How Should E-Commerce Be Designed to Enhance Customer Satisfaction & Loyalty?

Subject: E-Commerce
Pages: 48
Words: 14657
Reading time:
53 min
Study level: Undergraduate

Introduction

Background

During the last two decades the information technology industry has focused upon moving in the direction of developing the World Wide Web. Information systems that make use of www technology that is delivered through intranet or the Internet have now become increasingly prevalent across the world. In any given country there are a large number of organisations that deploy Information Systems into the World Wide Web including government departments, banks and other services providers. These entities have been using the World Wide Web as strategic business tools that support their present functions or provide low-cost solutions to deliver new products and services. Because of such developments, businesses have been utilizing the Internet with immense speed in terms of their sales and other business transactions and such an environment is now widely understood as e-commerce.

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There have thus been dramatic changes in the business world brought about by technological advancements of the 21st century. Presently, business executives and clients are equally overwhelmed by futuristic scenarios of business assisted by a click of the computer mouse (Kalakota & Whinston, 1997). A once ambiguous notion found only in mythical and science fiction, e-commerce has not only asserted its influence in global business scene, but has also become one of the most sought after tools of engaging in contemporary business. Businesses the world over have experienced the excitement of this new phenomena as it manoeuvred its way through the various phases of growth to reach its present stage. In some countries, the sprint to experience e-commerce during the formative years of its growth was equated to a gold rush, with businesses investing profoundly in everything starting with an ‘E’ in the hope of reaping maximum profits from the opportunities presented by the technology (Korper & Ellis, 2001).

The fact that businesses have benefited from embracing the e-commerce platform can never be denied. It can be argued without fear of contradiction that businesses continue to reap maximum benefits in both business to consumer (B2C) and business to business (B2B) market segments (Korper & Ellis, 2001). The e-commerce framework has allowed organizations to not only transact business without having to worry about time or distance barriers, but also expand their clientele without having to spend huge amounts of money in advertisement costs (Burkey et al, 2007). Apart from offering a wide allay of benefits to companies, e-commerce must have provisions that cater for the needs, values, and perceptions of customers (Andam, 2003). Indeed, according to the author, e-commerce frameworks must never be overly interested in pursuing and fulfilling the interests of organizations at the expense of customers.

This study aims to focus on two countries – UK and UAE – in an attempt to evaluate how e-commerce frameworks guarantee customer satisfaction. The Office for National Statistics (ONS) reveals that more UK-based organizations and customers are adopting the use of technology to transact business. According to ONS (2009), “…the proportion of [UK] businesses using the internet to sell rose from 14.4 percent in 2007 to 15.2 percent in 2008. The proportion using a website for their sales was 12.6 percent in 2008” (p. 1). The situation is not any different in the United Arab Emirates (UAE). Indeed, Dubai is one of the few Arab nations to fully embrace e-commerce as the preferred platform for transacting business (Dutta & Coury, n.d.)

The growth that has taken place in the online market is much greater than the development in conventional retail markets. People have now begun to shop online and as the global economy shows signs of recovery increasing competition will be the main factor that businesses will consider in carrying out e-commerce activities. In fact, e-commerce has become the main basis for businesses to achieve long-term sustainability and growth.

Customer loyalty has been on the minds of most market else and companies have been spending huge amounts on improving customer relationship with the objectives of building customer loyalty. It appears to be strange that the notion of customer loyalty is not recognized by consumers. In the viewpoint of most organisations the issue of brand or customer loyalty is plainly seen from the perspective of the previous in the context of repeated purchases. In view of such attitudes many companies primarily aimed at enhancing the patterns of repeated purchasing amongst present customers. In support of such efforts marketers have devised predictive models in showing the significant impact on profitability of the percentage of repeat purchases made by existing customers.

Such issues attain a great deal of importance for organisations that conducted business to e-commerce in view of the problems associated with taking initiatives for customer relationship management. The one-to-one concept of marketing has generated considerable interest in coming closer to customers. In e-commerce, the concept is grounded on information technologies as being important means that can capture the required customer preferences that further leads to repeat purchases by customers through easy means of transactions. Theorists have cited typical examples of customer service whereby service providers had to answer several questions to satisfy the customer. For instance while checking into a hotel a guest has several questions in mind that reveal his true preferences. E-commerce allows businesses to capture customer attitudes and preferences through the click of a mouse, which further enhances convenience and the customer tends to be satisfied in having his preferences complied with by the service provider. It is also known that customer preferences usually remain the same and once they are recorded both the service provider and the customer are not required or through the same process repeatedly whenever the customer checks into the same chain of hotels.

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Bigger organisations that have larger networks in terms of locations where lies the importance of e-commerce because all their units can access customer information from their central database, which are attained is possible by investing in technology.

Study objectives

This particular study will focus on how e-commerce applications could be designed to enhance customer satisfaction and loyalty. The study aims to achieve this objective by comparing e-commerce platforms and frameworks used in UK and UAE, and how well they are able to respond to the needs and requirements of customers. The following will be the specific objectives:

  1. To critically evaluate the strategies put in place by companies in both countries to ensure customer experience while transacting business using e-commerce protocols
  2. To critically evaluate the main challenges that companies face in attempting to balance the intricate relationship between maximizing technology use to achieve more profits and enhancing the customer experience in e-commerce transactions.

Problem Statement

Many seminal studies have been conducted about the viability and usefulness of businesses that integrate e-commerce frameworks into their systems. Indeed, we now know about the many benefits and opportunities that this revolutionary component of technology has brought into the business world (Burkey et al, 2007). According to Andam (2003), “…e-commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development” (p. 5). Business relationships have been completely transformed, courtesy of e-commerce, and the benefits of incorporating the concept are hard to comprehensively exhaust from the organization’s perspective. But while many systematic studies have been conducted over the years to show how businesses continue to benefit from e-commerce, few if any have focused on how the e-commerce applications influence customer satisfaction and loyalty. Information is lacking on customers’ experiences in e-commerce vis-à-vis other traditional methods of purchasing, products and services. It is this gap that this study will seek to fill.

The attractiveness of e-commerce is evident from the fact that transactions by way of online retailing had increased from $96 million in 2003 to $230 billion in 2008 as researched by Forrester Research (Forrester, 2003). More specifically, in the USA, the aggregate value of online retail business was almost ten per cent of the total retail sales volumes during 2008. Similarly, online sales presently make up for per cent of the total retail sales in the UK and in spite of the growth in online retail sales statistics have revealed that about 67 per cent of the transactions that are made on the World Wide Web are not concluded (Cohen, 1999). Research has also revealed that only 35 per cent of people transact online are satisfied with the transactions, which makes customers change their purchasing patterns to other options (Chatham, 2002). Amongst the incompleted transactions almost half had to be pursued with phone calls to the customer service Department of the firm or contact had to be established by way of other offline actions. As a result farms have to bear extra costs on call centre because of enhanced call volumes that have been reported to increase by up to 65 per cent (Millard, 2001). Thus, although the number of Internet customers or increasing such figures clearly revealed that customers are not much satisfied with e-commerce. They are not being given adequate support in completing their transactions because of which the defection rate is proving to be quite high.

Significance of Study

The value of this study cannot be underestimated. It is within our realms of understanding that e-commerce has necessitated companies to transact business in an environment that is neither limited by physical boundaries nor geographical distance (Korper & Ellis, 2001). Critics of this platform, however, have expressed concern that the platform serves to diminish customer satisfaction and loyalty by taking away the physical contact that most managers have traditionally relied on to establish long-term relationships with customers. This study aims to come up with a body of knowledge on how companies are re-designing their e-commerce platforms to secure their clients and customers from stiff competition. This information will critically assist start-up businesses as well as established companies to maximize their potential while ensuring their customers are always satisfied with the e-commerce services offered. It is imperative to fill the information gap that exists between e-commerce platforms and customer satisfaction since, according to Hill & Alexander (2000), no business can survive without customers regardless of the type and level of technology used.

Hypothesis

The hypothesis of this paper is that the prospects of e-commerce are considerably influenced by a number of obstacles that have created hurdles in dissuading potential users from freely transacting on the internet. The same situation holds for e-commerce in the UK and UAE, which are the two countries that this research has analyzed. However this paper has carried forward the hypothesis in highlighting that e-commerce applications can be designed to increase customer satisfaction and loyalty in addition to creating viable opportunities for businesses.

Structure of the Study

This dissertation is divided into six chapters. A summary of each chapter is described below:

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CHAPTER CONTENT
Chapter 1:
Introduction
This chapter outlines the background of How should e-commerce be designed to enhance customer satisfaction and loyalty in the context UAE and UK e-Commerce frameworks. This chapter also outlines the aim and objectives of this research paper
Chapter 2:
Literature Review
This chapter reviews previous studies in the field of new e-commerce, brand loyalty; consumer behaviour and the relationship between them are discussed in detail in the context of UAE and UK e-commerce.
Chapter 3:
Methodology
This chapter describes the research methodology used to collect sample data needed to conduct this research study. Research strategies are discussed in detail and finally the observations of the findings are presented.
Chapter 4:
Discussion
This chapter presents the findings in chapter 3 in relations to literature reviews in chapter 2
Chapter 5:
Conclusion
This chapter summarizes the research from the findings collected in this study. Final conclusion is presented in the context of the e-commerce in the UAE and UK.
Chapter 6:
Recommendations
In this chapter recommendation is given to businesses that are dealing in e-commerce in the two countries.

Literature Review

Introduction

This particular study will attempt to evaluate how e-commerce applications should be designed to enhance customer satisfaction and loyalty. Technology is one of the key engines for growth not only in the field of business but also in every single sphere of life (Andam, 2003). From the late 20th century, technology has been at the forefront in deciding how individuals, societies, organizations, and countries relate to each other. In the business field for instance, technology has enabled organizations to undertake complex transactions with other organizations and customers using platforms that were only grasped in the subconscious a couple of years ago (Andam, 2003). E-commerce and e-business has completely revolutionized the business world. But as businesses celebrate, customers too must be kept on the same page if the desired effect of such technological advancements is to be achieved.

E-commerce has gone through considerable consolidation and is growing consistently after it was introduced during the mid-1990s. It has gone through several phases of change whereby a tradition has been created in terms of online ordering, collaborative commerce, mobile commerce, e-market place, personalisation and customisation, e-government and e-learning (Turban et al, 2005). The current generation of e-commerce includes collaborative arrangements with buyers, suppliers and other business associates including expert sales systems and external and internal supply chain improvements. The speed with which the Internet has been growing has allowed several organisations to transform their functioning towards a more intensive Internet based digital environment. Presently, business to business e-commerce is globally considered to be the segment with the maximum potential in e-commerce.

Quelch & Klien (2006) had conducted thorough research in understanding the factors responsible for enhancing business to business implementation in e-commerce. They concluded that organisations have to recognize how to ascertain the major issues that impact the implementation of procedures and how they are to be addressed effectively in ensuring that the required outcomes can be achieved and failure can be avoided. Researchers have also studied the crucial issues that play a critical role in using Internet and its implication on strategies by analysing a sample of 125 UK companies (Eid and Trueman, 2004). Other studies were also conducted in this regard in ascertaining the most crucial factors in the success of business to business e-commerce. Researchers hold that appropriate planning for training, staff awareness and management programs are crucial for implementing business to business e-commerce. According to Chan and Swatman (2000), there are other issues such as culture, customer and supplier involvement and the effective utilisation of online and conventional marketing techniques. Kraemer et al (2006) held that there are a number of factors, that have a strong bearing on the resistance to or adoption of e-commerce, such as innovation attributes, environmental context, organisational context and technological context.

Definition and Importance of E-Commerce

E-Commerce is defined as the purchase and sale of goods and services on the World Wide Web and is presently flourishing, has become extensively global and has considerably been integrated with offline business actions. It has also been amalgamated with business objectives and strategies with added diversity in its scope. Business to business e-commerce implies the transactions that take place amongst different businesses that are entirely carried out electronically over the World Wide Web as also amongst private networks (Mahadevan, 2003). These transactions can also be carried out amongst businesses and their supply chains as also amongst different businesses. Business in this context is understood as any profit or non-profit organisation. A major feature of business to business e-commerce pertains to the concept that each transaction can be attempted electronically in terms of automatic trading and communication processes. It has been suggested by Noyce (2002) that there are different ways of adopting business to business research in meeting future challenges. The main factors that impact business to business e-commerce are the availability of a reliable broadband Internet connection, private and public e-marketplaces and the presence of an efficient partnership amongst buyers and suppliers.

E-Commerce can be defined and interpreted in different ways depending on the field of study. For purposes of this particular study, the concept will be defined as “…the application of technology toward the automation of business transactions and workflows” (Kalakota & Winston, 1997 p. 3). The multi-functionality nature of e-commerce in the field of business has been phenomenal, to say the least. Schuknecht & Esteve (1999) asserts that the clearest signal yet of the exceptional magnitude of e-commerce and e-business in the global economy is the swiftness with which internet use has developed and spread during the last couple of years. Andam (2003) posits that the rapid growth of the internet and Web-based technologies such as electronic money transfers, online buying, online advertisement, and outsourcing, among others, has ultimately narrowed down the differences between traditional market segments and the all-encompassing global electronic marketplace. As such, it can be safely argued that e-commerce has become a fundamental component of the global economy.

According to Andam (2003), the employment of e-commerce in business has increased productivity and boosted greater customer involvement, not mentioning the fact that it has worked to reduce costs and enhance mass customization. E-commerce has enabled organizations to strategically position themselves to reap maximum benefits from emerging opportunities. Through outsourcing services, e-commerce acts as a facilitator for companies to source for essential human capital skills. Andam (2003) argues that “…e-commerce coupled with the appropriate strategy and policy approach enables small and medium scale enterprises to compete with large and capital-rich businesses” (p. 5). Apart from the benefits accruing to business establishments, e- commerce is advantageous to customers since it assists them to make informed buyer decisions, not mentioning the fact that it considerably reduces the customer’s sorting out time (May, 2000). What’s more, the customer spends less time to resolve issues arising from invoice and order inconsistencies since the transactions are done online. Finally, customers are handed enhanced opportunities for purchasing alternative products and services from diverse sources. The important functions that e-commerce has brought to the global business environment cannot be possibly exhausted.

Types of E-Commerce

There exist many types of e-commerce frameworks, including “business-to-business (B2B); business-to-consumer (B2C); business-to-government (B2G), consumer-to-consumer (C2C), and mobile commerce (m-commerce)” (Andam, 2003 p. 9). This study aims to focus on the first two types of e-commerce. B2B involves e-commerce ventures between two or more organizations, and mostly deal with establishing interactions between and among business enterprises (May, 2000). According to Andam (2003), an estimated 80 percent of all e-commerce transactions entails business to business, with analysts arguing that this particular segment will continue to grow at a much faster rate than business-to-consumer segment. Many logistics firms, application service providers, outsourcing firms, auction companies, and web-based enablers use this framework. On the other hand, B2C involves e-commerce ventures between business organizations and consumers (Andam, 2003). Music download companies and online sellers of tangible products or software sorely depend on this platform to reach customers. Amazon.com and Barnes and Noble are examples of companies engaged in B2C e-commerce include

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The latest e-commerce trends have been identified as M-commerce, social commerce, videos and streaming media, personalisation and increasing online presence for small businesses. Mobile commerce is the second experience excellent growth in the coming years. With the launch of third party functions and innovative measures in e-commerce, customers will benefit from higher levels of features and options. They will be considerable growth in the number of mobile Internet users. The use of mobile and handheld instruments for shopping purposes will increase exponentially. Most of the major brands have already started investing huge amounts in offering new and better services through mobile devices.

Social networking is also being gradually incorporated into different kinds of e-commerce activities across major markets. A number of research studies have been done in the context of consumer behaviour patterns during 2009, which have revealed positive impact in the context of purchase decisions made by customers. There have been marked changes in terms of customer buying patterns whereby they have begun to place significant reliance on ratings, peer reviews and other kinds of user generated contents that will continue to impact consumer behaviors. A number of creative tools have been devised for social networking such as Facebook and tweeting sites. It is now well recognized that user generated contents will form an important platform and play significantly important roles in e-commerce. Brands have now increasingly begun to amalgamate social media interventions along with online shopping and business offers as means to enhance customer loyalties.

The World Wide Web continues to expand in terms of the enhanced usage of video, and video commerce has now been included into the online shopping processes that customers experience while visiting websites. No doubt customer expectations will increase and brands will have no choice but to respond in meeting their aspirations. With the advancement of technology, the inclusion of general multimedia content and Internet TV will continue to become significant whereby e-businesses will have to provide variety of options in transacting in keeping with the competition. Firms have also begun to use interactive video conferencing in promoting products as well as offering specific information to provide a fully involved online experience to customers.

Personalised services are increasingly gaining popularity in e-commerce because of the fast increasing role it plays in the daily lives of people. Businesses have undertaken to emphasise on providing personalised services to their customers. Business portals on the World Wide Web have started adopting procedures of offering personalised and tailored alternatives and contents to their clients in allowing them to have fast and rich shopping experience in order to meet the rising expectation of variety and convenience. Small businesses have increased their presence in e-commerce and the last few years have clearly revealed that their presence in the market is increasing despite the recessionary and volatile economic environment.

Importance of e-CRM and e-Tailing

The internet is increasingly assuming a significant role amongst businesses and many firms have started to give it immense importance in considering it to be an opportunity for reducing costs relating to customer servicing and tightening customer relationships. Most importantly, systems can be further personalized through large scale customization and personalized marketing messages. The internet has enabled the creation of what is understood as e-CRM, which entails the creation of automation in sales whereby electronic processes are used in gathering information and analyzing client information. The challenges pertain to providing information and communicating in the right perspective, in regard to the specific amounts and at the opportune time that is acceptable to customers.

E-tailing refers to the selling of retail goods on the World Wide Web. It implies electronic retailing whereby transactions are made on the internet through email, e-business or e-commerce. It is thus implied that buyers and sellers are not present at the same physical location because all transactions are carried out through plastic cards via e-commerce. Therefore e-tailers that take part in such activities have the opportunity to have higher profits because most of the overhead costs related to physical retail spaces such as inventories, physical retail spaces, and labor are done away with. Since transactions can be effected anywhere in the world the retailer can reach customers across the world while physically remaining at one location. However studies have indicated that e-tailers have not successfully been able to meet the demand of online buyers. They mostly get a single opportunity to create credibility amongst customers, which is quite difficult because in an electronic environment very few firms can meet high standards pertaining to search, support and promotion efforts for customers.

The Big Question

Undoubtedly, e-commerce has a lot of benefits for businesses and customers as suggested by the review of related literature presented above. There exist a broad body of knowledge about the evolution, growth, and benefits of e-commerce especially from the perspective of these platforms, in this case, the business establishments. However, little is known of the users of e-commerce platforms in terms of ensuring customer satisfaction, loyalty, and experience. The desire to know how customers achieve their satisfaction and manage to remain loyal to online companies with no physical contact whatsoever informed the objectives of this study.

From the perspective of the topic of this research it is important to examine the issue of customer loyalty which poses a big question in the context of success of e-commerce initiatives in the UAE. Consumer loyalty is essentially based on a number of factors, the most important being trust. For e-commerce to succeed it is essential that customers must have trust in the product or method that they deal with while purchasing goods and services. Secondly, the relationships and transactions have to be positively perceived in terms of getting greater value than provided by competitors. Thirdly, in building up on the previous two factors, marketers are required to create high levels of positive emotional attachments with customers. Such emotional responses can prove to be extremely beneficial to brands that are resistant to change.

Most of the literature pertaining to customer loyalty is about studies that attempt to define what the concept undertakes to provide for customers and for the firm. A number of researchers have emphasised on the components that lead to the growth of loyalty. Consequently, there are certain concepts that have been researched individually as also in combination with others. In this context, trust has been focused as a strong determinant of customer loyalty across most of the literature (Schlosser et al., 2006). Trust is a crucial element whereby informational aspects of the product and the transactions become complete. In a business environment that is characterised with perfect knowledge, trust is not necessary but in a realistic world it helps a great deal in reducing perceptions of risk by lessening the chances of customers suffering losses. In essence, trust gives a boost to the customers’ confidence level in terms of his or her expectations that the outcome will be positive. Such feelings can be expressed by way of the assumption that vendors will facilitate trustworthy dealings. In some transactions, the initial dealing may be made without a strong basis of previous positive record or word of mouth praise, thus implying that the subject transaction is entirely based on trust (Mittal et al, 2003).

Once a customer completes the first transaction successfully, there is a basis for him or her to assume and develop confidence that the vendor delivers goods and services as per promises made on the website. Such experience allows faith to be strengthened for further interaction. During the initial stage of relationships, elements such as brand and company name form significant areas of consideration. In fact, they form indications of positive performance. It is for this reason that global brands such as Toyota have strong brand equity in terms of boosting consumer perceptions of trust. In new relationships, the company and brand names as well as perception take on the weight of trust development. Trust continues to be a major apprehension amongst online customers in the online world. The need to divulge credit card details to virtual strangers on the World Wide Web is a big hurdle in e-commerce for many customers who in reality would like to shop in a secure environment (Dunn, 2004).

It was researched by Schlosser et al. (2006) that there are three main elements of trust; the vendor should have the ability to deliver the product or services as promised, there should be an element of benevolence and a high degree of integrity. Therefore, ability, benevolence and integrity are considered as distinctive issues that create trusting beliefs. The authors analyzed the impact of website designs and investments upon the trusting belief of customers as related with intentions of online purchase. They concluded that investments made by the firms in this regard indicate the extent to which trusting beliefs are created as related to intentions of online purchase, which they defined as the ability in the context of e-commerce. Additionally, they also concluded that the impact was strongest when customers aimed at searching for products instead of browsing and that a great deal of risk was involved in purchasing on the World Wide Web.

Value Perceptions in E-commerce

The literature also provides for other factors that impact loyalty. Other than the role of trust in creating loyalty, consumer perceptions about the value they receive from the product is quite significant in e-commerce relationships and transactions. Value perceptions are understood as the consumers’ overall sense of value in terms of benefits as compared with the costs in the context of marketing. More specifically, value in this context is understood as a broad construct that focuses upon price, cost incurred and the value that is delivered by marketers in a competitive environment. The literature also provides that consumer satisfaction is primarily dependent upon the concept of perceived value although the constructs vary in different situations. However, majority of the customers’ decisions are based upon their perceptions in terms of cost and benefit.

For many consumers, the very act of finding the required product is considered to be a strong value proposition. For instance, in highly specialized markets, finding the perfect gift that matches the customer’s perceptions is considered to be a great achievement. Other customers may have perceptions about transaction options in being able to use credit cards or debit cards while making purchases on the World Wide Web. Other facilities provided through marketing strategies such as home deliveries of newly introduced products are strong determinants of purchase possibilities. In similar vein, services and set-ups can be crucial for product categories that have high technological components such as high-definition television and other electronic gadgets.

All customers do not give much recognition to value in terms of convenience relating to the transactions that they make. For many customers time is a crucial element and therefore systems that allow for the reduction of time taken in searching for information about products and services, as well as in evaluating the required information in making purchase decisions, goes a long way in the decision-making process to purchase goods and services on the Internet. For such customers, speed of payment and delivery is considered as good customer service that brings high level of satisfaction and value. This section of customers can be understood as being quite matured in terms of recognizing marketing efforts. By understanding different customer segments, firms doing business through e-commerce can frame their strategies in setting preferences and targeting customers through carefully crafted marketing strategies. An important characteristic of doing business through e-commerce is to bundle products of acceptable qualities with the required set of services that aim at enhancing convenience and lessening customer worries (Preece et al, 2003).

The most significant issue pertaining to competition pertains to evaluating benefits as against costs. The costs include the monetary price of the product and services as well as the amount of uncertainty, worry, efforts and time taken in making the transaction. The basic objective of removing the middlemen as perceived by consumers is the duty of firms in providing lower prices. For instance, the idea of making payment for an auto mobile before its delivery sends the message that the role of the middleman is done away with. Similar arguments can be given in the context of consumers that buy large quantities from the website in expectation of lower prices, which too implies that there is a perception amongst consumers that they are doing away with the retailer as a middleman. However, researchers have found that such practices do not actually reduce costs but shift them by way of diverse sets of non-monetary expenses.

The core conceptualization in this regard pertains to the fact that there are elements relating to the value as perceived by consumers through interactions even though there are elements relating to personal and emotional issues. Emotional factors and perceived value are packed with each other. For instance, consumers that transact with a retailer can have a fairly correct idea about the outcomes in using simple logic. If the interaction with the retailer appears to be valuable in terms of satisfaction and financial value, the consumer will develop positive emotional responses towards the retailer. The emotional element assumes importance when marketers establish trust with specific customers while doing business and focus upon such trust while generating different sales activities, which allows for conditions to develop stronger relationships. According to Reichheld et al (2003), brand loyalty can be measured by consistently observing purchase patterns during a given period of time. It is then evident that the pattern is more a set of repetitive and distinct transactions amongst the brands and customers. Not only behaviors pertaining to repeat purchases impact such transactions but customer motives play an important role in creating such behaviors. Such motives allow for differentiation amongst authentic loyalty that is understood as inertia and true loyalty that clearly depicts a commitment to the brand and the company. Such distinction allows an understanding of whether the repeat purchases made by consumers will continue consistently thereby indicating true loyalty or will stop with any alteration in store assortments or the terms and conditions of sale. Researchers have attributed such characteristics as inertia that may characterize customers.

Inertia may become consistent amongst consumers because it is created on the basis of habits and routines that allow them to cope without any hardship in terms of time pressure and search effort. Researchers have found that the repeat purchases of a brand may be made because of habitual behaviors pertaining to reducing mental exertion and the physical aspects that focus upon searching actions such as browsing the internet or physically visiting stores. In fact, there needs to be a strong bond of commitment without which the firm runs the risk of customer loyalty fading away in the face of changes in patterns of supply, thus motivating customers to switch brands. Customer loyalty will develop through mechanisms that involve repeat purchase patterns by customers from a given vendor without specific commitment. In due course, the vendor may make efforts in developing trust, value perceptions and emotional connection with customers, which could further lead to follow up with commitments. There are other types of emotional bonding that can become equally important.

It was researched by Gallup through work done in the context of emotional bonds amongst brands and customers that depicted a construct, which described the different levels of consumer engagement. The idea emerged after Gallup created sets of rating scales that measured four crucially significant emotional states. Customer loyalty for products that are transacted through e-commerce also implied interactivity that was characteristic in buyer seller relationships (Schlosser, 2006. But the most valuable viewpoints have been of different dimensions. Marketing teams have realized the significance of transaction components in marketing relationships. Concepts pertaining to transactional and convenience successes have been researched during different time periods. Instances whereby marketing has been used in terms of transactions cost accounting are efforts to enhance consumer satisfactions and eventually loyalty, in attempts to maximize disparities amongst online and face to face environments.

During the period when e-commerce was evolving during the early 1990s, researchers had debated terms such as virtual retailers and brick and mortar. Subsequently they realized that brick and mortar operators were at an advantage as compared to pure internet retail sellers. This was because customers were more confident in transacting with actual firms than organizations that appeared to be virtually intangible. Consumers feared that internet formats could not be reliable as they appeared to be ghost entities without any confirmation of their inventories and without any strong reputation to support their credibility. There were several instances whereby customers lost their money because online retailers became bankrupt because of being under-capitalized. Conversely, the same brick and mortar stores that expanded their operations into internet stores proved to be instant successes. The credibility that they had created over the years helped them in maintaining the confidence amongst customers thus providing a real storefront back up for their internet functions. Such patterns clearly revealed that trust is easily created for existing stores with good brand reputation. The same situation existed for products, which was concluded by Danaher et al (2003) who made comparisons of brand loyalty in terms of retail products that were purchased from stores and through online options. They found that offline purchases depicted that the share of the brand market is not directly associated with the disparities in brand loyalty. But in the case of online purchase, the comparison of actual as against estimated brand loyalty revealed that there is excessive brand loyalty. More specifically, higher level of brand loyalty is revealed for brands that enjoy higher market shares and the opposite is true for brands that have lesser brand loyalty.

There are certain experiences that customers have in the context of e-commerce whereby the environment does not meet their expectations and the experience becomes rather unpleasant because of the prevalent obstacles. Such problems could relate to the following:

  • There may be usability issues with the website, such as those pertaining to ambiguous terminology or the use of showy characteristics that may appear to be good but are beneficial only for customers that have access to high-speed Internet.
  • Some situations adversely impact and diminish the relationships between customers and organizations. For instance, several websites have hidden costs in terms of tariffs, taxes and shipping costs while information pertaining to return of the product is not clearly outlined. Many times websites allow pop-ups to appear that often create hindrance and inconvenience for customers.

Such obstacles can have negative consequences for the e-commerce organization by breaking down the deals, especially at times when customers may not have the inclination or time to revisit the site. Such breakdowns in the smooth conduction of the customers’ interactions with the front end of the e-commerce Web site become obstacles and the customer is not able to find the product or service or there is a mismatch of cultural expectation and requirement. Obstacles also occur because websites often insist that the customer register before he decides to shop on the website and to give consent for providing personal details so that the website can send its newsletters, which often prove very difficult to unsubscribe.

However all obstacles do not result in breakdown of transaction but there are certain issues for which the customer may be responsible in the efficient handling of customer related information. Many times customers make spelling errors or write discourteous messages to queries made by the website because of which proper responses are not received and customer service proves to be ineffective. However if such obstacles are thoroughly understood by organizations offering sale of their goods and services to e-commerce, effective CRM approaches can be adopted and the usability of e-commerce can be designed in creating an environment that prevents such obstacles from occurring.

Methodology

Introduction

The methodology for this research is based upon the research philosophy that is about making comparison of the status of e-commerce in the UK and the UAE and focusing upon how e-commerce applications can be designed to increase customer satisfaction and loyalty. Such objectives have been achieved by comparing the e-commerce platforms in the two countries and how efficiently they cater to the needs and expectations of customers in both nations. A critical evaluation is then possible of the different strategies in both the UK and UAE in ascertaining customer experiences while they transact business using e-commerce protocols.

Research Design

This study will employ a quantitative research design for purposes of structuring the research process. According to Hopkins (2000), this type of research design will help the researcher to examine the issues at hand since the research is largely interested in evaluating the relationship between variables. Quantitative studies are either descriptive or experimental, but this particular study will employ a descriptive approach since the subjects, in this case the customers using e-commerce frameworks, will only be measured once (Sekaran, 2006).

Primary data was gathered by means of undertaking an online survey specifically designed to measure the customers’ perceptions, values, satisfaction, and loyalty levels towards companies engaging in e-commerce. According to Sekaran (2006), a survey is effective when the researcher is particularly interested in descriptive assessment of a particular phenomenon as it is the case in this study. Secondary data was collected by means of undertaking a detailed review of related literature.

This research aimed at achieving the objectives of making adjustments about the current activities of e-commerce in the UAE and the UK and identifying the barriers in these two countries while making comparisons amongst them. On the basis of the literature review and the answers to questions that were forwarded to individual respondents via e-mail, it was proposed to ascertain the following:

  • Whether cost-saving is the major driver for e-commerce transactions
  • Whether there are no barriers to e-commerce in the UAE and in the UK
  • Whether more and more service providers are making use of e-commerce as compared to providers of products.
  • Whether E-commerce in the UAE and UK is growing consistently

This research used different characteristics that were present in every chosen company for the purpose of this survey. Individuals were also chosen from diverse backgrounds in order to a have a wide cross section of respondents in enabling the study to have a broad perspective while concluding the findings. The Dubai Chamber of Commerce that has more than 15 industry groups was used in the study pertaining to UAE while the individuals that were requested to respond comprised of those that were professionals in different fields, businessmen, senior executives and youngsters between the age group of 21 to 25 years. There were 20 individual respondents chosen from Dubai that represented five business houses and the rest were individuals that were to respond in the context of their individual perceptions. In the case of UK there were 15 respondents of which ten were individuals and five were company officials that dealt with e-commerce services provided by their respective companies. Company representatives were required to respond in the context of their e-business activities and their performance in relation to varied parameters that were outlined in the questionnaire. There were two sets of questionnaires for business houses and individuals respectively. The questionnaires were designed after conducting a mock pre-test by way of in-depth interviews amongst decision makers in different industries as well as government offices. Attempts were made to represent the widest possible cross section of individuals and businesses in relation to e-commerce activities. The criteria used for selecting firms rested on the willingness of a given firm’s manager to be interviewed and that the firm should have been conducting e-commerce activities for five years. Individuals were selected amongst a wide base in attempts to include people from services and small businesses that were making use of the internet for online purchases. Some individuals that had attempted to transact on the internet but subsequently given up were also included. The average age of interviewed respondents was 34 years and 61 percent respondents were male while 39 percent were females.

Target Population and Sample

The target population for this study comprised of customers using e-commerce in both countries – UAE and UK. The researcher intended to enlist the services of surveymonkey.com for purposes of coming up with the desired population of companies that were to respond to the questions in the survey. To get responses from individual respondents the email option was considered most meaningful because it allows having specific information from the perspective of respondent’s confidentiality. Purposive and convenience sampling approaches were utilized for purposes of coming up with the desired sample. Purposive sampling was used to assist in the process of selecting a sample that has prior knowledge and understanding of e-commerce ventures (Cohen et al, 2007). Afterwards, the subjects were requested to respond to the questionnaire by virtue of being in the right location at the right time, otherwise known as convenience sampling (Sekaran, 2006).

Data Gathering Instruments

Primary data for the study in the case of individual respondents was collected by means of an online semi-structured questionnaire schedule. A questionnaire is desirable in a descriptive study basically because it is easy to administer the tool in an online setting (Cohen et al, 2007). The tool has been designed to measure the customers’ perceptions, attitudes, and values regarding e-commerce using a five-point Likert-type scale, and how these variables combine to enhance or lessen their satisfaction and loyalty levels. Apart from the ability to attain a high response rate, it is also easy to undertake a comparative analysis when using a questionnaire due to the fact that most items consist of closed-ended questions (Sekaran, 2006). The questionnaire used in this particular study was also subjected to thorough testing to ensure that issues of data validity and reliability are appropriately dealt with. Secondary data for this study was collected through a comprehensive review of literature, sourced from reliable sources, including textbooks and journals.

Ethical Issues

While dealing in e-commerce, businesses have to comply with certain ethical issues so that there is a degree of responsibility and trust established amongst customers. It is vital that the language used in the websites should be free from hidden legal implications or complications for customers. The information given on the website should be authentic in view of the possibilities of customers developing perceptions about the firm not adopting marketing ethics and thus adversely impacting the significance of recognizing internet marketing issues such intellectual property and trade secrets. E-commerce businesses have to also address security and spamming concerns of customers. Many e-commerce firms do not carry advertising labels that leads to inadequate confidence amongst customers visiting the website. It is an ethical obligation for e-commerce firms to ensure that they do not encourage cyber squatters, do not engage in online marketing to children. E-commerce firms have to avoid conflicts of interests and self regulate themselves in supporting an ethcal e-commerce environment.

Data Analysis

The study employed both quantitative and qualitative data assessment techniques for gathering primary and secondary data. Quantitative assessment involved coding the data contained in the questionnaires and entering them into a statistical package known as SPSS. Afterwards, cleaning and analysis of the data was performed using the same package to generate frequency distributions and descriptive statistics that were used to answer the study’s main objectives. Data was presented in different forms and the qualitative data generated by the open ended questions was analyzed by using a process known as qualitative content approach. This method involves cleaning, coding, and evaluating responses that were given in either verbal or written communication so as to permit them to be considered quantitatively (Sekaran, 2006).

Table I Analysis of E-Commerce in UAE

Themes No. of respondents
Lack of Transparency in E-commerce Multinational Companies

4

Pvt Ltd Companies

5

Travel Agencies

3

Health Services

3

Individuals

Small businesses
2

Youth
21 to 25 Years1
Senior Executives

1

Junior Executives

1

2 3 1 2 5 3 4 5
Adequate Security 4 4 5 4 4 3 3 2
Extent of trust 5 4 4 5 2 3 3 3
Quality of Service 5 5 4 4 3 4 3 4
Convenience 5 4 5 5 1 2 2 1

Table II. Analysis of E-Commerce in UK

Themes No. of respondents
Lack of Transparency in E-commerce Multinational Companies

2

Pvt Ltd Companies

3

Travel Agencies

3

Health Services

2

Individuals

Small businesses
2

Youth
21 to 25 Years1
Senior Executives

1

Junior Executives

1

3 2 2 1 5 4 5 5
Adequate Security 5 5 4 5 5 4 4 3
Extent of trust 4 5 5 5 1 3 2 4
Quality of Service 5 4 5 5 3 5 2 3
Convenience 4 4 4 4 2 1 1 2

The figures show the number of respondents who asserted to or confirmed the providence of each theme in the context of their agreement with the prevailing e-commerce environment.

The responses from 1 to 5 pertained to the following:

  1. Strongly Agree
  2. Tend to Agree
  3. Neither Agree nor Disagree
  4. Tend to Disagree
  5. Strongly Disagree

All the organizations surveyed, are based in the UK and the UAE and have been involved in e-commerce for at least five years. It is evident from the gathered data that in the UAE, lack of transparency is not perceived by multinational companies and travel agencies as being a strong detriment to e-commerce while individuals, senior executives and junior executives who responded individually expressed entirely differently in feeling that there was considerable lack of transparency in e-commerce dealings. All respondents except junior executives, individuals and youth felt that e-commerce was characterized with adequate security measures to carry out transactions. Similarly all company representatives felt that e-commerce sites could be trusted fully while individuals, junior, executives, youth and senior executives responded in expressing extreme lack of trust in e-commerce. In terms of quality of service almost all respondents appeared to be satisfied except that individual respondents had some apprehensions about trouble free services on websites of e-businesses. Corporate representatives were all praise about the convenience of e-commerce but individuals, junior executives, youth and senior executives that responded on an individual basis did not feel so.

Respondents from the UK exhibited different responses to the same parameters, which is clearly indicative of the maturity of e-commerce in the country amongst businesses as well as individuals. In contrast with the UAE, there were different perceptions amongst individual respondents in the context of lack of transparency as most of them expressed full confidence in e-commerce, which is evident from the large number of transactions that are done through e-commerce by people in the UK. In the context of security also, all respondents unanimously responded in replying to the affirmative. All respondents except individuals representing small businesses and some senior executives expressed trust in e-commerce transactions. The confidence level of most respondents was quite high in the context of quality of service of e-commerce sites. However, most individuals from small businesses, youth and junior and senior executives were not satisfied with the convenience rendered by e-commerce transactions, perhaps because of the lack of surety in terms of after sales services.

It is evident that low costs and catering to new segments are the main motivating factors for most companies. Next in importance for firms is to increase their respective market shares. Thus, it does not appear that cost saving is a major objective of both UK and UAE companies that are engaged in e-commerce. The main barrier for firms is identified as technology in terms of security issues, which is considered as the most crucial by firms because it has been discouraging them from conducting e-commerce business on a large scale. The issue of security was followed by organizational culture, lack of willingness to adopt IT, cost of technology and confidentiality. Therefore it appears that although security is considered a technological barrier, firms in both the UK and UAE are open about conducting business through e-commerce. This is primarily because in both nations there is good infrastructure in terms of means of telecommunication and high rate of internet penetration thus providing for future possibilities of minimal technical complexities. Although it cannot be said that there are no barriers to e-commerce in the UK and the UAE, the present environment in terms of security issues are making many firms and individuals to desist from frequenting the world wide web for their business and purchase transactions respectively.

Presentation of Findings

A major difference between the UK and UAE e-commerce pertains to the difference in the structure of clients for firms dealing in e-commerce. UAE is characterized mainly as a service based economy and most e-commerce and B2B sites are service providers. For firms to be successful in services they have to provide high levels of service. They have now begun to make use of better technology in order to satisfy customers. Thus it is true that more and more service providers in the UAE are making use of e-commerce as compared to providers of products. The UK e-commerce scene is characterized differently. In being a matured economy, e-commerce has for long been used by most firms and individuals in the country. Businesses make use of internet and transact online for most of their business transactions and the internet has become a common platform for them to make fast deals and collaborations on the basis of terms and contracts that are easily finalized on the basis of transactions made through e-commerce. A larger percentage of the UK population makes use of e-commerce for making online purchases for about 32 percent of their purchase needs. They have come to have faith in the internet in view of the security measures provided by regulation in the context of e-commerce. Firms are now legally answerable for all business and selling activities carried out through their websites and are required to compensate customers for shortcomings observed in products and services after their purchase.

Nearly all businesses in the UK are affected or influenced by e-commerce in terms of selling or purchasing commodities, services, and business-related content over the internet. As such, the uptake has been promising. The ONS (2009) figures reveal that “…internet sales [in 2008] represented 9.8 per cent of the value of all sales of UK non-financial sector businesses…up from 7.7 percent in 2007” (p. 1). The value of the internet sales, according to the statistics office, stood at £229.9bn in 2008, up from £163.2bn recorded the previous year. These statistics reveal more organizations and customers are adopting the use of technology to conduct business. A survey conducted by EU Eurostat Service revealed that UK lead other western countries in e-commerce, “with around 66 percent of individuals aged from 16 to 74 reporting they had bought goods on the web over the last 12 months” (Donoghue, 2009). Majority of the citizens polled argued that they have been led to use online shopping sites due to their convenience, flexibility, and choice.

The uptake of e-commerce in UAE is not very much different from what is happening in the UK. Indeed, UAE has made major strides to establish itself as a top class e-commerce hub, and is currently ranked at par with many EU states in the provision of basic online services. A recently concluded benchmark survey gave the Arab country a score of 76 percent in availability of online services, grouping it in the same league with other major players, UK included (LowTax.Net, 2010). Dubai businesses have specifically benefited from e-commerce due to the nature of businesses transacted in the Kingdom. According to Dutta & Coury, Dubai is a business and trade hub for duty-free commodities from nearly every corner of the world. The Kingdom’s electronic sale of cars, household goods, shoes, electrical appliances, and other products have tremendously challenged traditional business channels where traders were expected to travel to the country to place orders.

The UAE government has significantly contributed to e-commerce. According to a Gulf News report (2006) almost a third of all transactions pertaining to the business generated by Tejari.com, the electronic marketplace, were carried out by the government. Initiatives by the UAE government in terms of e-commerce had started in 2002 when the government established e-government functions in the economy. Amongst all the emirates in the UAE, Dubai has been a pioneer in having implemented government projects by launching e-services and setting up the government portal www.dubai.ae. E-government projects in Dubai have been given top ratings globally and the emirate has established a new trend that is being gradually adopted by other emirates in the region. The new portal established by the Dubai government provides e-services through varied government departments including Dubai Chamber of Commerce and Industry, Dubai Economic Department, Department of Health, Dubai Municipality, Etisalat, Dubai Naturalisation and Residency Administration, Dubai Water and Electricity Authority and the Dubai Police (Gulf News report, 2006). Tejari.com is an ideal example of a successful e-commerce market place that has now become the main business hub for Dubai’s government. A large number of companies are using Tejari.com in launching tenders and in making quotes and bids for tenders. Although the use of Internet for e-commerce in the Middle East is comparatively low, UAE has taken the lead in this regard. As per data provided by Internet World Stats (2007), the UAE with population of 3,982,978 has 1,707,500 Internet users, which implies that there is about 42 per cent internet penetration in the country. The following table gives a broad idea of Internet penetration in the UAE.

Internet Penetration in the UAE

Year Users Population %Pop
2000 735,000 3,750,054 19.6
2003 1,110,200 3,750,054 29.6
2005 1,300,000 3,750,054 34.7
2007 1,707,500 3,982,978 42.9

Internet penetration in the UAE is highest amongst all the Middle East countries and the country is amongst the top 20 nations in the world in this regard. It is expected that by the end of 2010, the number of Internet users in the country will increase to 2.6 million. The total number of Internet users is an important factor that determines the volume of business to business e-commerce, which is representative of the largest share of the e-commerce that is conducted across the globe. Business to business e-commerce has significant impact upon improving economic performance in any given region. It has been established that almost 80 per cent of the total e-commerce comprises of business to business dealings on the World Wide Web. Additionally, the adoption of business to business e-commerce in developing countries will be essentially associated with their ability to integrate themselves into global and regional supply chain systems.

In the Middle East region, the adoption levels of e-commerce have been comparatively low. As per the Madar Research Journal (2006), the position of UAE is only second amongst the GCC countries after Saudi Arabia. Several organizations in GCC countries have experienced a significant increase by way of online sales and the UAE continues to remain the leader whereby merchants in the nation accounted for more than 85% of the total number of transactions. As per Gale (2006), e-commerce in GCC countries and more specifically business to business dealings on the Internet are expected to cross the $1 billion mark by the end of 2010, whereby the UAE and Saudi Arabia will be clear leaders with a compounded average growth rate of more than 22 per cent during the five-year period ending 2010.

The automotive sector in the UAE accounts for the major part of the business to business transactions in e-commerce, which is followed by information technology, government and petrochemical industries. Major initiatives through e-commerce in the UAE were taken by companies such as Emirates, Al-Futtaim and the Al Gurair groups with the implementation of their online procurement systems that are mostly operated through their back-office ERP systems for participation in e-markets such asTejari.com. Most of such transactions relate to conducting and requesting proposal options and reverse auctions. Tejari.com is now being increasingly used by several government departments and private companies in putting forth offers and tenders. Payment security is guaranteed through gateways such as Comtrust that allows the entire process of transactions to be carried out securely on e-commerce portals.

Researchers have identified the following factors that are responsible in increasing business opportunities in e-commerce in the UAE:

  • Extending trading communities
  • Access to new markets,
  • Industry and vertical consortiums
  • Market presence and competition
  • Lowering the financial barriers to e-commerce participation
  • Efficiencies brought through the utilization of e-procurement

In the UAE, government support and globalization are considered to be the two biggest drivers in adopting e-commerce and B2B. Researchers have also reported that the potential for B2B in the GCC countries exceeds $25 billion of which $6 billion can be accounted for by UAE by the end of 2010. The Gulf News has projected that there will be a 55% yearly increase in B2B e-commerce in Dubai alone that will increase revenues from $6 billion in 2006 to $37 billion in 2010. As per recent projections, the increasing use of Internet and the enhancement and improvement of the e-government portal of the UAE government will provide access to new markets as a result of cost savings and globalization occurring from streamlined procedures of procurement and other driving factors. As per recent projections, the increasing use of Internet, the increasing popularity of the e-government portal, accessibility to new markets resulting from globalization and reduction in costs as achieved from procurement procedures have been the main driving forces.

According to, Kraemer et al. (2006), the extremely slow pace with which technology is being adopted and integrated or being diffused is considered to be the main barrier in the success of B2B e-commerce in other parts of UAE. The authors have cited other reasons that are inclusive of the existence of cross-country differences in the diffusion of e-commerce whereby different regions have different regulatory and economic environments. Researchers have also pointed out that there is a lack of adequate awareness and knowledge about the advantages that can accrue with B2B e-commerce. This is seen as a major handicap for most GCC countries. The adoption of B2B processes in the UAE and other GCC countries is primarily because of haggling in terms of culture and price amongst buyers, existence of grey markets in IT hardware and software, unethical standards being adopted and the existence in some regions of telecom related rules and regulations. Subscribers to the e- marketplace have not evinced keen interest in other related vertical business options. They have only expressed desire to take part in tendering and prequalification. The Madar Research Journal (2006) has listed amongst other reasons the extreme lack of adequate awareness of required information and education pertaining to the advantages of B2B and e-commerce. The report has also cited that there is considerable lack of common interest in promoting B2B alliances because most businesses have adopted the wait and watch attitude; when there is extreme lack of technology amalgamation, presence of risks pertaining to online security and a virtual absence of payment systems in the context of B2B transactions in the GCC countries.

Discussion

Significance of Trust

In order for e-commerce to succeed it is very important for marketing managers to establish trust amongst consumers from different perspectives. According to Naquin and Paulson (2003) it is extremely difficult to efficiently manage computer mediated environments. An efficient approach is to involve explicit statements in the context of security pertaining to personal information of customers. Some research studies have revealed that this kind of information greatly assists in creating confidence among its customers on e-commerce sites (Palmer et al, 2000). On the other hand, other researchers do hold that such information is not necessary to establish online trust (Montoya-Weiss et al, 2003). Many researchers have concluded that customers make use of surface elements such as design of website to form opinions about trust and security. It was found by Schlosser et al (2006) that sites can invest in better designing and can create better online intentions and trusting beliefs amongst customers. Other components of website designing can also be used in creating better relationships with customers.

A particular example of such relationship building exercises is found in the UK. There are a number of travel services that have made use of the benefits emanating from the internet by way of the search perspective and replacing it with travel specifics. This is because travel services provide information that facilitates communication in terms of destination and schedules and details including terms and services. The provision of such information used to be extremely beneficial to novice travelers. There are several competitors on the World Wide Web that vie with each other to dominate the market place by making use of standard features on websites to attract customers. Contrary to such attitudes, some UK travel agents devised their websites to create immediate contact with the customers. They provide on their website information such as toll-free number before customers can make online transactions in conveying that the visitor can immediately make contact with someone who provides help. The strategy is very helpful for Web sites that have restricted internet presence but they are able to establish a human bond almost immediately.

As discussed in the literature review a lot of recognition has been given to consumers in the context of their value for firms. The literature also deals with light and heavy users of goods and services and provides that heavy users are of greater value to firms for their contribution to revenues and volumes as also for the positive impact they create on the profitability of the firm. Most organizations work under the impression that customers can be differentiated in terms of profitability in recognizing the 80/20 rule, which implies that 20 per cent of the customers of any organization account for 80 percent of its revenues and profit. In fact, research has also supported this viewpoint. More specifically, long-term research efforts in the context of bank customers and their perceptions and behaviors in terms of expectation of service quality clearly revealed that the 80/20 rule was correct. It was observed by Zeithaml et al (2001) that the top 20 per cent customers of banks provided for 82 per cent of revenues and profits. Additionally, the top 20 per cent customers were the ones who were satisfied with the service quality of banks. The lower 80 per cent customers laid much focus on expecting better speed and attitude. Such conclusions provide a framework for e-commerce organizations to work towards creating opportunities for more profitable customers in the context of building customer loyalty strategies to which they will be more prone to responding. This is called the customer pyramid, which is a better framework that postulates the categorization of customers by using a part of the system on the basis of diverse and expected levels of profit amongst different categories of customers. Firms can benefit by making use of the customer pyramid especially when it has customers of different categories that provide different levels of profitability.

Value Perceptions of Firms

Zeithaml et al (2001) created a framework of classification by using the name of four metals to identify different categories of customers; platinum, gold, iron and lead. They considered that platinum and gold clients were of much more value to organizations as compared to customers that were in the iron and lead categories. Given that e-commerce is thriving and becoming more global in being integrated with offline business transactions, it has become more diverse in scope and become a major area of focus in business strategies and goals. Since companies make attempts to electronically automate communication and trading processes it has been suggested by Noyce (2002) that various methods need to be adapted in meeting future challenges. In order to reduce delays and to have better partnerships there is need to introduce effective technology that results in intra and inter organizational integration. It has been estimated by market forecasters that by the end of 2010 the total value of global e-commerce will cross $12 trillion in becoming a major component of global trade and commerce. It is also known that the dollar volume of e-commerce is consistently increasing which has been corroborated by Turban et al (2005) who held that the number of buyers and sellers create the basis of participation in e-commerce transactions, which have been described as under:

  • Selling side: One seller to several buyers
  • Buying side: One buyer from several sellers
  • Exchanges: Many sellers to several buyers

In this context researchers have referred to collaborative commerce which comprises of activities other than selling and buying amongst business partners such as those relating to collaborating, communicating and sharing information for planning and joint design etc. Other than trading of products on the World Wide Web, services are also provided through e-commerce, which include real estate, entertainment, travel, consulting services, online stock trading, financial services and different government organizations. Studies in e-commerce that have been conducted in developing countries by Moodley (2003) have revealed that firms dealing in e-commerce need to focus on two major areas; diffusion and enabling. Diffusion refers to the dissemination of information in e-commerce activities and enabling refers to systems configuration and integration of e-commerce activities. The author has also recommended some policy initiatives that need to be taken in order to reduce Internet access charges and network infrastructures for firms because such actions will provide a strong basis for development of e-commerce.

Maturity of E-commerce in the UK

Although e-commerce activities in the UK were consolidated and had reached maturity a decade back, such activities in the UAE are still developing although there is immense potential for e-commerce in the country to reach similar levels as in the UK, within the next few years. E-commerce in UAE has undergone from different phases of additions and changes in the context of online purchases, e-government, customization and personalization, e-learning, collaborative commerce, mobile-commerce and e-market places. The present status of e-commerce in UAE pertains to collaborating with buyers, suppliers, external and internal supply chains, experts sales systems and business partners. Internet in the UK is developing rapidly and more and more companies are beginning to migrate towards the e-commerce digital platform. A significant part of e-commerce in the UK comprises of B2B transactions and this segment is proving to be the largest in the country in terms of e-commerce.

According to Quelch & Klien (2006), e-commerce in UAE can be considerably enhanced if organizations understand how to relate with crucial factors that impact the implementation procedures and deal with them efficiently in ensuring that the required benefits are achieved and failures avoided. Eid & Trueman (2004) researched the crucial issues that impact the utilization of internet capability and its implication on strategy objectives of businesses by studying the business patterns of 125 companies in the UK. They identified the factors that are most critical to the success of E-commerce. They held that companies in the UK need to adopt better planning and training standards in addition to staff awareness and management support programs that are crucial for the implementation of e-commerce initiatives. Some authors have also held that companies that transact in e-commerce in the UK need to be more sensitive in providing convenience to customers instead of creating complexity by way of unwarranted requirements such as registration and providing personal details even before the consent of transaction has been given by the customers while visiting their website.

Nevertheless, there are several reasons that have been attributed to the resistance by customers in adopting e-commerce as a choice to purchase goods and services. If firms can efficiently resolve complexities faced by customers, the total business emanating from e-commerce and B2B activities can be considerably enhanced throughout the world. Firms need to consider from several perspectives such as technological, organizational, environmental and innovation aspects of respective businesses. Technology can be fully used by e-commerce Web sites by providing customers with guidelines in the context of, for instance, labeling different customers as premium customer, preferred customer or valued customer which communicates immediately the service level that provides for immediate action as required by the customer. For instance, the Bank of England classifies its customers into three distinct kinds that indirectly are equivalent to average, good and excellent, on the strength of customers’ patterns of contributing to profitability of the bank. All levels of customers are provided access to specific range of banking services on Internet banking whereby the most profitable customers are provided with the widest variety of options and are charged the lowest rates. Therefore, such creamier customers are given many facilities for which they may not be required to pay such as a safe deposit box, free of charge currency conversions and preferential rates on loans. It is evident that such facilities provide motivation to customers to transact online, which provides a boost to e-commerce activities.

Problems

Online businesses are quite apprehensive about problems encountered by providing services on the World Wide Web. At times the problems can result in a great deal of dissatisfaction and the erosion of customer relationship. It is thus very important that companies must train their people to understand whenever such problems arise so that they are resolved at the earliest. A pertinent example in this regard is that of computer companies that have set up service centers across major cities in the world. Computer companies sell their systems online by providing all required information through well-trained, knowledgeable and customer oriented professionals that guide customers through the entire ordering and buying procedures. Such companies provide service guarantees and assure customers that they will be fully satisfied failing which they will be given some kind of compensation in keeping with the intensity of their problems. Upon receipt of the computer by the customer, a service representative makes contact on the telephone and provides all possible assistance in setting up the system. If the customer faces any problems such as parts that may not be working, the firm arranges for a technician to visit the customer’s place and rectifies the fault. Thus, service guarantees go a long way in keeping customers satisfied. Thus, marketing departments of companies must devise service guarantees that are developed in meeting the needs of the customer pyramid. Undoubtedly, the best customers deserve a complete guarantee of satisfaction.

Customer loyalty in the context of e-commerce is best built by shifting customers from the gold to the platinum level of the customer pyramids, which involves a great deal of outsourcing. A conceptual framework has been provided by Jevons and Gabbott, (2003) relating to the development of customer loyalty in the context of e-commerce activities in which the main drivers comprise of value propositions, brand building, trust and security, website and technology and customer service. The authors held that value propositions such as customized products, large sets of choices, product quality, guarantees, well known brands and pricing have a very strong bearing on consumer behaviors pertaining to choosing e-commerce as a means to transact on the World Wide Web. Brand building is done by e-commerce firms by focusing upon the development and involvement of the brand image as also through community building. E-businesses can muster a great deal of trust and security amongst customers when they meaningfully address issues such as third party approval of transactions, privacy, trust, standing, dependability, validation and non-repudiation. The issue of website and technology is best addressed by ensuring fast page loads that are easy to navigate and browse. The website should have personalized features and be designed for the target customer segments with adequate language options. The website should enable effective search functions with server reliability, meaningful content and quick shopping checkout procedures. The issue of customer service is best addressed by providing fast response to customer queries. The e-business websites are expected to provide meaningful solutions leading to easy contact, free online applications, convenient and secure payment methods, fast delivery with efficient delivery alternatives and a customer reward system that is appealing.

Research has shown that most of the shoppers give preference to websites that sell customized information and products, which clearly indicates that customization plays a major role in creating e-loyalty. Customization is the outcome of the interactive involvements of customers in the designing of his or her required products. A typical example in this regard is that of Dell, which has successfully implemented such schemes by providing customers with options to create their own composition of technology in the computers demanded by them. The high levels of involvement of buyers concerning product designs is in fact a means to create strong and effective relationship with the brands, which eventually results in brand loyalty. If e-businesses can attract large number of customers to their websites they can accumulate huge data about them, which allows for offering and enhancing customized offers and thus beat the competition in e-commerce. By involving combinations of product design and customer involvement along with well-known brand that has relatively good product quality, the firm ensures the enhancement of the chances of the product meeting customer aspirations. Conventional brands that have high levels of brand loyalty have been able to enjoy immunity from competition based on price and brand switching. E-markets are characterized with a reduced immunity in this regard because of easy comparison of prices by customers.

Brand Image Building and E-commerce

The literature has exhaustively discussed brand image building as a strategy to develop brand loyalty in terms of managerial and theoretical perceptions. Researchers have also held that when brand concept management in terms of functional and symbolic dimensions is used to develop e-businesses, a competitive edge over other firms is achieved. In e-commerce, the importance of brand building has attained more significance with a large number of options that are available now. The internet provides exclusive techniques for firms to develop interactive processes that can build the brand. Such techniques were not available previously through the conventional brand building strategies across varied media options. Nemes (2000) studied the patterns of brand building in e-commerce and concluded that the decisions taken by firms in the context of conceptualizing domain names had far reaching consequences towards extending the scope of brand names. It is known in this regard that customers are prone to patronize well known brands and websites as also those that they can remember easily. However, the content available on such websites also impacts customers significantly and if the browsing is interesting and smooth, the over all image of the brand improves.

Trust is a unique dimension of transactional privacy and security and plays a crucial role in creating customer loyalty for e-businesses. Recent studies have found that risks relating to online credit card frauds are a major reason for customers that avoid transacting on the Internet. Such security concerns have made many public relations exercises of major e-businesses to become failures and have eroded brand images considerably. E-businesses can make use of a large number of distinctive methods and techniques to improve trust and perceptions of customers in the context of their websites. Technological advancements have now allowed e-commerce firms to adopt a wide variety of options such as authenticating and encrypting passwords and client information that have allowed transactions on the internet to become more safe and secure. Encryption allows for security during the time of transaction while authentication ensures that the identity of the people involved in the electronic contract is adequately protected. Non-repudiation implies the maintenance of authentic transcripts of the given terms and conditions of the deal as agreed between the parties. Such authentication processes mostly make use of passwords. In this context, Authentidate.com and Verisign.com are the two main providers in authentication technology that are used by service providers in both the UK and UAE. Given that trust is closely associated with security, it is a major issue during the online buying process. Customers that decide to purchase on the Internet cannot touch, spell or feel the product nor can they see the salesperson because of which such methods of developing trust are not included in e-commerce.

When trust is developed in a brand, it allows the uncertainty factor to be significantly reduced. Moreover, trust is an element of the attitudinal components concerning loyalty. It is thus natural that loyalty and trust in the brand can assist in overcoming many of the disadvantages associated with the Internet. In essence, such perceptions are still present amongst customers and many of them get discouraged or do not get motivated to transact on the internet for the purchase of goods and services. Websites such as TRUSTe.com provide third-party approval in the UK and the UAE and play a very important role in generating trust amongst people that transact on the Internet. All merchants and customers that participate on TRUSTe.com are expected to adhere to the terms and conditions outlined by the website in terms of privacy and transactions pertaining to security issues.

An exclusive factor associated with e-loyalty is the crucial role played by the first impression that is represented by a website in terms of the convenience with which it can be used. Technology plays an important role in e-commerce because customers perceive server reliability, navigation; fast page loading, fast shopping and checking out procedures as crucial factors for transacting on websites. The convenience associated with websites is amongst the main factors that lead to customer satisfaction, which further impact the decision to revisit the website. Therefore, the website must be created in a way that it attracts targeted customers. This implies that the website content has to be in accordance with the preferences of the target customer base. Although e-commerce in the UK is fairly matured and advanced, it is also fast gearing up in making global standards to keep up with the latest technology in e-commerce.

Use of Technology

Since e-business suffer from a large number of constraints they have to ensure that appropriate technology is used in ensuring that the web pages load quickly so that potential customers are not made to leave the website on account of time constraints. Further, navigation of the website must be convenient whereby the browser should be able to locate what the customer is searching for, within the shortest possible time. Users of websites will make lesser mistakes if the hierarchy structure is broad instead of being very deep. The right approach is to provide information that is organized in limited hierarchical levels in relation to the home page of the website. Since different buyers follow different directions in browsing through the website, the e-business should be able to ascertain whether visitors to the website have come with the intention to buy or not. Additionally, other factors that have a strong beer in on e-loyalty are fast response and server reliability that is representative of major technical issues.

Customer service in terms of timely delivery of orders is crucial to maintain customer loyalty in e-business. Additionally, the logistics systems of the e-business should permit and provide for varied methods of delivering products because different customers prefer different ways of delivery. Customer service is very crucial for e- businesses. Because website designs invariably comprise of errors in its architecture it is important to provide for a creative customer service system. Customer service does not only imply providing online assistance because in many instances customers can easily call company representatives.

Conclusion

Although online marketing strategies are known to make decisions that lead to boosting consumer trust, building loyalty amongst customers and enhancing perceived values, firms must recognize that they have to be very selective in terms of the strategies that they use. In a business environment that is characteristic of scarce resources and turmoil, companies have to consider who they wish to address and serve more effectively. Typically, the strategies that firms use for building online volumes would prove to be harmful in creating positive customer relationships. Conversely, a better result can be achieved if firms set specific requirements for customers so that the firm’s perception of being exclusive is made evident amongst customers who will then feel proud of associating with the organization. For instance, some techniques for creating online loyalty involve the distribution of e-mail newsletters and electronic coupons that provide for special offers. The objective of such strategies is to provide higher value perceptions to attract customers who will then feel that they are being offered reduced prices.

Classification systems such as the customer pyramids can be used by such firms in searching for alternatives to adopt profitable strategies. Actually, the offer of price reduction to the top bracket customers is not considered ideal because many customer segments attach immense value to higher prices and status that is related with such products. Conversely, there are also customer segments that delay even regular purchases in anticipation of prices to fall in the coming future. Additionally, offering discounts to the top bracket customers may not prove to be profitable for the firm. The economies of scale as applicable in e-commerce do not allow for personal contact with customers because it proves to be very expensive in contacting all online customers. Nevertheless, it is a good idea to make use of personal contacts and create relation building strategies with customers that are loyal and have proved to be profitable for the firm.

Basis for Further Research

Researchers feel that efforts at further research on the topic should be focused upon determining how to extend trading communities, accessing new markets, establishing industry consortiums, lowering financial barriers to e-commerce, market presence and competition and to enhance efficiency by utilizing new methods of e-sourcing. Researchers feel that presently there is a lack of adequate knowledge and awareness about the benefits that can accrue with ecommerce, especially in the UAE.

The Madar Research Journal (2006) has listed amongst other reasons the extreme lack of adequate awareness of required information and education pertaining to the advantages of B2B and e-commerce. The report has also cited that there is considerable lack of common interest in promoting B2B alliances because most businesses have adopted the wait and watch attitude; when there is extreme lack of technology amalgamation, presence of risks pertaining to online security and a virtual absence of payment systems in the context of B2B transactions in the GCC countries.

Recommendations

Some techniques that increase online volumes must be applied carefully in the customer pyramids. Giving discounts on prices may not prove to be viable for some customer segments but through market research they can be used with sections of consumers that were motivated with price reductions. E-businesses also have the option to engage in sponsored online community forums that provide offers and value to restricted customers. In all probability, the top bracket customers will be appreciative of third-party recommendations if they are satisfied with the product and services of the e-business.

On the basis of such conceptual frameworks relating to the drivers of e-loyalty, there are a number of questions that arise while considering future research in the area. Firstly, there is a strong need to shift from practitioner related descriptive research efforts towards higher levels of theoretically-based models concerning e- loyalty. Comparative research needs to be done in the context of the belated significance of the diverse factors than trying brand loyalty in conventional markets and in e-markets.

Despite the large number of failed promises and hurdles faced in e-commerce, the pattern of online marketing and buying is set to grow tremendously in the coming future. E-loyalty will be more strongly viewed as a major success factor in e-commerce. Thus it will be a big challenge for firms to consistently maintain customer loyalty in a highly competitive business environment that continues to prevail in the fickle world of online business and shopping. E-businesses have to understand the dynamics and drivers of the manner in which customer loyalty is created and preserved in e-commerce with the assistance of all inclusive theoretical frameworks that have become crucial in devising marketing strategy in an extremely competitive environment.

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Appendix A

Questionnaire for Individuals

  1. Do you agree that the popularity of e-commerce is growing in your country?
  2. Is it correct to say that majority of businesses in your country are offering sale of products and services through e-commerce
  3. Do you agree that e-commerce applications need to be constantly improved technologically?
  4. Do you consider that the e-commerce platform in your country is efficient in catering to customers’ requirements?
  5. Is it correct to say that you derive more satisfaction by transacting on the internet
  6. Do you use the internet very frequently for meeting your needs for different products and services?
  7. Is it correct to say that you have been rarely using the internet for purchases on account of security issues?
  8. Do you agree that the websites that are engaged in e-commerce are technologically advanced in terms of convenience and speed?
  9. Are you able to trust internet sites that sell goods and services?
  10. Are you concerned about the fact that there are some barriers to transacting on the internet?

Questionnaire for Company Representatives

  1. Are you making use of the latest technology on your website?
  2. Is it correct to say that your company realizes of and makes use of the huge potential in e-commerce?
  3. Do you provide maximum possible security options to your customers without compromising on costs?
  4. Have you increased your market share through e-commerce in the sale of products that you specialize in?
  5. Does your company’s organizational culture support e-commerce?
  6. Is it correct to say that while engaging in e-commerce a lot of barriers have to be met?
  7. Is cost of technology a major factor for your company to enhance its presence on the World Wide Web?
  8. Does your company consider cost factors while providing customers with confidentiality, convenience and quality infrastructure?
  9. Is it true that your company’s online sales have increased after it started e-commerce operations?
  10. Has your company established trust amongst its customers?

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