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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
5
Online survey Selection criteria
Buy for the last 6 months Made purchases online Buy in M.video or Mediamarkt
01
Surveymonkey.com 34 questions
02 03
Publication
Social networks
By e-mail
04
Sampling technique
Snowball effect (Facebook, VK, LinkedIn)
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
Research Model
6
Hypothesis: Factors and its attributes have positive impact on E- Satisfaction, E-loyalty and E-trust on consumer electronics market in Russia
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
Statistical Tools
7
“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.
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
*Alpha values were taken at an academic average 0.05 (95% confidence level).
Respondents Info
8
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%)
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
200 responses
192 of them - valid
Findings: Regression AnalysisAll factors turned out to be important for consumers of both online stores.
9
WQA group Only a few of the items proved to be valid. M.Video assortment, usability, informativeness Mediamarkt assortment
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
Regression analysis
10
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
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
Significance level
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 11
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.
12Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
13
Thanks for your attention!
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
14Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
Results: Factors affecting Loyalty in e-commerce
Results practically confirm theoretical assumptions that satisfaction is the basis of loyalty
15Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia
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.
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 16
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
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 17
FactorsinfluencingCustomerLoyaltyforGlobalandDomesOcE-RetailersinRussia 18
Types of Loyalty
Companies overview
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 19
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
FactorsinfluencingCustomerLoyaltyforGlobalandDomesOcE-RetailersinRussia 20
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
FactorsinfluencingCustomerLoyaltyforGlobalandDomesOcE-RetailersinRussia 21
M.video Needs & gaps analysis
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 22
Mediamarkt Needs & gaps analysis
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 23
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 24
Dotted line (zero gap) - boundary between positive and negative offsets
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 25
Findings: Personalization
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 26
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
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 27
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
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 28
Our analysis M.Video Gap -9.8 Mediamarkt 0
Findings: Importance index is higher for local store
Factors influencing Customer Loyalty for Global and Domestic E-Retailers in Russia 29
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