E-COMMERCE AND CUSTOMER SATISFACTION

(A STUDY OF JUMIA.COM AND OLX.COM)

ABSTRACT

Electronic commerce also known as e-commerce has facilitated the emergence of new marketing strategies and business models in several industries in developing countries, Nigeria inclusive. This study examined E-commerce and Customer satisfaction. Users of and employees of Jumia.com and OLX.com served as the study population. The broad aim of the study was to examine the effect of E-commerce on customer satisfaction while other objectives were; to identify the factors responsible for consumer re-order purchase in Jumia and OLX.com and to determine causes of consumer loyalty to the online products of Jumia.com and OLX.com. Analysis of data is based on 120 copies of questionnaire administered to users of Jumia.com and OLX.com. A total of 50 copies were filled and returned from Jumia.com and 55 was filled and returned from OLX.com, making a total of 105 copies returned while 15 was withheld. The formulated hypotheses were tested using chi-square. Results of the study shows that there are factors responsible for customer re-order purchase in Jumia and OLX.com. The study therefore recommends that an online marketing organization should work at adopting policies that would reflect the factors that encourages customers to use online shops. For example, customers want to be sure of adequate security on their online transactions, they want to be sure that their personal identity and information is intact and that there is need for online shops to do a lot of advertisement based on the fact that many consumers still do not know the advantages of buying their goods online.

TABLE OF CONTENT

Pages

Title Page                                                                                                                   

Certification                                                                                                                ii                     

Dedication                                                                                                                  iii

Acknowledgement                                                                                                      iv

Abstract                                                                                                                      v

Table of Content                                                                                                         vi

CHAPTER ONE: INTRODUCTION                                                                               

1.1       Background to the Study                                                                               1         

1.2       Statement of the Problem                                                                               3                     

1.3       Aim and Objectives of Study                                                                         4                     

1.4       Relevant Research Questions                                                                         4                     

1.5       Relevant Research Hypotheses                                                                       5

1.6       Significance of the Study                                                                               5

1.7       Scope of the study                                                                                          5

            References                                                                                                      6

CHAPTER TWO: LITERATURE REVIEW                                                                 

2.1       Preamble                                                                                                         8         

2.2       Theoretical Framework of the study                                                               9

2.3       Empirical Review of Previous works in the area of study                              10       

            References                                                                                                      22

CHAPTER THREE: RESEARCH METHODOLOGY                                     

3.1       Preamble                                                                                                         25

3.2       Research Design                                                                                             25

3.3       Population of study                                                                                        25

3.4       Sampling Procedure and sample size                                                              26

3.5       Data Collection Instrument and validation                                                    26

3.6       Method of Data Analysis                                                                               27

3.7       Limitation of the Methodology                                                                      27

            References                                                                                                      29

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS 

4.1       Preamble                                                                                                         30

4.2       Analysis of respondents’ Bio-Data                                                                    32

4.3       Analysis of Questionnaire items                                                                        44

CHAPTERFIVE: SUMMARY, CONCLUSION AND RECOMMENDATION        

5.1       Summary                                                                                                         46

5.2       Conclusion                                                                                                      48

5.3       Recommendations                                                                                          48

            Bibliography                                                                                                   49

            Appendix                                                                                                        54

CHAPTER ONE

INTRODUCTION

1.1              Background to the Study

 Electronic commerce also known as e-commerce has facilitated the emergence of new marketing strategies and business models in several industries in developing countries, Nigeria inclusive. Significant changes are happening in product retailing with the introduction of online shopping, especially in terms of channel development and coordination, business scope redefinition, the development of fulfillment centre model and core processes, new ways of customer value creation, online partnerships and general customer satisfaction. In fact the role of online marketing itself has undergone some significant changes in the last few years in Nigeria (Irene 2004). The electronic commerce segment of the retail market has witnessed tremendous growth in terms of participation in the Nigerian economy in the past few years. According to Johnson, (2012) over 100 firms both local and foreign have shown greater interest in the sector alleged to worth over $50 billion annually. The industry has no doubt opened doors for the coming generation of young Nigerian entrepreneurs. Electronic commerce industry has no doubt increased the percentage of local content in products and services as well as increased utilization of local capacity.

Ayo, Adewoye and Oni (2011) asserted that the adoption of e-commerce in Nigerian business organizations has increased since the users of internet in Nigeria has grown from 0.1% in 2000 to 29.5% of its population in 2014 and still has the potential to grow higher. Tunde (2014) also noted that online retail market in Nigeria has significantly impacted the nation’s economy. In the same vein, Mary-Anne (2008) affirmed that e-commerce has offered a level playing ground for large businesses, as well as small and medium-scale enterprises (SMEs) to operate in the global market-place; and for regional businesses and communities to participate in social, economic and

cultural networks seamlessly across international boundaries. E-commerce refers to the use of communications technology particularly the internet to buy, sell and market goods and services to customers. The Internet has brought about a fundamental shift in national economies that are isolated from each other by barriers to cross-border trade and investment; isolated by distance, time zones and language; and isolated by national difference in government regulations, culture and business systems (Mohammad, 2004).

A customer is said to be satisfied when products and/or services meetthe expectation of the customer. Trust which is a belief that one can rely upon a promise made by another (Pavlou, 2003), is an important factor in customer satisfaction. Stewart, Ellis, Johnson and Meyer (2009) define trust in electronic commerce as the subjective probabilitywith which consumers believe that an online transactionwith a web retailer will occur in a manner consistent withtheir expectations. Scholars have identified lack of trustas one of the main reasons for consumers’ cynicismtowards electronic commerce. In the context of ecommerce,trust beliefs include the online consumers’beliefs and expectancies about trust-related characteristics of the online seller (McKnight and Chervany,2002). The online consumers desire the online sellers tobe willing and able to act in the consumers’ interests, tobe honest in transactions (not divulging personalinformation to other vendors), and to be capable ofdelivering the ordered goods as agreed.According to Mahmood (2004), the trust factor hassignificant positive contributions to consumers’ online shopping behaviour. Jiang, Chen and Wang (2008) argued thatconsumer trust is a critical enabler of successful onlineretailing and knowledge is one important factorinfluencing the level of trust. The work of Gefen (2003)and Al-Dwairi, Chappel and Feindt(2009), among others presented anintegrated trust model with the technology acceptancemodel for business-to-consumer (B2C) e-commerce.

It is very important that customers are content with the products and servicesprovided by the particular internet shop as satisfied customers arelikely to be loyal and make repeat purchases which willincrease profitability of that particular e-commerce company. In this study, the concept of satisfaction will be referred in terms of outcome by comparingthe prior expectation and the perceived performance for eachantecedent factor in order to measure the attitude of the respondents for each of thosefactors.Many studies have been carried out to investigate the various degree of influence that e-commerce has on business development in Nigeria using different sectors of the economy but there seems a dearth of research that has specifically studied the relationship between e-commerce adoption and customer satisfaction using online shops. Based on this, this study takes a comparative analysis of E-commerce and customer satisfaction in Jumia and OLX.

1.2 Statement of the Problem

Despite the growth of internet users in Nigeria, muchresearch work has not been done in accessing the Business to Customer (B2C) e-commerce relationship. Presently, many online shoppingsites are thriving in Nigeria, servicing thousands ofsearchers every week. Some of them are:www.234 world., Xtaples.net, www.booksng.com, www.orderbay.com., Jumia.com and OLX.com. Some of these sites make thetransaction process so easy that buyers forget about theopen market. A site like OLX.com allows buyer topay to a designated bank account after making onlinepurchases. The items purchased are then shipped to thebuyer at the speed of light. Jumia.com allows individual toreceive money online and thereafter use it to pay forpurchases made. Considering allthese, it is expected that the number of people engagingin e-commerce activity will increase. E-commerce hashowever not been widely tapped into in Nigeria. Many Nigerians stilltreat its benefits with deep skepticism. They do notbelieve that e-commerce transactions could besuccessfully conducted. Customers do not have trust on the delivery system, the payment style and the facelessness of e-commerce activities. Therefore, there is need for online marketing organizations in Nigeria to understand what satisfies individual and organizational customers. Based on this, the study is a comparative analysis of e-commerce and customer satisfaction using Jumia.com and OLX.com, which are some of the leading online shops in Nigeria.

1.3 Aim and Objectives of the Study

The general aim of this study is to analyse e-commerce and customer satisfaction while the objectives are as follows;

i)                    To identify the factors responsible for consumer re-order purchase in Jumia and OLX.com;

ii)                  To determine causes of consumer loyalty to the online products of Jumia.com and OLX.com.

1.4   Relevant Research Questions

In comparatively analyzing e-commerce and service delivery the following questions are pertinent:

i)                    What are the factors responsible for consumer re-order purchase in Jumia and OLX.com?

ii)                  What are the causes of consumer loyalty to the online products of  Jumia and OLX.com?

1.5  Relevant Research Hypotheses

H0:There are no factors responsible for customer re-order purchase in Jumia and OLX.com

H1:There are factors responsible for customer re-order purchase in Jumia and OLX.com

1.6  Significance of the Study

This study became extremely important because of observed knowledge gap on e-commerce and its impact on customer satisfaction. This has made it apparently necessary to carry out this study. This study is therefore of significance to the following user groups:

Managers of marketing organizations in Nigeria would benefit from the study as recommendations would serve as necessary data for management strategic decision making.

 Findings obtained from this study shall be of assistance to the Nigerian consumer public as recommendations would serve as a source of information for purchase decision making.

The online shops in Nigeria would also benefit from this study as findings would assist them in formulating policies to counter competition in the sector.The study would also be of benefit to entrepreneurs who wish to venture into online marketing in Nigeria.

This study would be of importance to academics who are involved in knowledge transfer as findings would serve as research evidence.

1.7 Scope of the Study

This study aims at comparatively analyzing e-commerce and customer satisfaction. The scope of the study is limited to the study of e-commerce strategies in Jumia.com and OLX.com.

References

Al-Dwairi, J., Chappell, C., and Feindt, S. (2009). Best practice in SME adoption of e-commerce. Benchmarking:An International Journal, 10 (9), 122–132.

Ayo, C.K, Adewoye, J.O and Oni, A. A (2011): Business-to-consumer e-commerce in Nigeria: Prospects and Challenges. African Journal of Business Management. 5 (13), 5109-5117.

Gefen, A.S. (2003). E-marketing and SMEs: Operational lessons for the future. European Business Review, 19, 234–247.

Irene, Y. F (2004): Online Supermarket: Emerging strategies and business models in the UK; 17th Bled e-commerce conference e-global. Bled, Slovenia, June, 21-23, 2004.

Johnson, O (2012): Best Practice in SME adoption of e-commerce. Benchmarking: An International Journal, 9(8), 122–132.

Jiang Jui-Chin, Chen Chun-An, and Wang Chih-Chien (2008). Knowledgeand Trust in E-consumers' Online Shopping Behavior. InternationalSymposium on Electronic Commerce and Security.

Mahmood, M.A (2004). On-line Shopping Behavior:Cross-Country Empirical Research. International  Journal of Electronic Communication, 9 (1):9-30.

Mary-Anne, G (1998): E-COMM-AWARE! E-Commerce awareness programme for regional communities, Journal of Internet Banking and Commerce, 3(2), 90-112.

McKnight, A., and Chervany, P. S. (2002). E-Commerce adoption in developing countries: A model and instrument .Information and Management, 42, 877–899.

Mohammad, T (2004): Roles of E-Commerce in 21st Century. Journal of Internet Banking and Commerce. 8(2), 445-178.

Pavlou, P.A (2003). Consumer Acceptance of Electronic Commerce:Integrating Trust and Risk with the Technology Acceptance. International Journal of Electronic Communication, 7:3.

Stewart, D., Ellis-Chadwick, F., Johnston, K. and Mayer, R. (2000), Internet Marketing: Strategy, Implementation and Practice, Pearson Education Limited.

Tunde, K. (2014): Benefits and barriers of electronic marketplace participation: an SME perspective. The Journal of Enterprise Information Management,17(4),  301-311.

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