2 LITERATURE REVIEW In this chapter, we study the pertinent literature review on e-fulfilment and explore the key dimensions of e-fulfilment that influence customer shopping experience in etailing. Section 2.1 presents the literature review process. Section 2.2 describes the efulfilment and explores the key dimensions at each stage (namely order procurement, order fulfilment and reverse service exchanges) of e-fulfilment. Sections 2.4 and 2.5 present research gaps and research questions respectively.
2.1 Literature Review Process: Literature was searched from various online research databases like Emerald, Science Direct, Google Scholar, and several others using the following relevant keywords: efulfilment, order fulfilment and online retail, order fulfilment and e-commerce, etailing. About 78 research articles pertinent to our study were selected after critically examining all the papers available from these databases. Since e-fulfilment was the primary focus in our study, we found that the e-fulfilment can be broadly classified into three stages namely order procurement, order fulfilment and reverse service exchanges. Further, seven dimensions namely e-business quality, product quality, availability, timeliness, condition, billing accuracy and ease of return were extracted from the literature after exploring each stage of e-fulfilment process. The literature was organised accordingly into three stages of e-fulfilment process (see Figure 2.1). Many authors studied the linkages of seven dimensions of e-fulfilment process various customer aspects like shopping satisfaction, purchase intention, repurchase intention, word-of-mouth in variety of e-commerce and e-tailing contexts (Refer Appendix A).
Reverse Service Exchanges
Figure 2.1: Organisation of pertinent literature
2.2 Key Dimensions of e-fulfilment Process Pyke, Johnson, & Desmond (2001) proposed five distinct processes of e-fulfilment namely order capture, order processing, pick and pack, ship; and after sales service and returns handling. We classified e-fulfilment into three stages namely order procurement, order fulfilment and reverse service exchanges in management context section. Seven dimensions namely e-business quality, product quality, availability, timeliness, condition, billing accuracy and ease of return were extracted from the literature after exploring each stage of e-fulfilment process.
2.2.1 Dimensions of Order Procurement Order procurement involves product ordering information in terms of website search, website ease, website navigation, product quality, product availability, product information and product assortment (Heim & Sinha, 2001). Thus, e-business quality and product quality were identified as key dimensions of order procurement process of e-fulfilment. These dimensions are described in detail below.
e-business Quality Customers willing to purchase any product online first explore e-tailer‘s website. Hence, website quality and its features plays significant role to facilitate the customer for searching the desired product. Zeithaml, Parasuraman, & Malhotra (2002) proposed a conceptual framework for measuring service quality delivery through websites. They identified five dimensions for measuring electronic service quality (eSQ) namely information availability and content, ease of use, privacy/security, graphic style and fulfilment/reliability. Wolfinbarger & Gilly (2003) studied four factors for measuring consumers‘ perceptions of online e-tail quality (etailQ) viz. website design, fulfilment/reliability, privacy/security and customer service. They observed that order fulfilment and website design significantly affects online purchase experience and it further leads to online customer satisfaction as well as customer loyalty. They proposed actual representation of products, accurate orders and on-time deliveries as important elements of order fulfilment. Parasuraman, Zeithaml, & Malhotra (2005) developed a multi-item scale for measuring service quality delivered by various websites. In this paper, they proposed E-S-QUAL scale with four dimensions; efficiency, fulfilment, system availability and privacy. They also proposed E-RecS-QUAL scale (comprised of three dimensionsresponsiveness, compensation and contact) as a subscale of service scale for handling service problems, inquiries, complaints and product returns for customer having nonroutine encounters with websites. Bauer, Falk, & Hammerschmidt (2006) developed an eTransQual Scale for measuring online service quality incorporating both utilitarian and hedonic quality elements. They suggested functionality/design, enjoyment, process, reliability and responsiveness as five discriminant quality dimensions affecting customer satisfaction. Heim & Field (2007) studied the
operational variables of e-service quality. They examined the relationship between service process attributes and service quality dimensions and identified subsets of service attributes having positive and negative relationship with service quality dimensions (payment process, on-time delivery, ease of returns and refunds, privacy experience and customer support). Boyer & Hult, (2005b) and Boyer & Olson (2002) first attempted to study e-business quality with respect to online retail and labelled construct site-ease assessing specific aspects of navigation, sequence of steps, and ease of search on website for ordering a product online. Agarwal & Prasad (1999) considered different aspects of quality that are critically affected by taking orders online. Boyer & Hult (2005b) developed the construct ―e-business quality‖ based on the previous works (Agarwal & Prasad, 1999; Boyer & Olson, 2002; Zeithaml, Parasuraman, & Malhotra, 2000). They promulgated the idea of a simple and understandable website; making transactions as easy and transparent as possible, while delivering what the customer ordered. Product Quality Another important dimension of order procurement process is the product related information made available to the customers. One of the biggest challenges in etailing has been the fact that customers can‘t see and touch the product (Boyer & Hult, 2005a) and hence can‘t establish product quality more accurately. Product Quality refers to the physical quality of the goods as perceived by the customer; the degree of choice or the assortment; and the e-tailer‘s ability to keep these products in stock and/or make appropriate substitutions (Boyer & Hult, 2005b). Several authors have studied the significant relationship of product quality on shopping satisfaction (Liu et al., 2008; Thirumalai and Sinha, 2005, 2011; Trabold et al., 2006); customers‘ behavioural intentions (Boyer & Hult, 2005a, 2006); and customer loyalty (Heim & 13
Sinha, 2001). e-fulfilment dimensions related to order fulfilment stage are presented next.
2.2.2 Dimensions of Order Fulfilment Order fulfilment process involves order processing, picking, packing and shipping of products to the customer. In the literature, order fulfilment was conceptualized as physical distribution service quality (also referred to as PDSQ) (Bienstock et al., 1996; Rabinovich & Bailey, 2004); logistics service quality (Mentzer, Flint, & Hult, 2001; Mentzer, Flint, & Kent, 1999); operational order fulfilment service quality (Davis-Sramek et al., 2008), etc. These studies identified availability, timeliness and condition as dimensions of PDSQ. Koufteros et al. (2014) adding billing accuracy into PDSQ dimensions and developed order fulfilment service quality construct. Next, we discuss PDSQ in detail. Physical Distribution Service Quality Rabinovich & Bailey (2004) first conceptualized physical distribution service quality construct in online retailing using three dimensions namely inventory availability, delivery timeliness and reliability in order fulfilment. Availability in the e-fulfilment refers to inventory capability; whether the product is in-stock at the point of order placement and if not, when it is going to be available or what kind of substitution may be made (Xing & Grant, 2006). Timeliness in the e-fulfilment context refers to timely delivery of products or services (Koufteros et al., 2014). Accuracy and quality of the order is measured by condition dimension (Xing & Grant, 2006, p.285). It refers to whether the products or service ordered actually arrived in good condition (Koufteros, et al., 2014, p.10). Rabinovich and Bailey (2004) empirically investigated that PDSQ (offered by Internet retailer in their transactions with customers) is affected by service
pricing, transaction-level and firm-level attributes. They also stated that new entrant in online retailing needs to focus on these PDSQ dimensions to gain competitive advantage. Billing accuracy refers to correctly charging customers for the right products and services at the right price (Holloway & Beatty, 2008; Koufteros et al., 2014). Thirumalai & Sinha (2005) studied the customer satisfaction with order fulfilment processes across various product types. They classified the products into three categories- convenience (e.g., groceries), shopping (e.g., apparels) and specialty (e.g., electronics) and collected data from an online ratings website (www.bizrate.com). They concluded that customers derive higher satisfaction levels for convenience and shopping goods than specialty goods. Otim & Grover (2006) evaluated pre-purchase, transaction-related and post-purchase services of e-business on customer loyalty. This paper established that pre-purchase services (search support and product evaluation) have limited effect on customer loyalty as compared to transaction-related services (like billing transparency) and post-purchase services (like order-tracking, on-time delivery and customer support). Rao et al. (2011) developed the concept of electronic logistics service quality (e-LSQ) to investigate the relationship between e-fulfilment quality and customer retention using the secondary data from www.bizrate.com. They found that customer satisfaction with the PDS quality and PDS price are positively related with customer‘s purchase satisfaction and customer retention. Koufteros et al. (2014) studied the moderating effect of historical satisfaction between antecedents (order fulfilment service quality dimensions like availability, timeliness, condition and billing accuracy) and consequences (repurchase intention and word of mouth) of encounter satisfaction. Heim & Sinha (2001) conducted an exploratory study for determining the operational drivers of customer loyalty. They collected data for 15
electronics food retailers from online ratings site (www.bizrate.com) and found that three order procurement factors (website navigation, product information and price) and three order fulfilment factors (product availability, timeliness of delivery and ease of return) significantly affect customer loyalty. The reverse service exchanges is discussed next.
2.2.3 Reverse Service Exchanges Product returns have always irritated e-tailers (Pyke et al., 2001). It calls not only transport arrangement for receiving the product, inspecting, re-palletize, repackage, re-label but to integrate the inventory back into the system; and that too with reduced costs to the customers and with additional logistics cost burden to the e-tailer. Ease of return refers to the process where products are returned from the point of consumption to a retailer for possible repair, resale, or recycling, etc. (Tarn et al., 2003). Ease of return is also about how a retailer deals with damaged, unwanted or faulty products, how many channel options consumers have to return the products and how promptly products can be collected or replaced (Xing & Grant, 2006; Xing et al., 2010). Returns also represent the missed opportunity to manage customer relationships and build customer loyalty to the e-tailer (Mollenkopf et al., 2007). This study also observed that product returns requiring high levels of customer effort can have a negative effect on customer‘s satisfaction with the returns transaction. Mollenkopf et al. (2011) emphasized that returns management can also corroborate the conflicting marketing-operations interface by utilizing the conceptualization of customer value and its related drivers. They proposed returns policy, returns processing, product quality, service support, personal interaction, and supplier know-how as the value drivers of returns management. Jiang & Rosenbloom (2005) analyzed the price and customer satisfaction at different stages of customers‘ intention to return the products. 16
They put forward the argument that after-delivery satisfaction significantly influences customer satisfaction as well as intention to return; whereas price perception has positive impact on over-all satisfaction and intention to return. Griffis et al. (2012) proposed that returns policy may strongly influence future customer buying behaviour. They used transactional cost elements, consumer risk, and procedural justice theories and found that product returns process positively affects repurchase behaviour. (Mollenkopf et al., 2011) proposed that the management of product returns and reverse exchanges are important for cost reduction, customer acquisition and enhanced profitability for any organization. This section described pertinent literature review of the e-fulfilment and explored the key dimensions of e-fulfilment which influence customer experience. The research gaps and research questions found from pertinent literature is discussed in the next section.
2.3 Research Gaps The following gaps are identified during the pertinent literature review process:
There is no single study carried out till date which has examined the complete e-fulfilment using process view. Previous studies proposed standalone frameworks examining a certain part of e-fulfilment process and tested effect of few relevant e-fulfilment dimensions on certain attitudinal and behavioural aspects of the customer. However, study involving key dimensions of efulfilment considering process view is currently missing in literature. There is a need to build an integrated e-fulfilment framework examining the entire efulfilment process.
Majority of the studies has been carried out in US or UK context. Very few studies have been carried out in Indian context, where e-tailing is in naive stage.
Returns rate being higher in Indian context, ease of return can be a useful dimension of e-fulfilment which may be an antecedent to return satisfaction, shopping satisfaction and repurchase intention. Relationship between shopping satisfaction and returns satisfaction; returns satisfaction and repurchase intention needs to be explored for better clarity of service operations and reverse service exchanges literature in e-fulfilment.
Most of studies were carried out using secondary data from customer ratings website (www.bizrate .com; www.epubliceye.com); very few studies were based on primary data. These studies mainly focused on multi-channel retail. Primary data based study in pure e-tailing context is missing in the literature.
Limited studies has been carried out on comparing e-fulfilment dimensions between group of customers who did not encounter return or replacement experience and group of customer who encountered return/replacement experience in online shopping.
No study was found in the literature dealing with cash-on-delivery payment option, relevant for Indian e-tailing context.
Next, we present the research questions.
2.4 Research Questions Pertaining to these research gaps, we propose the following research questions: 1. What is the relevance and importance of e-fulfilment in pure e-tailing? 2. What are the key dimensions of e-fulfilment process? 18
3. Do e-fulfilment dimensions influence shopping satisfaction and repurchase intention of customer? 4. Does shopping satisfaction has a mediating effect between e-fulfilment dimensions and repurchase intention? 5. Does return satisfaction has a mediating effect between ease of return and repurchase intention? 6. Is
satisfaction/repurchase intention different for: a) Non-returns and returns case? b) Customers preferring COD payment option vs. Customers preferring other payment options? Based on the above research gaps and research questions, a conceptual framework and set of hypotheses is proposed in the next chapter.