and Gilly (2003) and Yand and Frang (2004) explained that fulfillment is
one of the most crucial factors related to the customer satisfaction about a website. The
fulfillment of an online shop can be compared with the fulfillment of a traditional store
whereas it seems to be more important in an online shop because there it is not visible.
3. System availability
According to Parasuraman et al. (2005) system availability is defined as “correct
technical functioning of the site”. Fram and Grady (1995) mentioned in their study that
technical software issues are problems related to purchasing on the internet that must be
avoided. Many of these problems such as missing links and non-working buttons lead to
frustration and in this way the online retailer misses the opportunity to build customer
loyalty (Wachter, 2002). This dimension is not present in a traditional shop.
4. Privacy
According to Parasuraman et al. (2005) privacy is defined as “the degree to which the site
is safe and protects customer information. According to Sharma and Sheth (2004) privacy
is a critical issue in online retailing, because of perceptions of risk related to the misuse
of personal information. Also Ranganathan and Ganapathy (2002) found that “privacy
and security have significant impact on purchase intent”. Privacy is also an issue in a
traditional store (for example loyalty cards) but in an online shop it becomes more
important because of the uncertain situations and higher degree of perceived risk.

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The E-S-QUAL model also has an e-recovery service quality scale as a subscale for
problem resolution, it includes the following three dimensions:
1. Responsiveness
According to Parasuraman et al. (2005) responsiveness is defined as “effective handling
of problems and returns through the site”. It is important that online shops offer
appropriate problem solving information to customers, online guarantees, return and
exchange policies (Kim et al., 2006).
2. Compensation
According to Parasuraman et al. (2005) compensation is defined as “the degree to which
the site compensates customers for problems”. Online shops should consider the
refunding of shipping and handling costs when a problem occurs (Kim et al., 2006).
3. Contact
According to Parasuraman et al. (2005) contact is defined as “the availability of
assistance through telephone or online representatives. The process of contacting a
customer service agent when the customer has a problem is very important. The e-
recovery service can be compared with the customer service which is in both cases an
important dimension, but probably more important in an online shop.

It is clear that the E-S-QUAL model differs from the SERVQUAL model, because in an
online shop other dimensions are important compared to a traditional shop.

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§ 3.2 TAM model
Since the growing popularity of the internet, companies rushed to set up the Web sites
and become an online retailer, but many of them failed to utilize the Web site effectively
(Dutta et al., 1998). It is important that online retailers understand the factors that affect
customer‟s perception and acceptance and possibly enhance the quality of the website.
Customers who want to buy online have to use a new technology. In the study of Lin and
Lu (2000) they examined the TAM model in the internet environment by adding
information system (IS) quality as external variables. TAM is a model to predict the
acceptance of new technology by using two variables, perceived usefulness and perceived
ease of use that have a great impact on the technology acceptance behavior. The modified
TAM model of Lin and Lu (2002) addresses “why users accept or reject a Web site and
how user‟s acceptance is affected by the features (i.e. information quality of the Web site,
response time and system accessibility) provided by a website”.

IS Quality
“The quality of information provided by a web site, is a very important factor in leading
people to believe in the usefulness of that web site” (Lin & Lu, 2000). According to Lin
and Lu (2000) information quality, response time and system accessibility are chosen in
this study as the variables to express the IS quality. These three variables have been
considered as important by several studies and considered important in affecting user‟s

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beliefs of a website and its acceptance (Bailey & Pearson, 1983; Delone & Mc Lean
1992; Seddon, 1997).
Information quality
“The quality of information, provided by a Web site is a very important factor in leading
people to believe in de usefulness of that Website” (Lin & Lu, 2000). A higher quality of
information will lead to a higher chance of website acceptance.
Response time
“The response time of a web site refers to the time that user spends on waiting to interact
with a site” (Lin & Lu, 2000). The ordering time and delivery time are important in this
dimension. The researchers found that the response time affects the user‟s beliefs and
influence the website acceptance.
System accessibility
“System accessibility refers to the availability of related system (such as PC, modem, and
online services) for accessing the web site” (Lin & Lu, 2000). A good system
accessibility will lead affect the user‟s belief and acceptance of a website.

Beliefs, Attitude and Intention

According to Davis et al. (1989) perceived usefulness means “the prospective user‟s
subjective probability that using a specific application system will increase his or her
performance,” and perceived ease of use is “the degree to which the prospective user
expects the target system to be free of effort”. Both perceived usefulness and perceived
ease of use have a strong influence on the preference for a website and this leads to the
intention to reuse the website and the acceptance of the website (Lin & Lu, 2000).

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§ 3.3 Perceived risk

“Perceived risk, a fundamental concept in consumer behavior, implies that consumers

experience pre-purchase uncertainty as to the type and degree of expected loss resulting
from the purchase and use of a product” (Cox, 1967). According to Tan & Thoen (2000-
2001) it is clear that the e-commerce environment is more risky. Online shopping is more
uncertain, because one is not able to see and touch the products and has to deal with
issues like privacy and security. Chen & He (2003) explained that in an e-commerce
environment there is a higher degree of perceived risk, and such as the influence of some
store attributes, on the choice for a store, in an online environment change (Chen & He,
2003).

Information
“In the context of online retailing, risk theory implies that having more information
available to consumers reduces perceived risk associated with buying” (Chen & He,
2003). Also other studies mention that consumers develop ways to reduce risk and one of
them is by searching for information that gives more certainty about a product (Bauer,
1960; Murray, 1991). The information can be divided into internal information and
external information. How bigger the degree of perceived risk, the more the consumer
will search for external information from the environment to decrease this risk (Chen &
He, 2003). Because of this online retailers should offer more information on their website
such as the provision of maps, FAQs, contact information to reduce the perceived risk.

Brand knowledge
In an online retailing sector, brands are assumed to be more important than in a
traditional shopping environment, because they reduce the risk. When the company
informs the consumers by advertising or other forms of communication, their brand
knowledge becomes larger and this can reduce the perceived risk. “Through brand
knowledge, online retailers can better catch and serve prospective consumers” (Chen &
He, 2003).

22
§ 3.4 Price

Chu et al. (2008) used an extensive data set to estimate the price sensitivity of households
in online and offline shopping channels. They observed several households that shop
offline and online in the same grocery chain and they find that across twelve vastly
different product categories, that the price sensitivity was lower when they shop online
compared to offline. They also found that the price sensitivity is closely related to
demographics and the distance from the offline store. Degeratu (2000) also mentioned
that the price sensitivity goes down in an online supermarket. According to him this is
because when there is more non-price information available in an online supermarket
about non-sensory attributes, the price importance goes down as a result of this.

Degeratu (2000) found that there were no significant differences in the effects of price
promotions between online and offline supermarkets. Also Chu et al. (2008) found that
“price reduction across channels does not result in a bigger online response in purchase
quantity than in the offline channel”.

Delivery charge is an issue what not appears in traditional supermarkets but it does in
online supermarkets. Clarke (2000) said in his study that one of the reasons for the low
uptake of online supermarkets is the delivering fee but many researchers have shown that
it has no big influence. Bell et al. (1998) mentioned that both types of supermarkets have
fixed costs; namely the travel costs to a traditional supermarket with the delivery fee of
an online supermarket but customers like to forego the expense such as petrol or parking
charges. So in fact there is not a big difference between the travel costs and the delivering
fee. In the research of Huang & Oppewal (2006) they examined the importance of four
situational factors for online supermarkets. They found that customers fifteen minutes
difference in travel time to the grocery store had a greater impact on the relative
preference to shop online than a delivery fee of £5. So the delivery fee is not a big issue
according to this study.

23
§ 3.5 Conclusion
There is a significant overlap between the two models discussed in this chapter. Table 1
shows important factors for online shopping and summarizes the two models and
integrates them.

Factors E-S-QUAL TAM model Perceived Price

model risk
Efficiency Efficiency Response time

Fulfillment Fulfillment Brands

System System System

availability accessibility
Service Responsiveness
Compensation
Contact
Privacy
Information Information Information
quality
Price Price
Table 1

All the factors in the above model have an influence on the store attributes of chapter 2.

Assortment and brands: Fulfillment from the E-S-QUAL model and the perceived risk on
brands have an influence on this store attribute.

Convenience: Efficiency from the E-S-QUAL model and the responsive time from the
TAM model have an influence on this store attribute.

Price and promotions: The information about online prices has an influence on this store
attribute.

Store environment and atmosphere: System availability from the E-S-QUAL model;
system accessibility from the TAM model and the online perceived risk on information
have an influence on this store attribute.

Customer service quality: The e-recovery model and privacy from the E-S-QUAL model
have an influence on this store attribute.

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Chapter 4: Research question 3

In this chapter the influence of the moderator on the different store attributes from
chapter two will be considered. So the findings of chapter three will be linked on the
store attributes of chapter two and in this way the influence of the moderator will be
considered and the importance of the store attributes of chapter 2 will be modified. This
will give an answer on the following research question:

Which store attributes determine the choice of the consumer for an online
supermarket?

25
§ 4.1 Assortment and brands

Size
In chapter 2.1 is explained that there is a positive relation between assortment size and
the choice for a supermarket. For online supermarkets it also seems to be that there is a
positive relationship between assortment size and the choice for a supermarket. When an
online supermarket offers a large assortment, customers can order from one website all
their groceries and this is the same for a traditional supermarket where customers can
visit one store instead of many. So the influence of assortment size on customer choice
stays the same.

Another aspect that becomes more important in an online supermarket is called

fulfillment as explained in chapter 3.1. It is for an online supermarket more important
compared to a traditional supermarket to have all the products in stock. An online
supermarket should offer information about item availability, because this is not visible
as in a traditional supermarket.

H9: In online supermarkets there is the same positive relation between the assortment
size and choice for an online supermarket as in a traditional supermarket.

Brands
In chapter 2.1 is explained that the number of brands positively affects the choice of a
customer for a supermarket. While one would expect the importance of brands going
down in an online supermarket, because of the more information that is available in most
situations, this is not completely true because of the perceived risk in an online
supermarket. In chapter 3 the influence of perceived risk on brands is discussed. As
mentioned before the internet environment is more risky, because there are privacy and
security risks and „people are afraid of their benefits being damaged by service provided
in a more uncertain environment‟ (Tan & Thoen, 2000-2001). So through the influence of
perceived risk on brands, brands become more important in an online environment.

H10: The presence of brands has a stronger influence on online than offline supermarket
choice.

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§ 4.2 Convenience

In chapter 2.2 is explained that several researches mention convenience as the most
important store attribute for the choice of a customer. The travel distance and location are
not relevant in an online shop but there are some other convenience aspects in an online
shop that are very important as explained in chapter 3.1. Several researches consider this
also the most important store attribute of an online shop.

H11: Convenience is also the most important store attribute for the choice of an online
supermarket but focuses on other aspects.

As explained in chapter 3.1 convenience and the saving of time are considered the most
important reasons to shop online. The efficiency dimension of the E-S-QUAL model
emphasizes the importance of the ease and speed of accessing and using the website.
These can save time and support the convenience of the customer.

In addition to this, in chapter 3.2 is explained that the response time is also very
important in an online supermarket, because this influences the user‟s belief and
acceptance of the website. The delivery time (and delivery reliability) is a very important
aspect in an online supermarket. The time to place an order can be compared with the
waiting line of a traditional supermarket. The ordering time becomes a little bit more
important compared to waiting lines. The ordering time should also, as in a traditional
supermarket, be short and not longer as expected, because then customers become
dissatisfied.

H12: The ease and speed of using the website, the ordering time and response time are
very important for the choice for an online supermarket. .

27
§ 4.3 Price and price promotions

In chapter 2.3 is explained that the encoded price of a customer and the quality signal of a
price have an effect on the choice for a supermarket. In chapter 3.4 is explained that the
price sensitivity of customers who buy their groceries online is lower than for the
customers who shop in a traditional supermarket. There are several reasons why
consumers have lower price sensitivity when they shop online. Since the most important
reason to shop online is convenience and saving time, one reason could be that many
consumers who shop online experience a time pressure and therefore they will not
compare many prices. Another reason could be that the online shoppers use shopping lists
to reduce the shopping time through which they will not compare the prices any more.

H13: The target group of customers who shop online, because of time pressure, is less
price sensitive in an online supermarket compared to a traditional supermarket.

In chapter 2.3 is explained that several researchers found that the effect of price
promotions on store choice is weak. In chapter 3.4 is explained that there is no significant
differences in the effects of price promotions between online and offline supermarkets.

H14: The effect of price promotions on the customer choice is both for online and
traditional supermarkets weak.

In chapter 3.4 the effect of a delivery charge is explained. Several researchers found that
it has an effect on store choic,e but this is not a very strong effect, because many other
factors are more important than the delivery fee.

H15: The delivery charge has a weak influence on the choice of a customer for an online
supermarket.

28
§ 4.4 Store environment and atmosphere

In chapter 2.4 is explained that a pleasant store environment and atmosphere has a
positive effect on supermarket choice. Since there is no physical store environment and
all the purchases are ordered via the website, the website is the store environment of the
online supermarket.
The ambient and social characteristics of a traditional supermarket are not present in the
environment of an online supermarket. The design which is not very important in a
traditional supermarket becomes more important in the website of an online supermarket.
As mentioned in chapter 3 it is important that the environment is accessible and in an
online supermarket this means that the system must be available and accessible for
customers. The website of an online supermarket should function technically correct and
technical software problems should be avoided, because otherwise it leads to frustration
and exiting. This is very important because otherwise customers will not choose for the
online supermarket.
The visual communications that are important in a traditional supermarket are also very
important in an online supermarket, for example colors, music, signs and graphics on the
website. By modifying these visual communications customers can also experience
pleasantness by shopping online.
As mentioned in chapter 3 the quality of the information that is available on the website
is very important. Because customers can not feel and see the product and there are no
salespeople to answer questions they need a lot of product information to make a
purchase decision. Information on a website especially about price and quality, positively
influenced satisfaction with the online shopping experience and the choice for an online
supermarket (Lynch and Ariely, 2000).

H16: Online supermarkets should focus on the website instead of the physical
environment to positively influence supermarket choice.

29
§ 4.5 Customer service quality

Since there is no physical shop and almost everything is about the service in an online
supermarket, customer service quality is more important in an online supermarket. In
chapter 2.5 is explained that a good customer service positively influences the choice for
a supermarket. A good customer service in an offline supermarket must be
responsiveness, assurance, empathy and offer reward programs.

In chapter 3.1 is explained that the e-recovery service can be compared with the customer
service which is in both cases an important dimension, but more important in an online
shop. This is because in an offline supermarket customers can ask the salesclerks, while
in an online shop they have to contact via the internet.

The problem resolution of an online supermarket should pay attention to responsiveness,

compensation and contact. These aspects are comparative with the aspects of an offline
supermarket. A responsive service is as mentioned before, important in a traditional
supermarket but more important in an online supermarket. There is a difference in
contact, because the interactions in an offline supermarket take place between humans
while the interactions in an online supermarket take place between humans and
technology. Compensation is almost the same in an online supermarket; the only
difference is the refunding of shipping and handling costs when a problem occurs.

H17: Customer service has a stronger influence on online than on offline supermarket
choice.

An aspect which differs in an online supermarket is the privacy of the customer. In a

traditional store customers have a lot of privacy and the environment is save, while in an
online supermarket customers have to give a lot of personal information via the internet.
In chapter 3.1 is explained that privacy and security have an important impact on the
purchase intent, because of perceptions of risk related to the misuse of personal
information.

H18: The privacy of customers becomes more important in an online supermarket

compared to a traditional supermarket.

30
Chapter 5: Conclusion
5.1 Conclusion and problem statement

Answering the research question: What aspects should be central in an online

supermarket’s positioning to influence the choice of a customer?

The factor convenience is the most important store attribute for the choice of a traditional
supermarket and also for the choice of an online supermarket, while it covers very
different issues. There is no location or distance issue, but the ease and speed of using the
website are very important. Also a short ordering time and delivering time have a strong
influence on the choice of the customer for an online supermarket.
All though the customer service quality is not a very important for the choice of a
traditional supermarket, it is a very important factor for the choice of an online
supermarket. Since there is no physical store in an online supermarket the service
becomes very important. Online supermarkets must act responsiveness, be contactable
and offer good compensations which are comparable aspects to traditional supermarkets.
The privacy of the customer differs greatly in an online supermarket and becomes very
important for the choice of the customer.
Since there is no physical store environment as in a traditional supermarket and all the
purchases are ordered via the website, the website is the store environment of the online
supermarket. It is important that the system is available and accessible for customers to
avoid frustrations. Also the visual communications and the quality of the information on
the website are important. These all influence the choice of the customer.
There is the same positive relationship between the assortment size and the customer
choice in an online and offline supermarket. The importance of brands increases, because
the internet is a more uncertain environment and more risks are perceived by the
customers. This perceived risk can be made a little smaller by offering a lot of
information on the website.
The target group of customers who shop online, because of time pressure, is less price
sensitive in an online supermarket because their main goal is to save time. The effect of
price promotions on the customer choice is for both online and offline supermarkets
weak. The delivery charge has not a strong influence on the choice of a customer for an
online supermarket.

31
5.2 Recommendations
The convenience of an online supermarket is very important. By promoting, an
online supermarket should focus on the time savings gained and the quick service.
The website should be simple to use and offer browsing and order instructions.
Customers should be able to use their own online shopping lists. It should take no
more than 20 minutes to place an order and the groceries should be delivered
within 24 hours.
Online supermarkets should pay lots of attention to a good customer service
quality. They should have a good responsiveness problem resolution system.
Online supermarkets should fully compensate problems that occur. They must
provide privacy and security policies; satisfaction guarantee information; return
and exchange policy information available on the website. The online
supermarket must offer interactive help and contact information such as telephone
numbers and email addresses.
The website of an online supermarket must function technically correct, must be
well-organized, well-structured, an offer advanced search function, FAQs and at
least three browsing options. They should offer a lot of information about the
product attributes, but also about the service and the process.
Online supermarkets should offer well-known brands to reduce the perceived risk,
as well as a lot of information to reduce this risk. They should offer in-stock status
information and order status/tracking information on the website.
Online supermarkets can ask a delivery fee of £5.

5.3 Limitations and future research

This research has several limitations. It is an exclusively literature research and the
hypothesis are not tested by an analysis. There are several store attributes that determine
the choice of a customer for a supermarket, but since the limited time and space of this
research a choice have been made for five relevant and important attributes. Further
research on the effect of all attributes should be examined to get a complete view of the
choice for an online supermarket.

32
The different customer target groups and demographics, such as income level and gender
are not considered. These differences may have a big influence on the results, because for
example income level will have a big influence on the price sensitivity of the different
customers.
Future research should test the findings of chapter 4 with empirical data to draw
significant results. The topic „online supermarkets‟ needs more research since online
shops are rapidly growing while online supermarkets are growing slowly.

33
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