Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia

Factors influencing Customer Loyalty for Global and Domestic

E-Retailers in Russia

Kseniia Udovitskaia Student

Research Advisor

Prof. Elena Panteleeva

Structure

Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 2

Customer & e-loyalty

Factors influencing loyalty Measurements of

loyalty

Overview of e-commerce market

Research methodology

E-survey results

Conclusions Further research

directions Recommendations

for two retailers

Problem Statement

3

Global B2C

e-commerce turnover

\

High Competition

Worldwide and in Russia

+ 23.3 % 2014

+ 19.9 % 2015

+ 17.5% 2016

Global volume 2.6 tn

h%ps://www.ecommercewiki.org/wikis/www.ecommercewiki.org/images/5/56/Global_B2C_Ecommerce_Report_2016.pdf

$ 17 bln (2014) Russian retail market volume (2015)

$12 bln

Low switching costs

One click of the mouse needed to switch to a competing retailer

“In the physical world, if I make a customer unhappy, they’ll tell five friends, on the Internet they’ll tell 5,000”. Poleretzky

generate recurring profits

create positive word-of-mouth

Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia

The Thesis

Object: define factors influencing customer loyalty to online stores of global and domestic consumer electronics companies.

Subject: two major consumer electronics companies that operate on the Russian market: Mediamarkt (global) and M.video (domestic).

Defined Area: consumer electronics (the second largest online purchasing category after “books & music” worldwide).

Research question: “What are the factors influencing loyalty in e-commerce on consumer electronics market that lead to surpassing the competition”?

4Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia

Data Collection Process

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Online survey Selection criteria

Buy for the last 6 months Made purchases online Buy in M.video or Mediamarkt

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Surveymonkey.com 34 questions

02 03

Publication

Social networks

By e-mail

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Sampling technique

Snowball effect (Facebook, VK, LinkedIn)


Research Model

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Hypothesis: Factors and its attributes have positive impact on E- Satisfaction, E-loyalty and E-trust on consumer electronics market in Russia


Statistical Tools

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“Top 2 Box” framework 2 rating scales

Gap = Satisfaction - Importance

Regression analysis* Gaps Analysis NPS Index

NPS = % of Promoters - % of Detractors /

Total no of respondents.


*Alpha values were taken at an academic average 0.05 (95% confidence level).

Respondents Info

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0%

50%

100%

Bachelors or Master's degree

High school College Undergraduate

76%

24%

0% 20% 40% 60%

46-65

31-45

23-30

18-22

Shopping experience in e-stores

4+ years (58%)

3-4 years (20%)


200 responses

192 of them - valid

Findings: Regression AnalysisAll factors turned out to be important for consumers of both online stores.

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WQA group Only a few of the items proved to be valid. M.Video assortment, usability, informativeness Mediamarkt assortment


Regression analysis

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Findings: Needs & Gaps Analysis

Positive buying experience of WQA:

only personalisation

all WQA except informativeness and personalisation

Poor assortment International retailer - slightly wider range of products.

Perceived service quality the “bottleneck” for both online stores

Mediamarkt weaknesses: order management, assurance. M.video - order management, assurance, and customer service.

Importance index was higher for local than for international store.

M.video clients are more demanding

M.Video 91

Mediamarkt 87


Significance level


Net Promoter Score Analysis

M.Video - 2 Mediamarkt - 22

Positive NPS index - there is the potential for increasing the client base due to loyalty. The client leads to another client. A zero/negative index - there is no such potential, and on the contrary (for large negative values) there is a risk of client outflow. Companies with extra large NPS index +50 - client base has a tendency to grow by itself purely via mutual recommendations, without the need of advertising.

Average globally: 40

Overall level of customer loyalty

Apple: 72

Recommendations

•  Run express questionnaires after purchase completion by rating their intention to purchase again on this website.

•  Use highly usable search function with filters of finding the right product.

•  Improve the service quality in accordance to customer requests. Service offerings should allow to receive ordered goods at convenient point of sales.

•  All active elements of the website must work properly, extra attention to the basket.

•  A lot of work should be done offline. The system of ordering, delivery time and quality, speed of order receipt, security guaranties are the key issues on the today’s agenda.

•  Work with feedback on the Internet and eliminate client dissatisfaction.


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Thanks for your attention!



Results: Factors affecting Loyalty in e-commerce

Results practically confirm theoretical assumptions that satisfaction is the basis of loyalty


Further research directions

•  to extent size of respondents base

•  to make an assessment of competitive websites, including the Chinese platform aliexpress.com. It seems that such analysis can provide interesting results in terms of why Russian users switch to Chinese suppliers.

•  to expand the range of factors and issues associated with the online order placement and customer service, in particular goods pickup at points of sale (PoS), convenience of self-delivery locations, staff benevolence and ability to resolve complicated issues, queue length at the cash register, packaging, ability to test the goods before purchasing, exchange and return services.

Theory: Customer & e-loyalty

Customer loyalty (Oliver, 1999) — "a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, despite situational influences and marketing efforts have the potential to cause switching behavior"

E-loyalty (own elaboration) - consumer behavioural and attitudinal commitment to make repeated purchases, obtain positive emotions and satisfaction through the company’s website and other brand presence touch points. Elements - frequency of purchases, favourable attitude, behavioural aspects, possibility of switching to a competitor, awareness of brand attributes, emotional attachment, satisfaction, and commitment.


1940 First mention of CL

Theory: E-satisfaction and e-trust

E-satisfaction (Kotler, 2010) - a difference between product’s perceived performance and actual performance resulting in feeling of pleasure or disappointment.

Antecedents of customer satisfaction (1) Website quality

(2) Perceived service quality (customer service, assurance and order management)

Customer Trust — relation between trustee and a product.

Customer loyalty measurements

Repeated purchase intention, switching costs, inertia, word-of-mouth, intention to recommend


FactorsinfluencingCustomerLoyaltyforGlobalandDomesOcE-RetailersinRussia 18

Types of Loyalty

Companies overview


Data Insight and Ruward. E-Commerce Index Top-100 2016

Mediamarkt (Media-Saturn-Holding GmbH)

800 stores in Europe (62 physical

shops in 28 cities in Russia) 65,000 employees

Turnover 21 bln eur

M.Video

24 years, 382 stores 162 cities of Russia 18,000 employees

Turnover 153 bln of rubles (9 months in

2016)

12 new stores in 2016 24-hour support center

8,000 unique visitors daily

28,000 unique visitors daily

Mvideo — leader with 20.4 mln rub of online sales MediaMarkt - 6th place with 7.38 mln rub online turnover

lower brand awareness


1) Valvi A.C. & Fragkos K.S. Critical review of the e-loyalty literature: a purchase-centred framework. 2) Yang J.M. & Kim Z.D. Customers’ perceptions of online retailing service quality and their satisfaction

Literature search approach

•  Concept-centric approach for presenting information in simple and convenient format

•  Four key steps: keyword search, backward search, forward search, and concept matrix

•  Sources: Google, Yandex, Scopus, Web of Science

•  Conceptual basis of our research is to refer to the scientific works of Srinivasan S. (2002)

•  Gave a definition of e-loyalty in the retail industry and determined significant factors affecting it


M.video Needs & gaps analysis


Mediamarkt Needs & gaps analysis



Dotted line (zero gap) - boundary between positive and negative offsets

Findings: Personalization


M.Video - uses the history and statistics of customer’s online store activity (individual shopping advice, personal discounts, selected products, promo codes). Show high demand for a selected product by highlighting: a)  number of people looking through the product b)  number of people already purchased this product c)  indication of time, date and location of last purchase Mediamarkt customers: Do not receive enough personalisation offerings on the website.

Findings: Service quality in Mediamarkt


Customer service — negative gaps in order management and assurance. Customers seem to give more credit to the international brand, but expect to adopt better service quality standards on local market. Feeling of assurance is higher with the local store - Lower assurance measurement can be true for businesses that do not have their representative or service offices present in the country of operation. -  Clients require a clear feedback path using a local phone and

native speaking support specialists. Using the subcontractors for logistics or the third party service providers has to be carefully managed.

-  Huge gap in Mediamarkt’s order management and delivery quality. Historically from all the peers present on Russian market Mediamarkt was one of the last stores to provide door-to-door delivery in 2013.

Findings: Assortment M.video - problem area

Metacommerce index Mediamarkt 4.8/10 M.video with 4.4/10


Our analysis M.Video Gap -9.8 Mediamarkt 0

Findings: Importance index is higher for local store


There is a space for Mediamarkt to keep customers even if the quality of services not at the highest level.

The majority of survey respondents were active consumers with a considerable shopping experience of the Russian store. Long-time online store clients have developed stricter services requirements.

International aspect

Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia

Retail

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