Determinants of E-Commerce Customer Satisfaction, Trust, and Loyalty in Saudi Arabia

Abstract

ABSTRACT Managing customer trust, satisfaction, and loyalty attitudes of e-commerce services is very important for the long-term growth of many businesses. Previous research has shown that e-retailers experience difficulty maintaining customer loyalty despite the recent rapid growth in Business to Customer (B2C) e-commerce applications. Numerous studies have empirically examined B2C e-commerce customer trust, satisfaction, and loyalty attitudes in various countries. Nevertheless, empirical research on these key constructs of e-commerce in developing Arab countries is generally limited. Thus, the main objective of this paper is to identify the factors that influence the extent to which Saudi consumers trust, are satisfied with, and are loyal towards B2C e-commerce. This study draws on previous research to build a conceptual framework which hypothesizes relationships between these three e-commerce constructs and their antecedents. A survey was conducted among B2C e-commerce customers in the eastern province of Saudi Arabia using a structured self-administered questionnaire. The findings of this study show that B2C e-commerce customer loyalty in Saudi Arabia is strongly influenced by customer satisfaction but weakly influenced by customer trust. The study limitations, implications, along with directions for further research are discussed. Keywords: B2C e-commerce, e-retailer, customer trust, customer satisfaction, customer loyalty 1. Introduction The Internet and Web development have been the most exciting developments in the field of information and communications technology in recent years. With increasing Internet access, the use of e-commerce services by the population is booming globally and locally in Saudi Arabia. The most recent estimate of e-commerce spending in Saudi Arabia (taken in 2010) is SR12 billion [The Arab Advisors Group 2009], the largest in the Arab world. According to [Wikipedia 2010], the currently estimated population of Saudi Arabia is around 28 million. It has been reported by the Arab Advisors Group [2009] that Saudi Arabia's IT sector is growing at a rate of 9.3%. Furthermore, the report showed that 3.5 million internet users or 14.26% of the Saudi population were engaged in e-commerce transactions. The results of the report indicate the country's emergence as an ideal market for e-commerce activities among the developing countries in the Middle East region. At a global level, customer loyalty (e.g. customer retention) is generally very strongly related to the profitability and long-term growth of a firm [Reichheld 1995]. Small increases in customer retention rates can dramatically increase profit [Huffmire 2001]. Loyal customers visit their favorite websites twice as often as non-loyal customers, and loyal customers spend more money [Dialscore.com 2000]. According to analysts, 35 to 40% of e-commerce website sales revenue comes from repeat visitors [Rosen 2001]. As such, it is not surprising that customer loyalty has been found to be a critical asset for e-retailers. Reichheld and Schefter [2000] found that the high cost of acquiring new online customers could lead to unprofitable customer relationships for up to three years. Consequently, it is very useful to determine the key antecedents or factors that influence customer loyalty. Previous research found that e-retailers experience difficulty maintaining customer loyalty despite the recent rapid growth in B2C e-commerce [Hoffman and Novak 2000]. Although there are certainly challenges shared by both traditional retailers and e-retailers, e-retailers face greater competition due to the fact that on the Internet a competitor is only a click away [Mithas, Ramasubbu, Krishnan, and Fornell 2007]. Therefore, attracting and retaining the attention of online shoppers who skim virtual shelves is not an easy task, and without a strong incentive for online shoppers to visit a website and without an anchor to keep customers on it, e-retailers may struggle retaining them in an increasingly competitive e-market. …

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