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This study investigates key factors influencing customer activation and retention in Indian e-commerce, identifying service quality, system quality, information quality, trust, and net benefit as critical for success. It emphasizes the importance of both utilitarian and hedonic values in enhancing customer satisfaction and repeat purchase intentions. The research proposes a model based on the Means End Chain theory and Prospect theory to analyze these relationships among online shoppers in India.

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0% found this document useful (0 votes)
11 views11 pages

Art 2

This study investigates key factors influencing customer activation and retention in Indian e-commerce, identifying service quality, system quality, information quality, trust, and net benefit as critical for success. It emphasizes the importance of both utilitarian and hedonic values in enhancing customer satisfaction and repeat purchase intentions. The research proposes a model based on the Means End Chain theory and Prospect theory to analyze these relationships among online shoppers in India.

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© © All Rights Reserved
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Journal of Retailing and Consumer Services 59 (2021) 102399

Contents lists available at ScienceDirect

Journal of Retailing and Consumer Services


journal homepage: http://www.elsevier.com/locate/jretconser

E-retail factors for customer activation and retention: An empirical study


from Indian e-commerce customers
Vikas Kumar a, *, Ogunmola Gabriel Ayodeji b
a
Chaudhary Bansi Lal University, Opp. Education Board, Bhiwani, 127021, Haryana, India
b
Faculty of Business, Sharda University, 73, Boburshah Prospekt, Andijan, Uzbekistan

A R T I C L E I N F O A B S T R A C T

Keywords: Customer satisfaction has emerged as one of the most important factors that guarantee the success of online store;
Customer satisfaction it has been posited as a key stimulant of purchase, repurchase intentions and customer loyalty. A comprehensive
Website quality review of the literature, theories and models have been carried out to propose the models for customer activation
Utilitarian & hedonic values
and customer retention. Five major factors that contributed to the success of an e-commerce store have been
Repurchase intention
identified as: service quality, system quality, information quality, trust and net benefit. The research furthermore
investigated the factors that influence the online customers repeat purchase intention on the basis of the Means
End Chain theory (MEC) and Prospect theory. By hypothesising that a combination of both utilitarian value and
hedonistic values are needed to affect the repeat purchase intention (loyalty) positively, Structural equation
model has been presented on the primary data collected from the Indian online shoppers. Results indicate the e-
retail success factors, which are very much critical for customer satisfaction. By increasing the utilitarian value
and hedonistic values derived by the customers, customer satisfaction and hence the customers repeat purchase
intention can be increased significantly.

1. Introduction million internet users in 2010, India has since touched 500 million
internet users in 2018. Online retail businesses are positioning them­
Large number of customers are getting attracted towards online selves to be able to take advantage of the massive internet user base by
retailing; this is because e-stores usually offer them a variety of services turning them into online shoppers. Indian e-commerce market is poised
and products according to their preferences. Convenience, round the to surpass that of the United States, making it the second largest in the
clock availability, flexible pricing, discounts as well as free door step world in less than twenty years from now (PwC India, 2018). According
delivery are some of the major benefits of shopping online. Presently, to global payments firm Worldpay (The economist, 2016), this rapid
more number of online retailers are beginning to experience increase in growth is driven by a host of e-commerce players comprising of small,
demand for products and services (Singh and Rana, 2018). Indian online medium and large firms in terms of revenue and assets. An amalgam­
retail industry has been experiencing good times since the last six years; ation of factors contributed to India’s rapid increase in number of online
as a result of the constantly growing internet penetration, deployment of retail shoppers, which includes; digital friendly policies of the Govt.
modern infrastructures, and a robust ecosystem for e-retail start-ups Large investments made by the online retailers, growing internet and
(Deloitte, 2018). Several e-commerce start-ups have commenced oper­ smartphone penetration, demographics distributions, emerging middle
ation with innovative strategies, which differs from what was pioneered class and young population (IBEF, 2019; Agarwal and Dixit, 2020).
by first generation e-commerce companies. “More than 1200 start-ups With western markets getting saturated (matured) and China
came up in 2018, including eight unicorns, taking the total number to becoming more restrictive, India is becoming the main battleground for
7200 in India” (NASSCOM, 2019). India’s B2C e-commerce revenue the e-tailers. The focus is attributed to the increased internet penetra­
grew from €20 billion in 2017 to reach €25 billion in 2018 at a growth tion, per capita income, rising middle class, urbanization and changes in
rate of 20% (Asendia, 2019). The number of internet users in India has consumer spending trends in India. Some foreign e-tailers like Amazon.
been growing at a CAGR of 35% since the year 2007 according to a com and Walmart (through Flipkart.com, Myntra.com, Jabong.com) are
report by IAMAI-IMRB (2017). Having grown from just over a 100 already playing with a good market share, while others like Alibaba.

* Corresponding author.
E-mail addresses: [email protected] (V. Kumar), [email protected] (O.G. Ayodeji).

https://doi.org/10.1016/j.jretconser.2020.102399
Received 22 March 2020; Received in revised form 8 November 2020; Accepted 17 November 2020
Available online 27 November 2020
0969-6989/© 2020 Elsevier Ltd. All rights reserved.
V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

com, Rakuten.com are subtly trying to gain access to market through measure an e-retail’s websites operation level of success. Studies have
investment in small or big companies. A number of home-grown small e- suggested that past online shopping experience, perceived usefulness,
retailers are struggling, while the big players are also facing a rough and customer satisfaction are factors capable of influencing a customer’s
competition. Correspondingly, the decision making by these e-tailers repurchase intention (Tsai and Huang, 2007; Chen et al., 2009). Website
becomes very much important in terms of customer activation and quality (e-store) and the usability of the e-store have also been proposed
retention. Any wrong decision can lead to high risk for the growth as being very vital for e-retail success by studies (Schaupp et al., 2009:
strategies. Hence, there is stringent requirement of research on the dy­ Rhee et al., 2009; Ganguly et al., 2009; Kim et al., 2007). In order to
namics of the Indian online retail industry and coming out with the recommend a comprehensive model, the work adopted the
models for successful development of this industry. The increasingly Quality-Value-Satisfaction-Loyalty model; as the mechanism for which
competitiveness of the online retail industry has led the e-tailers to shift an online retailer may successful. The customer retention model illus­
their focus from inducing the consumers to motivate the customers for trates that for a customer to become loyal to an online retail brand, there
repeated purchase. Purani et al. (2019) have argued that customer must be satisfaction, which arises when the e-tailer possesses a quality
acquisition cost in e-retail is significantly higher than in the traditional system backed-up by the proper mix of values. Shopping values refers to
offline contexts. Hence the e-loyalty becomes the most crucial factor that the evaluations of experience of shopping with an e-store; such as the
decides the profitability of any online business. extra convenience of shopping online. It focuses on the experience of
Therefore, knowing how to maximise the repurchase intention of purchasing the preferred product, instead of the product itself (Yang and
Indians online consumers’ is vital for an online retailer in India to Lee 2010). Prashar at al. (2019) posited that the online customers is
achieve its business goals. This may further lead to develop a general divided into two most critical predictors a) shopping (hedonic and
reference model for successful online retail business. Success of an on­ utilitarian) value (in formativeness, efficiency and entertainment) and
line retail website depends on its system quality and how much con­ website features. In comparison to this, previous studies have used
sumer motivator values are derived through shopping from it (Ahn et al., variables such as websites, internet performance, perceived profit,
2007). “System quality is the level of user satisfaction with the technical perceived risk, variables for website selection, and differences in
and functional aspects and is dependent on factors like: response time, lifestyle.
usability, availability, reliability, and adaptability” (Delone and McLean
2003). On the other hand, motivational values are referred to as either
2.1. Online retail customers values
utilitarian value (function or task oriented) or hedonic value (fantasy,
multisensory or elements based on emotions) as discussed by Hepola
According to Gupta and Kim (2010), value to the customer will
et al. (2020). The present work has focused upon these values and
determine the level of motivation to shop from an e-retail vendor. To
attempted to see their role in the customer satisfaction and purchase
et al. (2007) psychologically categorised them into two broad cate­
decisions. The primary objective of this study is to propose and empir­
gories: (a) Hedonistic (b) Utilitarian shopping values. Hedonistic values
ically test the online retail success model with emphasis on proving
represent the excitement, and pleasurable experiences derived from
values to the customers. This work proposes two online retail success
shopping online (Overby and Lee 2006). On the other hand, utilitarian
models and test them with the data collected from online retail cus­
shopping values are those related to the level of fulfillment as a result of
tomers in India. First model incorporates the factors necessary for user
being able to achieve the shopping goals (To et al., 2007). Hedonic
satisfaction, which in turns leads to purchase/repeat purchase in­
shopping values are considered as the most vital factor for online
tentions. While the second online business success model explains cus­
customer satisfaction leading to customer retention (Shang et al., 2005;
tomers motivational values necessary for repurchase decision and
Kuan et al., 2008; Gupta and Kim 2010). On the other hand, Szymanski
loyalty, and most importantly how these values may differ from one
and Hise (2000) characterized the utilitarian shopping values as a
customer to another.
rational, goal oriented and effective decision based, which improves the
customer satisfaction. Utilitarian e-retail customers concentrate mainly
2. Theoretical background on functions related to specific task, for example: price comparison
features, customer review before making a purchase (Overby and Lee
Several researchers have attempted to identify the factors necessary 2006). Arul Rajan (2020) investigated the effects on the online shopping
for online retail business success. Studies have mostly emphasized on: channel in the City of Coimbatore of hedonic/utilitarian incentive on
creating value for customer (Boshoff, 2007), managing the customers’ human aspects; factors, such as social media, marketing efforts, tech­
online (Santouridis et al., 2009), improvement of e-retail service quality nology factors, shopping convenience were taken into account as vari­
(Brown and Jayakody, 2008; Boshoff, 2007), e-retail strategy (Brunn ables that impact the motivation of shopping.
et al., 2002; Nero and Raman, 2019), customer retention (Khalifa and This category of e-retail customer would be motivated to shop on an
Liu, 2007) and website quality (Kim and Lee, 2005; Kuan et al., 2008). e-vendor with widely selection of products, informative, convenient,
Unfortunately, according to Wang (2008) researchers have not focused and fast websites (Sorce et al., 2005). Both categories of shopping values
on integrating the entire online retail success factors into a compre­ have been presented in Fig. 1.
hensive research model. According to Hellier et al., repeat customer
purchase resulting from a long standing loyalty positively affects an
e-retailer growth and profitability (Molla and Licker 2001; Tsai and
Huang 2007). Numerous studies (Liu and Xiao, 2008; Chiou and Pan,
2009; Zeithaml et al., 2002; Chen and Cheng, 2009; Kuan et al., 2008)
concluded that maintaining a long-standing customer loyalty is a vital
determinant of success of an e-retailer.
Studies have considered “customer repurchase intention” as a
reflection of loyalty and are being frequently used as a construct of e-
retail success estimation instead of “intention to use”. This construct has
been used by several studies (Nicolaou and McKnight 2006; Kuan et al.,
2008; Wang 2008; Lu and Su, 2009), conducted on the basis of DeLone &
McLean’s e-commerce extended success model (2003). As a result of the
increase in popularity and prevalence of online shopping, DeLone &
McLean’s e-commerce extended success model was unable to completely Fig. 1. E-commerce shopping values.

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

On the other hand, hedonic shoppers would prefer to shop on an e- posited that value is an assessment of utility, on the basis of customers’
retail store, which offers more than transaction related interactive comparison of what they give to what they receive. Present research
controls (information, security, and privacy), but also the aesthetics, work focuses on two types of values that positively a influence the
emotional value, sensual stimulation etc., which enhances the pleasure e-retail customer purchasing behaviour; (a) Utilitarian values and (b)
of e-retail shopping experience (Sorce et al., 2005; Overby and Lee Hedonistic shopping values (Ozkara et al., 2017); the values and effects
2006). Hedonic shoppers may be inspired to make an online purchase has been studied extensively by a number of researchers (Park and Ha,
for the reason that the website related to hobby or because of their 2016; Childers et al., 2001). Although few studies have examined the
involvement with a specific product or brand (Bridges and Florsheim type of relationships that exists with the other factors of successful op­
2008). Meeting the need of hedonic shoppers’ values is fast emerging as erations of an online retail store (Bridges and Florsheim, 2008; Chia­
a vital source of revenue for e-retail, as the need increases (Sorce et al., gouris and Ray 2010). Liu at al. (2019) recognize that consumption
2005; Babin et al., 1994; Bridges and Florsheim 2008). Hedonic and activities involve both utilitarian and hedonic components. Although
utilitarian values results from the intention of consumer’s to make a utilitarian usage suggests that the effects of the cerebral consumer
purchase in conjunction with the conscious quest for play and fun which behaviour are fixed, its hedonic equivalent is affective consumer
are active determinants of consumption behaviour (Babin et al., 1994; behaviour when it comes to the emotional and multisensory dimensions
To et al., 2007). Both categories of values are now becoming gradually of the experience.
essential for success of an online retailer as they are capable of moti­
vating the consumer to not only visit an online retail website, but can 3. Proposed research models
also lead to repeat purchase intention (Childers et al., 2001).
The customers’ view of utilitarian and hedonistic values is arguably The research model in this study is based on the Online Customer
one of the vital components of customer satisfaction; this is because a Lifecycle used in e-commerce, it tracks both the customer’s qualitative
satisfied customer is expected to repurchase from and remain loyal to an and quantitative journey in relation to a product (Arul, 2020). The
e-retail store (Chiagouris and Ray, 2010). The best way to guarantee that model is based on statistical records of customer’s progression through
a customer would revisit, repurchase, and even recommends (word of the phases of the process; focusing on how to optimize the performance
mouth) the e-tailer to others is by improving the customer satisfaction of several touch points and channels of interaction. Goal of every
(To et al., 2007). The success of an online retail business requires the e-commerce company is to acquire customers ensuring that there is a
balanced provision of both hedonic and utilitarian values as numerous continuously acceptable conversion rate (Tran, 2020). Along this, they
studies have shown that they are essential for purchase/re-purchase need to focus on how to turn a visitor into a loyal customer, as well as to
intention, customer satisfaction and retention (Sorce et al., 2005; understand the shortest path through which a new customer becomes a
Kuan et al., 2008;). Therefore, this study posits that to increase the loyal customer (Vijay et al., 2019; Atulkar and Kesari, 2017).
customers repurchase/repurchase intention, enhancing the customer Present work proposes two research models; the first model presents
satisfaction is paramount. Also the customers’ opinion on utilitarian and the factors necessary for the consumers’ purchase/re-purchase decision
hedonistic values is most likely to influences the level to which the (Activation Model), while the other research model presents how
customer is satisfied, which is responsible for purchase/repurchase motivational values can motivate customer loyalty towards an e-tailer.
intention (To et al., 2007). Following Hypothesis has been proposed: The activation model is derived from the frequently referred in E-com­
merce research DeLone and McLean E-commerce success extended
H1a. Utilitarian shopping values are positively related to customer
models. This research model accepts that “Use” and “User Satisfaction”
satisfaction.
jointly provide the “Net Benefits”; which is what the users get from
H1b. Utilitarian shopping values are positively related to customer shopping on an the e-retail website and contains the additional factor
repurchase intention. trust. The second model (customer retention) is derived from Means-End
Chain theory (MEC) “the theory holds that consumer behaviour is value
H2a. Hedonistic shopping values are positively related to customer
driven, so perceived values ultimately influence consumers’ choice
satisfaction.
patterns” (Gutman, 1997) and prospect theory to build the connection
H2b. Hedonistic shopping values are positively related to customer between values and goals. Empirical studies by Parasuraman and Grewal
repurchase intention. (2000), Jones et al. (2006) have confirmed the relationship between
value and repeat purchase intention.
By adopting the position that e-retail success is dependent upon how
well the customer is satisfied and this in turn leads to loyalty, the study
3.1. Customer activation model
attempts to understand and recognizes interaction among the several
factors necessary for e-retail success. Though, system, information,
The model adopts the three qualities (System Quality, Information
service quality is important for customers when making the decision to
Quality, Use, and Service Quality) and its impacts on User Satisfaction,
purchase however, it might not be adequate enough to guarantee the
thus, intention of the customer to use the e-retail website or application
customers’ repurchase decision or to become a loyal customer. All things
is also affected. In this research model, “User Satisfaction” represents
being equal, e-retail customers may not have to necessarily purchase
one of the principal measurements of success of an online retail website.
services or product with the most superior quality; the customer’s pur­
Wang et al. also stated that the measurement of “User Satisfaction” is an
chasing behaviour is however influenced by the feeling of fairness in
objective based attitude. It claimed that attitudes towards objects for
cost and value of the product being offered. Vijay et al. (2019) concluded
example, website and Information Systems are not enough to predict
that an online customers experience during shopping is an amalgam­
customer behaviours like; intent to purchase or system usage. Also, as
ation of hedonic and utilitarian values; these values determine the
recommended by DeLone and McLean, in e-retail settings “Net Benefits”
pattern of consumption of consumers by using utilitarian shopping ef­
overlapped with the measures of “User Satisfaction”. “User Satisfaction”
forts to rationalize the optimal value by applying specific goals and
is basically as a result of “Net Benefits”. Also, relying on the Technology
focusing on features.
Acceptance Model (TAM) (Wixom and Todd, 2005), attitude toward the
A customer’s purchase/repurchase intention may depend upon es­
an e-commerce website is based on activities which informs the intent to
timate of the total net value of a product offered by the e-tailer (Childers
use and the actual usage of the system itself. “TAM theorizes that the
et al., 2001). Yang and Lee (2010) have posited that perceived value is
effects of external variables on intention to use are mediated by
the primary motivation for online retail shopping. It strongly affects
perceived usefulness and perceived ease of use”. However, there are two
both offline and online repurchase intention. Zeithaml et al. (2002)
vital factors missing from the DeLone & McLean extended IS success

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

model: trust and justice. “Trust is very important for online retails information content quality is important for online retail customer
transaction because it is capable of absorbing transaction-specific un­ satisfaction.
certainty by mitigating the negative effect of perceived information
asymmetry and the resulting possibility of encountering opportunistic 3.1.5. System quality
behaviour” (Pavlou et al., 2007). The importance of trust in online This can be described as the users’ perception of the online retail
transactions has been widely discussed in many researches studies website’s ability to efficiently provide requested information as well as
(Kumar & Pradhan, 2015, 2020). According to Adams’s (1965) equity its delivery method (Boshoff, 2007). System quality analyses the per­
theory, “Individual’s perception of the fairness of exchange relationships formance of the website; some of the metric includes; page load speed,
is determined by comparing the output/input ratio for oneself with that ease of navigation between pages, website design, appearance, website
of referent others”. The feeling of fairness can only be derived when availability, and website layout. Technology acceptance model (TAM)
there is a balance between input and outcome, which leads to the states that, an e-retail website which is seen as being easy to use is most
development of trust. Since E-retail websites becomes successful when likely to bring about a feeling of positivity among the consumers. Szy­
customers buy its products, this model contains factors necessary for manski and Hise (2000) also opined that the performance of a website
user satisfaction, while positing that user satisfaction, trust and net performs a significant role in deciding satisfaction of the customers
benefit are directly required for a purchase decision/re-purchase deci­ while shopping on the website. When customers purchase a product
sion. The proposed customer activation model has been shown in Fig. 2. from a website or web application, functionality snags (for example,
Website crash, interruption) may result in a poor customer user expe­
3.1.1. Purchase/repurchase intention rience (Collier and Bienstock, 2006). System quality positively impacts
Purchase/Repurchase intention can be defined as the likelihood that online customer satisfaction (Bauer et al., 2006).
an online customer is going to buy a product and continue to purchase
products from the same online retailer (Anderson et al., 2014). This 3.1.6. Service quality
primary construct “customers purchase/repurchase decision” (behav­ Service quality refers to how well the services delivered by an online
iours) is explained in the model respect to its relationship with other key retail store are able to match the expectations of the customer. Examples
factors (user satisfaction, trust and net benefit). of such services may include; contact, responsiveness, and privacy
(Parasuraman and Grewal, 2000). For online retailers, making available
3.1.2. User satisfaction several channel for customers to be able to communicate across to the
Satisfaction has been defined as a personal feeling of contentment or online vendor when assistance is required. This is crucial, if the quality
pleasure, as a result of comparing the actual outcome of shopping online of an e-tailer service operation has to improve (Collier and Bienstock,
as against their expectation (Ives et al., 1983). Satisfaction of online 2006). Responsiveness, which is concerned with the competence to
customers will positively impact their future intention (repeat purchase) handle customer concerns and returns can be improved upon by making
directly or indirectly (Tyrväinen et al., 2020). available support through email, text, presence of online representatives
and telephone. According to Bauer et al. (2006), online consumers will
3.1.3. Net benefits not shop on an online portal, which does not guarantee that credit or
This is used to describe the total benefits of received when shopping debit card information are secured against third party misuse.
online by customers, as against the costs (for example, effort, money and
time). Some of the net benefits derived from online shopping include: 3.1.7. Trust
monetary gain, product search and buying effectiveness, convenience, According to a study by Pavlou and Fygenson, trust is the perception
timely delivery, enjoyment, broad product range, and flexibility. Ac­ of a consumer that the merchant will transact with all ethically, capa­
cording to a research by Childers et al. (2001), net benefit of shopping bility, and efficient standard. This is also supported by the Theory of
online includes both utilitarian value and hedonic values. Planned Behaviour (TPB). Which, further states that trust produces a
positive feelings toward the online retailers; this increases the chances of
3.1.4. Information quality customer’s intention to buy a products, or use a service. Whenever there
This can be defined as the customers’ perceptions towards the pre­ is no trust in a process, it stops online consumers from continuing with
sentation and characteristics of information presented or displayed in an the transaction, as a result of this, they may never transact with the
e-commerce website, web application or portal. It takes the character­ online retailer again if it does not improve on its trustworthiness
istics of information into consideration, for example, timeliness, rele­ (Hoffman et al., 1999). Generally, when an online retailer is not trusted,
vance, understandable, accuracy, and completeness. One of the basic customer would not buy from the online retailers, this may be as a result
responsibilities of an e-tailer is to ensure the availability of complete of the perception that the e-tailer will not behave ethical, socially
information on products being offered, the transactional process accepted manner (Gefen et al., 2003). Trust begins as a result of an
involved, and services to be rendered. Displaying high quality infor­ online retailer being able to fulfil its objectives; the online retailer has to
mation on the website can stimulate an improved conversion rate as well meet the customers’ needs by fulfilling the following criteria;
as better customers’ satisfaction. However, outdated or inaccurate in­
formation can lead to customers’ dissatisfaction with the online retailer • Distributive justice: It is defined as the magnitude to which an
(Collier and Bienstock, 2006). An online retail website having the right online retail customer’s investments (for example, effort, time, and
money) must be adequately compensated. Distributive justice is
based on concept of order fulfillment. As stated in a research by
Colquitt et al. it opined that distributive justice is usually derived by
evaluating if investments and reward are proportional, it can also be
judge whether returns tallies with expectation, and also if input or
outcome proportions matches with others (Adams, 1965).
• Procedural justice: This can be described as the fair-mindedness of
processes as well as policies offered by the online retailer. Impor­
tantly, the transaction processes are a significant aspect of cus­
tomers’ online shopping experience therefore, online retail
businesses can improve the customers’ trust by promoting policies
Fig. 2. Customer lifecycle in online environment. that improves procedural justice, for example handling complains

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

fairly, displaying a detailed shopping policy and procedure infor­ that utilitarian along with hedonistic values are the paramount factors
mation, having a consistent policies, clarifying decisions on changes for persuading future customers’ choice to repeat purchase or not. For
in the website or application or policies. this reason, online customer would exhibit a better repeat purchase
• Interactional justice: Represents the competence with which intention towards an e-tailer offering higher utilitarian and hedonic
interpersonal responses are delivered to a customer while online values as exemplified in Fig. 3.
shopping process is on-going. According to Bies and Moag it reported Utilitarian and hedonistic values are defined as the anticipated trans-
that for effective communication for increasing customers perceived conditional objectives, which differ in significance, it is the guiding
justice, they should be treated with respect and dignity. Also Lind principles of any individual, organisation, or society, and also values are
was of the opinion that “people use overall impressions of fair motivational constructs which function as the criterion for decision
treatment as a surrogate for interpersonal trust”, trust may be facil­ making or evaluation of things or action (Babin et al., 1994).
itated by establishing several channels of interpersonal communi­
cations that express social sensitivity. 3.2.1. Dimensions of hedonic value
According to Kaushik et al. (2020) consumers expect a more social
3.2. Proposed Customer Retention Model and interactive online experience to accumulate common intelligence
and support decision-making. The study concluded that hedonic aspects
This research study adopts the theory that an online customer’s should be taken into account in designing the Website of a fashion
repeat purchase intention (Retention) is influenced by utilitarian and retailer. Dimension of hedonic values includes;
hedonic values, which are further derived from net benefits (Childers Social shopping: This is the type of shopping that reflects the online
et al., 2001; Sorce et al., 2005). This study presents the second order retail customer propensity to strive for recognition and even friendliness
composite latent variables in the customer retention model. The through interpersonal relationships. It was reported by To et al. (2007)
research models utilised in the research attempts to investigate why that online shopping social benefits, for example peers communication
benefits are considered as the components of values; and to establish the may play a vital part when influencing the shopping intention of the
link between goals and value. The customer retention model takes its customer. It is important to note that interaction socially performs a very
root from the Means-End Chain theory (MEC) pay particular attentions paramount role in repeat purchase behaviours, this is as a result of in­
to “consumers’ perceptive state after product or service consumption, it crease in ability to interact socially which have been made available
does not involve the risk concept. Prospect theory, therefore, is invoked online retailers (for example, firstcry.com has forum where mothers
to explore the role of risk in moderating the relationships between interact). Other examples of strategies to encourage social shopping
values and repeat purchase intention”. The hypothesised associations include the offering of products on sale on social networks (which di­
are explained as the following. Utilitarian and Hedonic value, according rects users to the e-store), while creating contents for the network
to a research by Babin et al. (1994), the paper explains values as community. Some retailers may even offer the option to buy directly
‘anticipated trans-circumstantial goals, with different degree of impor­ from the social network buy displaying a “Buy” button.
tance, serving as principles guiding the life of an individual, organisa­ Role shopping: One of the numerous benefits of the internet is that
tion, and social entity. To et al. (2007), also posited that consumer offers the platform for users to play different roles that were hitherto
actions are regulated by values, which includes behavioural intention to difficult to accomplish (Sorce et al., 2005). Role shopping refers to the
purchase from or become loyal to a single e-retailer. Correspondingly, online customers who shop to gain pleasure and self-approval when
the research by Millan& Reynolds (2014) suggested that consumer be­ shopping under a different identity to perform a specific role at given
haviours are informed by utilitarian and hedonic values, which are the time. It is the enjoyment that the online shoppers gets from shopping for
values derived from achieving online shopping goals. Seasoned online the consumption of others (for example, father shopping for a child),
retail customers, mostly attach importance to conclusions drawn from shopping online for others, has been revealed as a source of joy for some
previous purchase experiences, which expedite the process of attaining customers.
their shopping goals. This is how online repeat purchase decisions are Value shopping: According to Gupta and Kim, the research claimed
reached on the basis of the judgment of value, which is necessary to help that getting a bargain gives online consumers the feeling of having won a
consumers to accomplish their goal of shopping. Kim further suggests contest. One major benefit of shopping online is the ability to compare

Fig. 3. Proposed customer activation model.

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

products, prices, etc. Also supporting this in a research by Sorce et al. significance of hedonic values in making decisions when risks are
(2005), it observed that pleasure is also derived during the process of involved. The theory further postulated that when the problem is framed
browsing for good deal, and listed it as also part of motives of customers as gains the people are risk adverse. Low risk perceiving online cus­
shopping online. tomers are willing to shop online only if they are offered the right item at
Adventure shopping: This type of shopping is engaged in by an the best price. As a result, online customers are quick to change their
online customer who is looking to escape bored therefore requires attention from getting the best buy to hunting for hedonic value for
stimulation to get out of depression (Bridges and Florsheim 2008). A example; entertainment and gratification which are derived from pro­
survey conducted online customers shows that, 95% of respondents cess of shopping online. Therefore, it is also important to heighten the
agreed that shopping online serves an opportunity for departure from hedonic value of the website to improve loyalty while effectively
daily routine. reducing the effect of utilitarian value on customer retention. According
Gratification: Research by Bridges and Florsheim (2008) indicated to a study by Chiu et al. (2014), it concluded that perceived risk will
that gratification is a strong motive to shop online; it also improves the decrease the effect of utilitarian value on customer retention, in the
chances of buyer returning for a repeat purchase other products from the other hand; the effects of hedonistic values on customer retention in­
same e-retailer. Gupta and Kim, also suggested that humans behave in creases as a function of perceived risk.
ways that reduces stress, leading to better online consumer experience.
It is the degree to which an e-store is entertaining and fun to the online 3.3. Empirical testing of the models
customers, it is also the feeling of accomplishment after completing a
task easily on the website. Other form of gratification includes receiving The proposed models have been empirically tested to analyze the
incentives for shopping on a particular website. actual customer behaviour.

3.2.2. Dimensions of utilitarian value 3.3.1. Data collection instrument


Product offerings: This is described as the complete information on The study used a structured questionnaire as the data collection in­
products or services offered for purchase to a customer by an online strument. A fixed alternative design was followed, which allows the
retailer, while displaying the height, depth, and breadth of the respondent to answers from multiple choices provided by the researcher.
merchandise being offered (Bridges and Florsheim 2008). Take for Hence, a formal structured questionnaire was used for this research.
instance, a customer shopping on flipkart.com will be shown different
categories of product (for example, Smartphones, computers, fashion 3.3.2. Sample universe
etc.) to choose from, several option of any product choose is available for The sample universe of the questionnaire includes anyone who has
comparison. shopped from an online retail store in India, irrespective of the location
Product information: The information quality of products dis­ of the respondent. The universe includes all location with the
played by an online retailer has to be detailed enough to enhance the geographical entity of India.
customer decision in making a purchase or not (Overby and Lee 2006).
For instance, Amazon.com, gives detailed information on products being 3.3.3. Sampling technique
displayed to a consumer, this enables the consumer to learn about the Purposeful random sampling was employed in this research (Flick,
technical specifications, attributes, size, and products features. 2018). In order to target the right respondents, a collaboration was done
Monetary savings: According to Overby and Lee (2006), one of the with the online marketing agency to get the database. The online
major reasons of shopping online is to get value for money, in other questionnaire was floated to this database with 20,000 online shoppers
words, spend less on products thereby saving more money, for instance, in India for voluntary participation. In response, a total of 3592 filled
Amazon. in was offering 10% cash back on both Amazon pay and HDFC questionnaires were received. Out of these, 1000 responses were
bank credit and debit cards and up to 40% discounts on selected prod­ selected randomly. These selected responses were validated and checked
ucts, in the Great Indian Sale in 2019. on one to one basis. Finally, a total of 912 qualified questionnaires were
Convenience: Online shopping is very effective because of it con­ considered for analysis. Email IDs of the respondents were collected
venience, a lot of time and effort is saved when a consumer decides to along with other demographics.
shop online. Online shopping has the benefit of no restrictions on
shopping hours (Childers et al., 2001). For instance, shopping on Sna 3.3.4. Sample size
pdeal.com, allows an online customer the elasticity in order placement The sample size (N) of the research was 912 qualified respondents
online, which can occur at any place, time, and day. This reduces the (with valid responses), who had varied experiences in online retail
need to physically travel to a store, thereby saving time, energy, and shopping. The sample size is sufficient for the Structured Equation
money. Modeling (Muthén and Muthén, 2002).

3.2.3. Perceived risk 4. Data analysis and results


In online shopping, risk is more pronounced than shopping in
traditional physical store, this is as a result of temporal and spatial Aim of the data analysis was to test and validate the proposed con­
separation that occurs between the sellers and buyers. Risk may arise as ceptual model and to identify the casual relationships that exist between
a result of event which cannot be predicted perfectly, and may not be variables. The researches adopted several techniques to test, validated,
pleasant to the online customer . Previous research has shown the check the fitness of the model as well as to test the hypotheses. The study
importance of perceived risk determining purchase intention, repurch­ used several goodness-of-fit indices to test if the model can be accepted;
ase intention and even to become a loyal customer. Whenever buyers are the technique used includes; Chi-Square Goodness of Fit Test, Normed
faced with uncertainty and consequences that are not desirable as a Fit Index (NFI), Comparative Fit Index (CFI), The Root Mean Square
result of a purchase made, they perceive risk . Not being able to Error of Approximation (RMSEA), and Tucker-Lewis index (TLI).
completely track the e-tailers behaviour as well as apprehensions con­
cerning the security of shopping online will lead to a higher perceived 4.1. Descriptive analysis
online risk. Also, supporting this is the Prospect theory, which postulates
that an individual’s decisions is made by people based on expected The demographics of the respondents showed that the number of
utility to be derived, for examples are utilitarian values. The short- females was higher with a share of 68%, while 32% were males. Sample
coming of this is that it does not take into consideration the covered the different age groups as some of the respondents were less

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

than 20 years of age and some were more than 50 years. The sample Hypothesis 4. System Quality positively associated with User
constituted of the response from Tier-1, Tier-II and Tier-III cities of India Satisfaction
and the respondents were having varying experience from less than one
Hypothesis 5. Service Quality positively associated with User
year to even more than 4 years.
Satisfaction
Hypothesis 6. Trust positively associated with User Satisfaction
4.2. Model fit analysis: Structural Equation Modelling
Hypothesis 7. Net Benefit positively associated with User Satisfaction
Structural equation modeling (SEM) was used to analyze the struc­
Hypothesis 8a. Utilitarian values positively influence Repeat
tural relationship amongst measured variables and latent constructs.
Purchase.
SEM is a multivariate statistical analysis technique, employed in ana­
lysing structural relationships (Westland, 2019). For both models, Hypothesis 8b. Hedonistic values positively influence Repeat
AMOS version 21.0 was utilised to evaluate the degree to which Infor­ Purchase.
mation Quality, System Quality, Service Quality, Net Benefit, Trust were
Fig. 4 illustrates the structural coefficients for the activation model,
associated to User Satisfaction (Activation model) and also the degree to
the standardized coefficients of the effect of the factors were found to be
which the factors of the retention model construct; Gratification, Role,
significant for users’ satisfaction (Fig. 5).
Best deal, Social, Adventure, Monetary savings, Convenience, Product
Table 2 shows the standardized regression estimates and allows a
information, Product offering determine the customer retention or loy­
direct examination of relationship that may exist between the constructs
alty. “The standardized regression weights are used to compare the
used in the study. Biswas et al. (2006) stated that the level of significance
relative effect of each independent variable on the dependent variable”.
is based on the critical ratio (CR) of the regression estimate. According to
Standardized coefficients for the activation model as well as the reten­
Byrne (2001) 99% significance level is achieved when the Critical Ration
tion model have been shown in Table 1.
(CR) values are greater than or equal to 2.58.
In the Activation model gave a yields a chi-square value (χ 2) of
Hypothesis 3, which argues that Information Quality has a positive
761.868, degree of freedom = 30 with a p value = 0.000 which indicates
impact on User Satisfaction was supported in this study as the rela­
that there is a good fit between the model and the collected data.
tionship between the two variables has been established as being sta­
However, as a result of the sensitivity of the chi-square value to the
tistically significant β = 012, C.R = 7.402).
sample size other suitable fit measures were used to validate the model.
Hypothesis 4, claims that System Quality regresses significantly and
The results for both the models have been shown in Table 1, which
is positively related to User Satisfaction (β = 0.011, C.R = 29.970)
indicate that both the models fit the data quite well and the models have
therefore hypothesis was accepted.
been successfully verified.
Hypothesis 5; which suggests that Service Quality has a positive in­
fluence on User Satisfaction was supported in this study as the rela­
4.3. Path hypotheses testing tionship between the two variables has been established as being
statistically significant (β = .001, C.R = 23.448).
AMOS version 21.0 was used to first test the Hypothesis 1 and Hy­ Hypothesis 6: the hypothesis formulated in relation to Trust having a
pothesis 2. The results have been summarised as: strong positive influence on User Satisfaction has been verified and
Hypothesis H1a, which results that Utilitarian shopping values has a accepted (β = 0.35, C.R = 34.329).
positive impact on customer satisfaction was supported in this study as Hypothesis 7; the claims that Net Benefit regresses very significantly
the relationship between the two variables has been established as being and positively the User Satisfaction was supported in this study (β =
statistically significant (β = .981). 0.065, C.R = 44.608).
Hypothesis H1b, claims that Utilitarian shopping values regresses Consequently, it is accepted that all constructs; Information quality,
significantly and is positively related to customer repurchase intention System Quality, Service Quality, Trust, and Net Benefit are positively
(β = 0.268), therefore hypothesis was accepted. associated with User Satisfaction. On the other hand, the factors in the
Hypothesis H2a; which reveals that Hedonistic shopping values has a retention model showed a significant association amongst the Hedo­
positive influence on customer satisfaction was supported in this study nistic values and Utilitarian values and how they contribute to online
as the relationship between the two variables has been established as retail customer retention.
being statistically significant (β = .561). Hypothesis path of the customer retention model has been shown in
Hypothesis H2b: which depict that Hedonistic shopping values Fig. 6. Based on the results:
having a strong positive influence on customer repurchase intention and Hypothesis 8a, which argues that Utilitarian values has a positive
has been verified and accepted (β = 0.350). impact on Customer Retention was supported in this study as the rela­
Hypothesis testing was further extended to assess the degree to tionship between the two variables has been established as being sta­
which Information Quality, System Quality, Service Quality, Net tistically strongly significant β = 0.316, C.R = 21.355. Utilitarian
Benefit, Trust were related to User Satisfaction (Activation model) and Values: Monetary savings (β = 0.696, C.R = 18.303), Convenience (β =
also the degree to which the factors of the retention model: Gratification, 0.336, C.R = 17.939), Product information (β = 0.233, C.R = 11.870),
Role, Best deal, Social, Adventure, Monetary savings, Convenience, and Product offering (β = 0.478, C.R = 17.451) has a strong statistical
Product information, Product offering are inter related. The following significance positively relates with repurchase intention.
hypotheses were tested: Hypothesis 8b, which states that Hedonistic values has a positive
impact on Customer Retention was supported in this study as the rela­
Hypothesis 3. Information Quality positively associated with User
tionship between the two variables has been established as being
Satisfaction

Table 1
Summary of model fit analysis.
Model χ2 Df CMIN/df (1–3) NFI (0–1) TLI (0–1) CFI (0–1) GFI (− 1 to 1) AGFI RMSEA
<0 -1 0.05- <0.08

Activation Model 761.868 30 2.539 .831 .907 .912 -.899 .933 .042
Retention Model 21.254 8 2.656 .918 .936 .921 -.963 .905 .045

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

Fig. 4. Proposed customer retention model.

Fig. 5. Structural equation model of customer activation model.

statistically strongly significant β = .398, C.R = 26.671. Hedonistic shopping. E-tailers targeting this community should concentrate their
values such as Gratification (β = 44.121, C.R = 0.364), Role (β = 1.376, web elements on the theme ‘Reliability and Ease of Searching Products.’
C.R = 31.345), Best deal (β = 0.398, C.R = 18.031), Social (β = 1.494, C. Ensuring correct photos, product descriptions and ease of search for
R = 19.927), Adventure (β = 1.184, C.R = 21.316) has a strong statis­ contextual cues can allow portals to attract this segment and gain loy­
tical significance and positively relates with repurchase intention alty. Students are a big part of the utility-seekers, as they actively
(customer loyalty). concentrate on obtaining profit from online shopping. Portals targeting
this category will concentrate on providing practical value to these
shoppers either by increasing the use of portals or by reducing prices by
4.4. Discussion and interpretation providing promotional discounts. E-retail portals with a wide range of
products to choose from would attract these shoppers and allow them to
For online retailers, marketers and retail website developers, the close their shopping trip in one case. Quality seekers are delighted by the
outcome of the study is of extreme importance to target a specific monetary and practical advantages of online shopping as well as the fun
shopping segment(s). Various shopping values and web features influ­ they experience when browsing online portals. You can use portals that
ence the different groups of online shoppers. Some of the shoppers do e- are fun to navigate and browse, and store the latest gadgets and trendiest
shopping because of their convenience and usefulness, while many items for heavy discounts. Increasing user experience and features such
others rely on e-commerce to search products and offer information. as built-in videos, the 3D view of items, chat mechanisms and customer-
Likewise, some segments are not interested to do online shopping to to - customer interactivity can help attract more users and increase
derive pleasure and fun. For example, information seekers are drawn to segment patronisation. In general, core shoppers are not affected by
the web portals offering accurate product and service information and either shopping or web variables. This segment must be targeted to
they may not be so interested in the entertainment value of online

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

Table 2 customer a specific value proposal.


Standardized regression estimates of models.
Model Estimates S.E C.R P 5. Conclusion
(β)

Information Quality - > User 0.092 0.012 7.402 *** To run a successful online retail sore, emphasis must be given to the
Satisfaction factors necessary for user satisfaction. However, these factors may differ
System Quality- > User Satisfaction 0.336 0.011 29.970 ***
among the customers as per their preferences. From the proposed and
Service Quality- > User Satisfaction 0.008 0.017 23.448 ***
Trust- > User Satisfaction 0.348 0.010 34.329 ***
tested models: information, system and service qualities prove to be the
Net Benefit - > User Satisfaction 0.653 0.015 44.608 *** well-established factors necessary for online business users’ satisfaction.
Utilitarian values - > Customer 0.316 0.511 21.355 *** Nevertheless, e-tailers are required to integrate other benefits as well to
Retention create value to the customer. Empirically tested models have shown the
Hedonistic values - > Customer 0.398 0.475 26.671 ***
importance of the quality of system, information, accessibility, security,
Retention
Gratification 44.121 121.177 .364 *** and ease of use are needed to appeal to the consumer’s utilitarian values.
Role 1.376 0.064 21.345 *** On the other hand, to appeal to the hedonistic values of the consumer,
Best deal 0.398 0.022 18.031 *** the e-store should incorporate elements that would offer value to the
Social 1.494 0.075 19.927 *** pleasure seeking behaviour of customers; for example: adventure,
Adventure 1.184 0.056 21.316 ***
Monetary savings 0.696 0.038 18.303 ***
gratification, role shopping etc. As to what motivates a customer’s
Convenience 0.336 0.019 17.939 *** repurchase intention, the outcome of the study indicates that a com­
Product information 0.233 0.020 11.870 *** bined approach designed to increase customer satisfaction, trust, and the
Product offering 0.478 0.027 17.451 *** overall net benefits of shopping on their e-store must be adopted to
Note: N = 912; “The C R (Critical Ratio) is the commonly recommended basis for achieve their goals. Online retailers must focus on the information
testing statistical significance of SEM components with C.R. values beyond quality and system quality of the online retail websites to enhance
±2.58 establishing significance at p”. customer satisfaction, which in turn will lead to repurchase decision.
Both the utilitarian and hedonistic values led to customer satisfaction
traditional (offline) retailers, because they prefer to shop offline rather and considerably stimulate their repurchase intention, leading to loy­
than online. Retailers should position their stores as offering an “expe­ alty. The result further suggests that customers’ perception of utilitarian
rience” that cannot be offered via online platforms and that offers the and hedonic values will inform their preference for a particular online
store. Hence, attention to the customer specific content is very much

Fig. 6. Hypothesis path of customer retention model.

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V. Kumar and O.G. Ayodeji Journal of Retailing and Consumer Services 59 (2021) 102399

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