Customer Loyalty in E-Commerce

The high cost of attracting new customers on the Internet and the relative difficulty in retaining them make customer loyalty an essential asset for many online vendors. In the non-Internet marketplace, customer loyalty is primarily the product of superior service quality and the trust that such service entails. This study examines whether the same applies with online vendors even though their service is provided by a website interface notably lacking a human service provider. As hypothesized, customer loyalty to a specific online vendor increased with perceived better service quality both directly and through increased trust. However, the data suggest that the five dimensions of service quality in SERVQUAL collapse to three with online service quality: (1) tangibles, (2) a combined dimension of responsiveness, reliability, and assurance, and (3) empathy. The first dimension is the most important one in increasing customer loyalty, and the second in increasing customer trust. Implications are discussed.