Role of online retailers’ post sale service in developing repurchase intention on online shopping in vietnam

FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS *** RESEARCH PROPOSAL Module: Research Methodology For Economics And Business Role of online retailers’ post-sale service in developing repurchase intention on online shopping in Vietnam Class: KTEE206.1 Intake: 60 Lecturer: Dr Pham Thi Cam Anh Hanoi, October 2022 This page is intentionally left blank TABLE OF CONTENTS ABBREVIATION Abbreviation CAGR Explanation Compound Annual Growth Rate CRM Customer Relationship Management CFA Confirmatory Factor Analysis CS ECT GDP Customer satisfaction Expectation confirmation theory Gross Domestic Product H OLS RPI Hypothesis Ordinary Least Square Repurchase intention RS SEM Research question Structural Equation Modeling I INTRODUCTION I.1 Context The past decade has seen significant growth in e-commerce transactions, which results in irreversible changes in the retail landscape The number of online shoppers is increasing annually as the availability and usage of the Internet grow steadily In Asia, the growing middle class and increasing internet penetration make this area the forefront of global e-commerce dynamism By 2024, Asia’s e-commerce revenues are predicted to reach USD 1.92 trillion, accounting for 61.4% of the global e-commerce market Developing in line with the area, Vietnam is seizing opportunities to thrive based on digital transformation in a post-pandemic future Vietnam e-commerce market is forecasted to grow at a compound annual growth rate (CAGR) of 16.3% from VND 218.3 trillion (USD 9.4 billion) in 2019 to VND 399.5 trillion (USD 17.3 billion) in 2023, according to forecasts from Global Data Obviously, online shopping is increasingly important in the Vietnam economy Robust logistics networks, a rising middle class, progressing financial infrastructure and rapid innovation are promising in driving up Vietnam’s e-commerce revenues, which will in turn prompt GDP growth and productivity Meanwhile, this asset-light business model is an opportunity for small entrepreneurs and start-ups to access larger markets, which increases competition but also makes Vietnam economies more inclusive At the same time, consumers benefit from greater choices and better price transparency Hence, it is crucial for online businesses to sustain and provide their competitive advantages in this fast-growing industry Prior studies have revealed that online business is more prone to negative customer perception due to customers’ perceived purchase uncertainty such as online retailers’ credibility, inability to inspect the product before receipt, and the physical distance between buyer and seller (Faqih, 2016; Davari et al., 2016) E-retailers also face the challenge of retaining customers who frequently store-switching (Jain et al., 2017) Thus, in the digital world, retail store operations encounter a breadth of novel complexities (Mou et al., 2018), most of which stress the paramount significance of service quality and customer perception (Vargo and Lusch, 2004; Zehir et al., 2014) To this extent, online retailers' post-sale services may alleviate customers’ prepurchase uncertainty (Heiman et al., 2001; Ramanathan, 2011) A huge amount of research on the effects of pre- and post-sale service (Bressoles et al., 2015; Ba and Johnson, 2008) has been conducted and it turned out that initial sales service received more focus of attention However, several after delivery service factors which may foster online orders including product exchanges, returns and refunds are emphasized by researchers such as Grewal et al (2004) Increasing consumers' online purchase convenience has been recorded, but repeated interruption in the process still exists (Lai et al., 2014), causing customers’ decreasing future confidence (Bettua, 1999; Saleh, 2016) In terms of customer satisfaction and retention, post-sale services can be considered as crucial as pre-sale Previous researchers note that while many retailers pay exclusive attention to access and transaction convenience (i.e., pre-sale services), customers continuously experience post-sale annoyance (Laiet al., 2014) As e-purchasing is becoming competitive (Rezaei et al., 2014), customer experience is of more importance than ever (Dailey, and ULkü, 2018) Xu et al (2017) thus highlight how e-retailers could expand the market share by putting more efforts on service, to which the results would be achievements in market goals (Zehir et al., 2014) Therefore, further research is needed to investigate the role of online retailers after sale stages in relationship and repurchase development The findings of this research affirm the positive impacts of post-sale services on a customer’s satisfaction and future confidence in a retailer Customers’ perception of after delivery services can play a key role in building a consumer-seller relationship In the age of globalization, these perceptions can expand the market share of a retailer, even during recessions Recent studies bring an important implication for management that beside product quality, customers also put their concern on retailer honesty and responsibility after sale Besides, our research indicates that customers’ satisfaction with after delivery services has a direct association with their trust in the retailer The results focus on the importance of a retailer’s past performance concerning post-sale service and illustrate that the outcome can account for positive feedback from pleased customers Therefore, e-retailers should take the interests, demands and behaviors of customers into consideration to increase their satisfaction level (Edward et al., 2009) Research on post-sale service by online retailers is not enormous, but some previous studies emphasize the importance of customer perception (Grewal et al., 2004; Lin, 2007; Khalifa and Liu, 2007; Park et al., 2012; Lai et al., 2014; Bressolles et al., 2015; Xu et al., 2017; Jeng, 2017; Dailey and ÜLkü, 2018) Also, they reveal the link between satisfaction and repurchase intention, however, not many identify the factors which influence both customer satisfaction and repurchase intention And there are very few empirical studies investigating the relationship between after delivery service and repurchase intention, how they foster each other and the implication for online retailers to better off post-sale services and improve sales Moreover, knowledge concerning certain after-sale services such as return, exchange and maintenance and their actual impacts on customer satisfaction and repurchase intention in Vietnam is limited Our research fills this gap by analyzing connections between post-sale services and customer satisfaction by investigating return, exchange and maintenance service and the extent to which they encourage continuance intention to purchase in Vietnam online market Understanding this engagement might assist online retailers to develop appropriate after sales service strategies and earn greater benefits Furthermore, in the context of e-commerce, the literature on gender differences in building a profitable customer relationship and encouraging repurchases is limited Hence, we focus on the gender differences as another objective of our study I.2 Literature review Customer satisfaction is a multidimensional and extensive notion which is essential to business longevity It is defined in Kotler 1997 as a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations Therefore, any failure to meet needs and expectations of the customers is assumed to result in dissatisfaction with the product or service So as to make customers satisfied, it is quintessential for businesses to take many different factors into account and to consider continuous evaluation and improvement of their various service activities namely addressing customer queries and complaints, meeting customer expectations, etc (Sivadas and Baker-Prewitt, 2000) Wellington (1995) divides customer satisfaction elements into product, sales, postsales, location, time, and culture Post-sales services, among numerous factors offered by businesses, has proven to be an undoubted predictor of customer satisfaction and customer retention (Kurata and Nam, 2010) Research indicates that inefficient postsale services may result in online customers’ retaliation (Arruda Filho and Barcelos, 2020) The satisfaction elements of post-sales involve maintained interest and complaint handling Complaint handling should be responsive and keep the customer advised and feel appreciated through the process Hassle-free order cancellation, easy return and refund procedures are recognized as critical tasks by business since customers expect to receive support from a transaction after purchase Return policies have become a competitive strategy (Janakiraman et al., 2016) and key element for online retailing in service recovery that can be employed to averse the risk (Heiman, 2001; Che, 1996) and customers’ uncertainty in terms of product quality Since consumers are shopping at e-tailers, that is intrinsically less experiential and leniency in the product return is thus pivotal to the retailer (Kirmani and Rao, 2000; Wood, 2001) Apart from easy product return, the allowance of customers’ exchanging purchased products is another task in post-sale service, however, its implication for business is rather different from a product returned When customers require an exchange, it is possible to continue customer interaction (Hanet al., 2017) More significantly, research shows that retailer’s post-purchase policies such as product exchange have a positive impact on customer satisfaction and customer retention (Minnema et al., 2018) In recent years, products have become increasingly sophisticated, thereby the buyer after-sale risks are escalating Therefore, many businesses now employ maintenance and repair of products such as home appliances and electronic gizmos which may require repair services during warranty period Maintenance and repair are beneficial for online retailers as it decreases the perception of risks and uncertainty as a result of being unable to inspect the products before any transaction These after-sale services including return, exchange and maintenance are key elements for online retailers to improve customer experience and decrease customer turnover A research by Copeland (1923) defined repurchase intention as repeatedly purchasing goods or services over time, or it can be considered as the willingness to buy products at a brand again where customers had past shopping experience Repurchase intention is important since finding new customers is much more costly and time-consuming than retaining existing customers, and it brings more profit to business (Chiu et al., 2009; Spreng et al., 1995; Zhang., 2011; Maharani et al., 2020) Once the customers are retained, they may introduce the brand and spread the reputation to new buyers such as their friends, relatives, which will continue to increase the company’s profitability (Pham & Ahammad, 2017; Ho et al., 2020) Expectation confirmation theory (ECT), a theory applied in marketing context, has been brought into the investigation of customers’ decisions to repurchase in the customer behavior literature (Oliver, 1993) ECT regards satisfaction as a key factor for customers’ continuance intention It explains a high amount of variance and repurchase intention (Giannakos et al., 2011), and increased customer retention might be a result of higher satisfaction level (Ittner and Larcker, 1998) However, the relationship between customer satisfaction (CS) and repurchase intention (RPI) turns out to be more complex than expected (R.E.Anderson & Srinivasan, 2003; HennigThurau & Klee, 1997; Söderlund, 2002) In the 1980s, to reach a higher CS rating was itself a target (Mittal & Kamakura, 2001) During the 1990s, it was widely realized that CS ratings lead to strategic ends, such as repurchases, that directly pose changes to profit (Jones & Sasser, 1995; Mittal & Kamakura, 2001; Reichheld, 1993; Reichheld and Teal, 1996; Stewart, 1997) Huge investment in CS has shown that higher CS does not guarantee higher repurchase rates Even after achieving a considerable level of CS, retailers have discovered that making customers satisfied is not enough (Jones & Sasser, 1995; Neal, 1999; Stewart, 1997) A study’s result has pointed out that although 85-90% of customers were satisfied with the brand, only 40% of them repurchased those products (Reichheld, 1993) To better understand the CS-RPI relationship, researchers began with the moderators For example, Rust and Zahorik (1993) chose length of patronage, while Homburg and Giering (2001) adopted personal factors such as variety seeking, age or income Some recent studies indicate that the result of the evaluation would be different between loyal and nonloyal customers A study of banking service by Mittal and Katrichis (2000) revealed that the importance of attributes differed between new and nonloyal customers Garbarino and Johnson (1999) also found that trust and commitment have effect on loyal customers but not the nonloyal ones Regarding trust, Blau (1964) stated that people’s feeling about a relationship with another party relies on their perception of fairness in exchange negotiation The process of service delivery with the interaction between customers and company can be considered as social exchange (Bowen, 1990), which is based on reciprocation and trust (Blau, 1964) In conclusion, if the satisfaction level with post-purchase services provided by e-tailers comes up with customers’ expectations, this tends to develop trust in customers as well as their retention in purchasing in the future Moreover, in the context of online purchase, there is a differentiation between females and males’ behavior as customers For example, while men tend to be more rational, women turn out to be more emotional (Wang and Kim, 2019) Further investigation also showed that females prefer higher convenience levels (Lai et al., 2014), easy accessibility and usage (King, 2009) This led to the finding of the variety in male and females’ psychological susceptibility toward online shopping (Wolin and Korgaonkar, 2003), reinforcing the concept that gender will more or less affect online buyers’ behavior and decisions Name and author of the research “Role of Online Retailers’ Post-sale Services in Building Relationships and Developing Repurcha Analysis Among Male and Female Customers” by Muhammad Kashif Javed & Min Wu “An Empirical Study of Customers’ Satisfaction and Repurchase Intention on Online Shopping in Nguyen Thu “The leniency of return policy and consumers repurchase intention in online retailing” by Yacan W “E-tailer ‫׳‬s return policy, consumer ‫׳‬s perception of return policy fairness and purchase intention” “Consumer Trust Model: The Impact of Satisfaction and E-Service Quality toward Repurchase Intention in E-Commerce” by Nanang Firmansyah & Hapzi Ali “Effects of online retailer after delivery services on repurchase intention: An empirical analysis o future confidence with the retailer” by Muhammed Kashif Javed & Min Wu I.3 The objectives of the study In the context of the growth of the internet and related firms, business witnessed a revolution in the form of purchasing Online shopping or e-commerce in general have become popular Similar to physical stores or face-to-face purchasing, online businesses always desire to enhance products and services to keep loyal customers and attract new ones Post-sale service is one of the key elements in establishing the business credibility This study is to deeply figure out the relationship between the post-sale service of online retailers and customers’ repurchase intention The objective of this study is to examine the effect of return, exchange and maintenance policies of retailers on customers' expectation and satisfaction; thus generating the desire to repurchase We aim to research customers of different genders, age groups, marital status, occupations and location to conceptualize the customers’ preference of after-sale service and level of satisfaction resulting in repurchase behavior The result and implications can be data for retailers to implement suitable post-sale service terms and adjust their existing post-sale service to fulfill buyers demand and improve market competitiveness I.4 Research questions To establish the scope and depth of the project, we operate the research based on the research questions The process of literature review, hypothesis development, data collection, analysis and evaluation is guided following the questions: RQ1: Is there a connection between post sale service and online customer satisfaction? Many relevant studies indicate the close relationship between post-sale service and customer satisfaction in many fields, for example automobile firm, manufacturing, 10 priority, all-time support and feedback reception Post-sale service is also used in terms of business marketing strategy Rapidly growing internet-based market with the emergence of a multitude of platforms forces retailers to adapt and figure out competitive advantages of their own Retailers apply the innovation in website designing, vouchers, membership discounts, to become notable in the market and pre-sale and after-sale service is worth mentioning As online shopping is somewhat related to “blind-buying”, the experience of the customers is not always exactly the same as the illustration They psychologically need an “insurance” and be assured that sellers are always willing to support This increases the belief and the motivation to purchase After-sale services in online retailing can include: User training, Online support, Warranty services, Upgrade, Free replacement In this study, we concentrate on analyzing the Return, Exchange and Maintenance service, which are the most common and approachable services in the area analyzed - Online customer satisfaction Satisfaction is the term to describe how products meet or surpass the demand of a customer In the online environment, marketers are able to better identify customer preferences and either focus their messages and products and services on meeting the needs of each individual, or allow the customer to customize the message and products and services they desire (Wind and Rangaswamy, 2001) The factors of satisfaction in online purchasing are: perceived benefits, website efficiency, meeting the needs of buyers and personal data security The customer's satisfaction can be affected by affordable price, considerate service and good usage experience Satisfaction is a key factor that every retailer wants to obtain, mostly by advancing the customer care service II.2 The level of impact of post-sale services on repurchase intention Margin from after-sale service is much larger than that of the products; therefore after-sales service is regarded as the key revenue generator in certain categories (Cohen et al., 2006) The profit generated derives partly from the Loyalty Customer who show their constant repurchase Post-sale service is a contributory factor - 12 Repurchase intention and the determinants Repurchase intention is the consumers’ motivation to continuously purchase the product or service of the same sellers or retailers Repurchase intention and repurchase activities reflex the product sales from the retailers perspective and the brand preference from the customers perspective There are several determinants of repurchase intention in online retailing firm Repurchase intention in e-commerce firm is built upon Perceived Ease of Use, Confirmation, Trust, Perceived Usefulness, Satisfaction and Perceived Enjoyment (Chao Wen et al., 2011) Previous research has pointed out the link between post-sale service, satisfaction and repurchase intention This study will further discuss the impact of post-sale service and this connection II.3 Hypotheses development A number of previous findings state that there is a considerable extent of influence of after-sale customer service on the retailers’ repurchase figure In this study, we develop some hypotheses concerning the variables of the impact of post-sale service on the repurchase tendency particularly by increasing satisfaction and use mixed methodology to testify the hypotheses H1: Good return service after sale can increase repurchase intention Return service is defined as when a buyer is unsatisfied with the product, they can return it back to the seller and receive a refund The first hypothesis discusses the product returns service (retailers support, delivery service, business policies) on purchasing experience, satisfaction, trust and repurchasing H2: Attractive product exchange terms can lead to increase in repurchasing Product exchange occurs when customers find the product unmatched their desire or erroneous, the sellers can regain the products and offer a substitution The second hypothesis discusses the level of exchange terms impact on repurchase behavior H3: Good maintenance offer increases customers' repurchase intention 13 Maintenance service includes functional checks, servicing, repairing or replacing of necessary devices, equipment, machinery and supporting utilities, Maintenance services are targeted to keep customers using the products properly without fear of breakdown or error The extent of maintenance in purchasing behavior is tested in this study III RESEARCH METHODOLOGY After researching and referring to the studies that have been done before, our team decided to use both of qualitative and quantitative methods to study about the impact of post-sale services on repurchase intention III.1 Qualitative methods: Within the scope of the topic, qualitative methods are used to observe the volatility of repurchase intention in relation to the change in three factors by collecting data and related information through questionnaire and semi-structured interviews with aim to get authenticity We choose with ten random people who participated in our survey to ask for a deeper explanation for their choices in the survey and their perceptions toward online buying III.2 2.1 Quantitative methods: Empirical Models: Previous researches used quantitative method with regression models to identify the factors impact on online customer satisfaction (Duarte et al., 2018; Lin et al., 2011; Pham & Ahammad, 2017) and repurchase intention (Hsu et al., 2014; Kim et al., 2012; Zhang et al., 2011) In this paper, we have also build a regression model with one dependent variable to test the relationship between three factors repurchase retention as follow: =+++ + In which: Dependent variable: Y: Repurchase intention in online shopping 14 Independent variables: PR: Product returns rate (%) E: Exchanges rate (%) M: Maintenance/Repair rate (%) Variables description: 2.2 The model is used to find out the dependence of the dependent variable on repurchase intention in online shopping independent variables, which are product returns rate, exchange rate and maintenance/repair rate - Dependent variable: Repurchase intention in online shopping Repurchase intention in online shopping refers to a customer's desire to purchase goods or services from a retailer's website again in the future In comparison to other aspects of loyalty, the intention to repurchase is a reliable predictor of future purchases, and this behavior will directly impact a retailer's profit Independent variables: + Product returns: Product return has been a prolonged challenge for online retailers When a customer returns a product, the shop either reimburses them or credits their account Product returns were first developed as a competitive strategy to lessen the ambiguity around product quality, but they have since evolved into a crucial step in the transaction process It is expected that the estimation coefficient of the independent variable of the product returns will be positive because then repurchase intention will increase + Exchange: Exchange services provide online merchants one more opportunity to engage with customers Customers' exchange choices may be influenced by problems with the product itself, the degree of brand compatibility, or the amount of compatibility between the replacement items It is expected that the estimation coefficient of the independent variable of the exchange will be positive because then repurchase intention will increase 15 + Maintenance/Repair: Customers place a high value on the maintenance and repair of things they purchase online, especially electronic ones Accordingly, based on a contract (i.e., consignment or/and wholesale contract) between the retailer and manufacturer, after-sale service (such as maintenance or repair) can be offered by either the manufacturer or the retailer It is expected that the estimation coefficient of the independent variable of the maintenance will be positive because then repurchase intention will increase 2.3 Data Collection and Description: This study has made use of primary data We employ a survey approach with a questionnaire to get the data Vietnamese people who have made at least one online transaction are the subjects of this survey We divide the content of the questionnaire into three parts The first part is to identify the personal information of the participants including age, gender, marital status, occupation and location Followed by the second part about their frequency of shopping online in the past six months and their willingness to repurchase if offered types of post-sale services namely return, maintenance and exchange Also, in this section, we we utilize a 5-point Likert scale to specify respondents’ level of satisfaction on a symmetric satisfaction scale for a series of statements The last part, we ask questions aiming to extract information about likely issues that customers cope with and how they expect seller’s support could be in these situations After finishing the questionnaire, we launch online form to Vietnamese people via social media like Facebook, email,… and give instruction to help participants fill out the survey We expect the outcome that the dataset has 600 respondents in month 2.4 Data analysis: We started processing and analyzing data once we had entered the data from the Google form into Excel Firstly, we translated the data from Vietnamese into English Subsequently, we imported the data into Stata software to process the data and to posttest the dataset Regression analysis in Stata will be presented as follow: 16 F= Prob > F = = Y Coefficient Standard deviation T P> 95% conf interval PR E M Intercep t III.3 Questionnaire administration After the questionnaire is finished, we will filter and remove the invalid samples Those unusable samples consist of the questionnaires that have only one answer for more than individual questions in the last section It would not ensure the reliability of the study if those unusable samples were not deleted This is because selecting only one answer for more than individual questions in the last section reflects that the respondents may read the questions cursorily After retaining valid responses, we use software to test the Cronbach alpha indicator to check the level of reliability of the total scale for the model The following three typical problems may threaten the external validity of a quantitative study (Ryan et al., 2002): population, time and environmental validity Concerning these factors, we will calculate the proportion of female and male participants, the proportion regarding the age group, marital status, location to see if there would be any large disparity in these proportions IV LIMITATIONS OF THE STUDY The small sample size (N = 600) may not explicitly represent the whole population, which poses the first limitation of the study Therefore, we encourage further research to expand the sample as well as collect more observations to guarantee the 17 representativeness of the sample Besides, there are so many other factors that can be moderators to customers’ satisfaction and repurchase intention in e-commerce context If future studies measure the effects of more independent variables, for example price or promotion, the results will provide more and better insights about the analysis Moreover, conducting an online survey leads to the mismeasurement of the respondents’ perception, thus producing the outcome without proper accuracy This limitation can be overcome by using data from detailed company records of returns and repurchases of e-tailers in future research PROPOSED TIMELINE V - September 2022: (1) Defining the problem (2) Developing the questions (3) Reviewing the literature October 2022: (1) 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Scale: – Absolutely – Probably yes – Neutral – Probably no – Absolutely not Absolutely not How likely are you to repurchase if an online store offers the return service? How likely are you to repurchase if an online store offers the exchange service? How likely are you to repurchase if an online store offers repair or maintenance service? III QUALITATIVE QUESTIONS 24 Probably no Neutral Probably yes Absolutely Why you choose online stores to purchase products?  Variety of  Better products  Better service  Low price  Others: quality What is the problem that you had when purchasing online?  Deliver  Distorted  Delayed delivery packages delivery wrong products  Refund policy  Lack of  Others: support What you expect the sellers to support when you have problems with products?  Repairing  Refund  Exchange  Others: If the seller offers good care after-sale but at a higher price than others, are you willing to purchase?  Definitely  Probably  Unwillingly What makes you want to buy again when you buy something online?  Product quality 25  Service quality  Needs  Others: 26 ... Javed & Min Wu “An Empirical Study of Customers’ Satisfaction and Repurchase Intention on Online Shopping in Nguyen Thu “The leniency of return policy and consumers repurchase intention in online. .. variable: Repurchase intention in online shopping Repurchase intention in online shopping refers to a customer's desire to purchase goods or services from a retailer's website again in the future In. .. connection in online retailing firm RQ2: To what extent can post sale service be predictive of repurchase intention? The quality of post- sale services may be important to distinguish an online