How Do Customers Judge Quality in an E-tailer?

Online retailers must distinguish themselves in three aspects of a transaction: customer interaction with the Web site, delivery of the product and ability to address problems when they occur

Consumers’ ability to go online to search for and purchase products has dramatically changed the way organizations are managing customer relationships. E-commerce has effectively minimized two of the biggest hurdles to providing a quality experience in a retailing environment. First, it has minimized “heterogeneity” by providing a far more consistent experience to every customer. Unlike a service employee, a Web site never arrives late to work, and it is never in a bad mood or inattentive. A Web site never forgets to sell related products or keep records of previous purchases along with customers’ purchase preferences. (Though e-commerce has reduced some of the heterogeneity in retail experiences, it has not eradicated it. Web sites can lose server connections and experience technical problems that can have a negative impact on customers.) E-commerce has also reduced “perishability” in the retail experience by allowing shopping and product purchases 24 hours a day, seven days a week. With so many customers who consider themselves to be “time starved,”1 online organizations are now allowing the customer to decide when a transaction will occur.

E-commerce clearly has some advantages over brick-and-mortar retailing, but how does one online retailer distinguish itself from another? Early research in e-commerce projected that online retailing would spiral into a never-ending price war, while recent researchers have discovered that customers are more likely to pay higher prices to online retailers of high quality that they trust.2 We must ask, How do customers evaluate quality with online retailing? What are the specific aspects of an online transaction that customers value and use to distinguish one Web site from another? We explored these issues by surveying customers who had recently engaged in an online retail transaction to determine how they evaluate the quality of their experiences with online retailers. The results demonstrated that customers’ perceptions of quality and satisfaction with online purchases depend upon three things: interaction with the Web site, delivery of the product and how prepared retailers are to address problems when they occur. Of the three, product delivery has the strongest influence on customers’ satisfaction and future purchase intentions. (See “About the Research.”)

About the Research »

1. N. Koiso-Kanttila, “Time, Attention, Authenticity and Consumer Benefits of the Web,” Business Horizons 48, no. 1 (2005): 63–70.

2. E. Brynjolfsson and M.D. Smith, “Frictionless Commerce? A Comparison of Internet and Conventional Retailers,” Management Science 46, no. 4 (2000): 563–585.

3. F.D. Davis, R.P. Bagozzi and P.R. Warshaw, “User Acceptance of Computer Technology: A Comparison of Two Theoretical Models,” Management Science 35, no. 8 (August 1989): 982–1003.

4. J. Wind and A. Rangaswamy, “Customerization: The Next Revolution in Mass Customization,” Journal of Interactive Marketing 15, no. 1 (winter 2001): 13–32.

5. M.D. Odom, A. Kumar and L. Saunders, “Web Assurance Seals: How and Why They Influence Consumers’ Decisions,” Journal of Information Systems 16, no. 2 (fall 2002): 231–250.

6. T.L. Esper, T.D. Jensen, F.L. Turnipseed and S. Burton, “The Last Mile: An Examination of Effects of Online Retail Delivery Strategies on Consumers,” Journal of Business Logistics 24, no. 2 (2003): 177–203.

7. C.C. Bienstock, J.T. Mentzer and M.M. Bird, “Measuring Physical Distribution Service Quality,” Journal of the Academy of Marketing Science 25, no. 1 (winter 1996): 31–44.

8. B.B. Holloway and S.E. Beatty, “Service Failure in Online Retailing: A Recovery Opportunity,” Journal of Service Research 6, no. 1 (August 2003): 92–105.