Service Quality and Price Perceptions by Internet Retail Customers

Abstract

One of an Internet retailer’s managerial goals is to create positive perceptions of retail prices among online customers. This study examines the relationship between customer perception of Internet retailers’ service quality and customer price perception. Unlike previous studies, this study extends the scope of service quality to three stages of service interaction: first, a retailer’s home page presentation; second, the overall retail website, which we call a retailer’s order-procurement quality; and third, the retailer’s order-fulfillment quality. To that end, this study samples 516 Internet retailers whose service quality information in their separate service interaction stages is available on their home pages and on a well-known rating site, Bizrate.com. The results verify a clear connection between service quality perception and price perception along the chronological flow of service interaction. In particular, both the presentation of an effective home page web format and the customer perception of a retailer’s order-procurement quality are significantly associated with customer price perception. The price perception is also significantly associated with order-fulfillment quality perception. These findings suggest that the configuration of customer perceptions of both service quality and price stands out as an important subject for managerial attention.

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