Solutions to enhance customer trust towards online shopping at Lazada Vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Hue Phuong SOLUTIONS TO ENHANCE CUSTOMER TRUST TOWARDS ONLINE SHOPPING AT LAZADA VIETNAM MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2015 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Hue Phuong SOLUTIONS TO ENHANCE CUSTOMER TRUST TOWARDS ONLINE SHOPPING AT LAZADA VIETNAM ID: 22130057 MASTER OF BUSINESS ADMINISTRATION SUPERVISIOR: NGUYEN THI NGUYET QUE PhD Ho Chi Minh City – Year 2015 SOLUTIONS TO ENHANCE CUSTOMER TRUST TABLE OF CONTENTS CHAPTER PROBLEM IDENTIFICATION 01 1.1 Overview of The Company 01 1.2 Problem Situation Analysis 05 1.2.1 Justification of problem existence 05 1.2.2 Justification of problem importance 08 CHAPTER ALTERNATIVE SOLUTIONS 10 2.1 Exploration of potential causes 10 2.2 Cause and effect map of low customer trust 12 2.3 Alternative solutions 17 CHAPTER SELECTED SOLUTIONS AND CHANGE PLAN 24 3.1 Justification of The Best Solution 24 3.2 Change Plan 26 CHAPTER SUPPORTING INFORMATION 31 4.1 Interview Transcripts and Explanation in detail 31 4.2 Customer Trust and WebQual Questionnaire 46 4.3 Grouping Result of Customer Trust and WebQual Questionnaire 59 4.4 Other information 61 REFERENCES 66 i!! SOLUTIONS TO ENHANCE CUSTOMER TRUST LIST OF MAIN FIGURES Figure 1.3: Initial cause and effect map 06 Figure 1.4: Effects and Consequences of Low Customer Trust 09 Figure 2.1: Causes of Low Customer Trust 14 Figure 2.2: The cause-and-effect map of Low Customer Trust 15 ! ii!! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! CHAPTER PROBLEM IDENTIFICATION 1.1 Overview of The Company Nowadays shopping online become a modern trend in the world because its convenience and fast Therefore, it has been growing rapidly not only in developed countries but also in developing countries According to VECITA – Vietnam E-commerce and Information Technology Agency, Vietnam has 90.73 million people and 58% in that go online to purchase in 2014 It is a significant number to show that Vietnam is also start up to grown in e-commerce now RECESS LIMITED COMPANY (“Lazada”) Main address : Floor 15th, Empress Tower, 138-142 Hai Ba Trung, Dakao ward, District 1, Ho Chi Minh City Phone number : (08) 3942 1188 VAT code : 0308808576 Fax: (08) 38 3941 4223 Lazada was born in early 2012 at Vietnam to target serving more than five millions consumers The investor of Lazada is The Group of Rocket Internet – The International Group of Information and Technology They came from Germany and have been set up at six countries over Asia now, included Philippines, Indonesia, Singapore, Malaysia, Thailand and Vietnam With all experiences, it quickly developed in 2014 with 500% traffic growth and 550% revenue growth year on year in Vietnam’s e-commerce market (Figure 1.1) Additionally, in same year, ! 1! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! Lazada has possessed 26% of market share and keep the first position in Vietnamese ecommerce market (Table 1.1) Figure 1.1 – The growth of traffic and revenue in Lazada Vietnam YOY in 2014 Source: Lazada Marketing Regional analysis 30%! 26%! 25%! 20%! 19%! 18%! 15%! 10%! 5%! 6%! 1%! 2%! 2%! 1%! 1%! 1%! 0%! ! Table 1.1 - Market share of Vietnam e-commerce in 2014 Source: VECITA report ! 2! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! However, with the data as Table 1.2 below from March 2015 to October 2015, the traffic of Lazada drop down significantly from 49.9% to 33% from July to August in total Ecommerce’s market share (Figure 1.2) Specifically, average traffic people came to Lazada website daily was about 500,000 But recently, it was about 300,000 to 350,000 sessions per day Additionally, the quantity of orders on Lazada decreased also In July, total number orders of Lazada was 1.5 millions with the basket size about fifty dollars per order, drop down 1.2 millions in August with the basket size just only about thirty five to forty dollars per order March April Month May June July August September October (2015) Lazada 36.1% 40.8% 46.3% 48.1% 49.9% 33% 31.8% 32.5% Others 63.9% 59.2% 53.7% 51.9% 50.1% 67% 68.2% 67.5% Table 1.2 – Market share of Lazada from March to August 2015 Source: Lazada Marketing Regional analysis Figure 1.2 – Market share of Vietnam e-commerce in July and August 2015 Source: Lazada Marketing Regional analysis ! 3! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! In additionally, customers’ complains about quality of products also increased and many articles, which affect badly to reputation of Lazada appeared With this situation, Lazada kept spending the Marketing expense rate consistantly or even higher from 100% to 121% (Table 1.3) to calm down social media and push the traffic, orders and net merchandise value (NMV) increase as before % MKT expenses % NMV Jun 95% 89% Jul 100% 96% Aug 121% 68,8% Table 1.3– Marketing expense and NMV rate of Lazada Vietnam from Jun and August 2015 Source: Lazada Marketing Regional analysis From that, we could see there is a existent problem in Lazada Vietnam organization which leads to symptoms of decreasing traffic, order and NMV strangely, also many complains and negative articles The crisis mission now is to find out the real problem that existed in the organization to pull back customers to purchase on Lazada website That is the only way to help increase NMV of company to remain its first rank in the e-commerce market ! 4! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! 1.2 PROBLEM SITUATION ANALYSIS 1.2.1 Justification of problem existence To understand how internal department acknowledge about the problem of organization, author started to interview nine employees in Lazada, included, one in team Sale, one in team Operation, one in team LEX, one in team Commercial, and two in team Customer Service, one in team Finance Accounting and finally two in team Marketing Moreover, with three more managers, Head of Marketing, Head of Campaign and Head of Partnership in Lazada to find out how the level C group and consolidate the problem of company (refer to session 4.1-Interview Transcripts in chapter 4) The result came to Figure 1.3 – Initial cause and effect map as below In three main factors such as more competitors, investing Marketing expenses ineffectively and decreasing purchase intentions from interview internally, author continuously choose the main factor to discover the real problem of the company, which is the most important and possible to solve at Lazada now Firstly, to more competitors’ factor, this problem is external problem with certainty of nature in the marketplace While there is existent need in society, it will appear suppliers and competitors, too It could not be exceptional with the rapid speed development of Vietnam e-commerce nowadays It is also external problem of all organizations, not only Lazada To solve problem in organization, it could not be designed in this short-term research It needs to collect data for general e-commerce situation to decide Secondly, to investing marketing expense ineffectively, author could not decide exactly at her position Partnership Manager in Marketing This is a overall structure topic, which involved not only level C of company but also International Group – Rocket Internet of Lazada’ strategy Likewise, about Marketing expenses, it will be necessary to a detailed plan with more analysis ! 5! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! and diagnosis And certainly, it will mostly depend on the fact of investment situation for Lazada Therefore, the author finally and carefully decided to select Decreasing purchase intentions/ behaviors factor group to the research In this group, Low Customer Trust is the central problem, which many Lazada customers pay more attention to solve in this research Figure 1.3– Initial cause-and-effect map (Detail of Figure 1.3 are explained in chapter 4) More competitors in VN e-commerce recently Wrong target customers Don’t have VIP Loyalty Program Buying Assurance Return Multi Organizational policies Unrealistic images of products Fake products Decreasing Quality of product Discount price still expensive ! Customers’ privacy were divulged Investing MKT expenses ineffectively Long-time refund order Drop down traffic and NMV Long-time delivery Low customer trust Orders were canceled because of resellers and out of stock 6! Decreasing purchase intentions / behaviors SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! o Completed disagree / Hoàn tồn khơng đồng ý o Disagree / Khơng đồng ý o Average / Bình thường o Agree / Đồng ý o Completed agree / Hoàn toàn đồng ý Q26 You purchase because interest and attractive advertising to buyers / Anh/chị mua hàng quảng cáo trang X hấp dẫn, lơi * o Completed disagree / Hồn tồn khơng đồng ý o Disagree / Không đồng ý o Average / Bình thường o Agree / Đồng ý o Completed agree / Hoàn toàn đồng ý Q27 You purchase because return policy is good / Anh/chị mua hàng sách đổi trả X tốt * o Completed disagree / Hồn tồn khơng đồng ý o Disagree / Khơng đồng ý o Average / Bình thường o Agree / Đồng ý o Completed agree / Hoàn toàn đồng ý Q28 You purchase because refund process is fast and easy / Anh/chị mua hàng q trình hồn tiền hủy đơn hàng X nhanh chóng dễ dàng * ! o Completed disagree / Hồn tồn khơng đồng ý o Disagree / Khơng đồng ý o Average / Bình thường o Agree / Đồng ý 54! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! o Completed agree / Hoàn toàn đồng ý Q29 You purchase because guarantee policy is still execute by producers and exclusive distributors / Anh/chị mua hàng sách bảo hành sản phẩm mua trang X nhà sản xuất phân phối chịu trách nhiệm * o Completed disagree / Hồn tồn khơng đồng ý o Disagree / Không đồng ý o Average / Bình thường o Agree / Đồng ý o Completed agree / Hoàn toàn đồng ý Q30 You purchase because reputation of vendors who supply products on website to sell / Anh/chị mua hàng danh tiếng nhà bán hàng tham gia trang X * o Completed disagree / Hồn tồn khơng đồng ý o Disagree / Khơng đồng ý o Average / Bình thường o Agree / Đồng ý o Completed agree / Hoàn toàn đồng ý Q31 You purchase because of quality of product on website X / Anh/chị mua hàng chất lượng sản phẩm trang X * ! o Completed disagree / Hoàn tồn khơng đồng ý o Disagree / Khơng đồng ý o Average / Bình thường o Agree / Đồng ý o Completed agree / Hoàn toàn đồng ý 55! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! Q32 Please inform which Campaign attract you on the website X? Vui lòng cho biết chương trình trang X làm anh/chị muốn mua hàng? o Direct discount / Giảm giá trực tiếp o Give gifts / Tặng quà o Cash back Campaign / Chương trình hồn tiền o New card activation with hot promotions / Chương trình mở thẻ với ưu đãi hấp dẫn o Installment with 0% interest / Trả góp phần trăm lãi suất o Discount Vouchers of X / Chương trình tặng Voucher giảm giá X o Discount Vouchers of other partners with X / Chương trình tặng Voucher giảm giá đối tác với X o Mục khác: Q33 Please inform which kind of partner you like on website X? Vui lịng cho biết anh/chị thích đối tác X? ! o Schools / Universities / Centres / Trường học o Merchants / Vendors to sell on website X / Các nhà bán hàng trang X o Cinemas / Rạp chiếu phim o Transportations such as airlines, cabs, … / Các phương tiện vận chuyển máy bay, taxi o Payment gates / Các cổng toán o Food and beverage stores / Các nhà hàng ăn uống, quán cafe trà sữa o Mobile agencies : Viettel, Mobiphone, … / Các tổng đài điện thoại : Viettel, Mobiphone, … o Banks / Các ngân hàng o Finance institute / Các tổ chức tín dụng, tài chính, vay lãi suất tiêu dùng o 10 Insurance companies / Các công ty bảo hiểm o Mục khác: 56! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! Q34 Please inform which channels did you know about website X as below? Vui lòng cho biết anh/chị biết đến mua hàng X từ kênh truyền thông sau đây? o PR articles / Các báo o Advertising on other famous website / Các quảng cáo trang điện tử tiếng khác o Google Display Network / Các quảng cáo tìm kiếm Google o Local Display Network / Các quảng cáo trang địa phương o Partners of X / Các đối tác X o Competitors of X / Các đối thủ cạnh tranh X o Friends or relatives work in X / Ambassadors / Bạn bè, người thân làm việc X / Đại sứ thương hiệu X o LCD, TVC on tivi cast, LCD in elevators / Các LCD, TVC truyền hình , hình thang máy o You work in X / Làm việc X o Mục khác: Q35 Please inform which catergory did you most favourite and usually buy on X website? Vui lòng cho biết anh/chị thường xuyên mua ngành hàng sau X nhất? ! o Health and beauty / Ngành hàng sức khỏe & sắc đẹp o Fashion and Travel / Ngành hang thời trang & du lịch o Watches, Jewelries and eyeglasses / Ngành hàng đồng hồ, nữ trang hay mắt kính o Mobile phone and Tablets / Ngành hàng điện thoại máy tính bảng o TV, video and sound devices / Ngành hàng TV, Video âm o Laptops / Ngành hàng máy vi tính laptop o Furnitures / Ngành hàng đồ gia dụng o Cameras / Ngành hàng máy ảnh & máy quay phim o House living tools / Ngành hàng nhà cửa & đời sống o 10 Mothers and babies / Ngành hàng mẹ bé 57! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! o 11 Automobike / Ngành hàng ô tô xe máy o 12 Sport and out-doors / Ngành hàng thể thao & dã ngoại o 13 Bags / Ngành hàng ba lô & túi xách o Mục khác: Q36 Please inform which trait that you like the most of customer service of website X? Vui lịng cho biết anh/chị thích đặc điểm dịch vụ chăm sóc khách hàng trang X nhất? o Fast / Nhanh o Enthusiasm / Nhiệt tình o Feed back appropriated and suitable / Giải đáp thích hợp, hợp lý o Mục khác: Q37 Please inform which trait that you like the most of product on website X? Vui lòng cho biết anh/chị thích đặc điểm sản phẩm trang X nhất? ! o Exclusive / Độc quyền o Good to use, good quality / Sử dụng tốt o Right with image photos on website / Đúng với hình ảnh o Mục khác: 58! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! 4.3 ! Grouping Result of Customer Trust and WebQual Questionnaire Sending link of questionnaires and hard copy to take survey, author received back ninety two questionnaires have results, in that Fifty six questionnaires by online and thirty six questionnaires by offline, All interviewees are from eighteen to forty four year olds, with sixty-seven female with all types of income, education levels and careers, live in HCM City, Ha Noi City and Binh Duong province Sixty-four have experiences of buying online, twenty-nine persons used to buy on Lazada, in that Fourteen persons don’t believe to buy on Lazada.vn because image of product, eighteen to twenty persons afraid of privacy / security, and twenty three people afraid use cards method payment, Fifteen persons will be affected by purchaser experiences, Twenty one persons buy because e-commerce’ convenience, eleven people because its fast, fifteen persons because free shipping fee, all twenty nine persons who buy on Lazada agreed or Average with the ease of choosing products on website and fourteen persons likes to buy on mobile apps Fifteen persons buy because the price cheaper, twelve persons thought Lazada has many deals, but twelve others are Average with that According to results, customers have their opinions about what kind of deals on Lazada which they like the best ! 59! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! Twenty-two persons buy because Lazada WEBQUAL and Customer service Only ten - fifteen persons think return policy on Lazada is good, With only eight persons evaluate advertising of Lazada is good, twelve in twenty persons believe reputation of vendors on Lazada.vn, Fifteen in twenty persons justify quality of product is higher for purchasing decisions, Customers mostly want Lazada has discount directly or free gifts promotions, And most of them want to serve fast and good product quality with right images for purchasing ! 60! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! 4.4 ! Other information Table 4.4 - THE WEBQUAL 4.0 INSTRUMENT ( Gazal Punyani et al., 2015 ) Category WebQual 4.0 Questions I find the site easy to learn to operate My interaction with the site is clear and understandable I find the site easy to navigate I find the site easy to use Usability The site has an attractive appearance The design is appropriate to the type of site The site conveys a sense of competency The site creates a positive experience for me Provides accurate information 10 Provides believable information Information Quality 11 Provides timely information 12 Provides relevant information ! 61! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! 13 Provides easy to understand information 14 Provides information at the right level of detail 15 Presents the information in an appropriate format 16 Has a good reputation 17 It feels safe to complete transactions 18 My personal information feels secure Interaction Quality 19 Creates a sense of personalization 20 Conveys a sense of community 21 Makes it easy to communicate with the organization 22 I feel confident that goods/services will be delivered as promised Overall Impression ! 23 Overall view of the Website 62! SOLUTIONS TO ENHANCE CUSTOMER TRUST ! ! Table 4.5 - Initial WebQual dimensions ( Eleanor T.Loiacono et al., 2002 ) According to Eleanor T.Loiacono (2002), author collected 307 undergraduates with thirty-six questions in the questionnaire to test twelve key concepts of WebQual (refer to Table 4.5 in chapter 4) The Cronbach alpha ranged from 0.72 to 0.93 Predictive validity of the test ability of WebQual to Web visitor intention to purchase on Website was 0.56 and 0.53 (both with p