1. shopping

WHY TAOBAO OUTPERFORMED EACHNET:
THE IMPORTANCE OF WEBSITE FEATURES
ON E-SATISFACTION AND E-LOYALTY
By
WENWEN XU
Bachelor of Science
Beijing Institution of Clothing Technology
Beijing, China
2007
Submitted to the Faculty of the
Graduate College of the
Oklahoma State University
in partial fulfillment of
the requirements for
the Degree of
MASTER OF SCIENCE
July, 2010
WHY TAOBAO OUTPERFORMED EACHNET:
THE IMPORTANCE OF WEBSITE FEATURES
ON E-SATISFACTION AND E-LOYALTY
Thesis Approved:
Dr. Hira Cho
Thesis Adviser
Dr.Byoungho Jin
Dr. Hyun-Joo Lee
Dr. Mark E. Payton
Dean of the Graduate College
ii
ACKNOWLEDGEMENT
I would like to express my deepest appreciation to my committee members who
believed in me and continually supported me throughout this entire process. Especially, I
wish to give my sincere thanks to my adviser, Dr. Hira Cho, for her tireless efforts and
true dedication in helping me complete my thesis. This thesis benefited greatly from her
generous guidance and supervision. I will not forget the days we were working on my
thesis in her office very late. I feel so lucky that I had her as my adviser and friend in my
life. To the other committee members, Dr. Byoungho Jin, thank you for coming from
North Carolina to attend my oral defense. Dr. Hyun-Joo Lee, thank you for coming from
the Tulsa campus. Without their valuable suggestions and comments, I would not have
been able to complete this work.
I would like to thank my parents for their love and other family members for the
mental and financial support. To my dear father and mother, Dr. Bo Xu and Mrs. Hui liu,
you always respect my choice and give me the greatest support. Also, thank you for your
faith in my ability to “believe in yourself, you can do it.” To my dear aunt, Mrs. Qin Liu,
thank you for putting your efforts on data collection in China. All of you are my pride; I
hope I can share this honor with you.
Many thanks for my friends at OSU who always support and help me: Brandy
Kennedy, Wanshen Wang, Yang Shi, Weiyu Jiang, who helped me edit my thesis and
collect data in the U.S. Especially many thanks to my boyfriend, Minh Nguyen, who has
accompanied with me for two years. Thank you for your unending confidence in my
iii
abilities and your love.
There are still many people who I should acknowledge during my study at OSU:
Dr. Christine Johnson, Dr. Celia Stall-Meadows, Dr. Jane Swinney, Mr. Michael
Heppler, and Mrs. Susan Brock. I could not make it if I did not have your encouragement.
Once again, I appreciate everyone for your encouragement, guidance, and support in
helping me finish my thesis.
iv
TABLE OF CONTENTS
Chapter
Page
I. INTRODUCTION.................................................................................................. 1
Background ......................................................................................................... 1
Problems .............................................................................................................. 3
Purpose of the Study ............................................................................................ 4
Significance of the Study ..................................................................................... 4
Hypotheses .......................................................................................................... 5
Definition of Terms ............................................................................................. 7
Limitations .......................................................................................................... 7
Outline of Work ................................................................................................... 8
II. REVIEW OF LITERATURE ................................................................................ 1
Chinese Online Market ........................................................................................ 9
1. Internet Users in China ......................................................................... 9
2. Online Shoppers in China ................................................................... 10
3. Hindrance of the Initial Development of Chinese Online Market ........ 12
4. Growth of Chinese Online Market ...................................................... 14
5. Chinese Online C2C Market: Taobao vs. EachNet .............................. 16
6. Growth Factors for Taobao ................................................................. 18
6-1. Location ..................................................................................... 19
6-2. Target Market .............................................................................. 20
6-3. Strategy of Listing Fees ............................................................... 20
6-4. Unique Needs .............................................................................. 21
6-5. Promotion ................................................................................... 22
6-6. Auction Market in C2C Format ................................................... 22
7. Website Features of Taobao and EachNet .......................................... 23
7-1.Website Interface Design ............................................................. 23
7-2.Customer Service ....................................................................... 24
7-3.Payment System and Method ...................................................... 25
7-4.Communication Tool and Community ........................................ 27
7-5.Feedback System ........................................................................ 28
E-loyalty and the Antecedents ............................................................................ 31
1. E-loyalty ............................................................................................ 31
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Chapter
Page
2. E-satisfaction................................................................................ 32
3. Website Features .......................................................................... 32
End-User Computing Satisfaction (EUCS) Model......................................... 36
1. Development of the EUCS Model ............................................... 36
2. Application of the EUCS Model .................................................. 37
Model Development and Hypotheses ............................................................ 45
1. Model Development ..................................................................... 45
2. Hypotheses .................................................................................. 48
2-1.Website Features and E-satisfaction ....................................... 48
2-2.E-satisfaction and E-loyalty ................................................... 52
2-3.Comparisons of Taobao and EachNet .................................... 53
III. METHODOLOGY ............................................................................................ 56
Focus Group Interviews ................................................................................ 56
Pre-test ......................................................................................................... 59
Measurement Development for the Main Survey .......................................... 63
Data Collection ............................................................................................. 64
Characteristics of Sample .............................................................................. 65
Data Analysis .............................................................................................. 69
IV. FINDINGS ........................................................................................................ 70
Dimensions of Website Features .................................................................... 70
Comparisons of Taobao and EachNet ............................................................ 75
V. DISCUSSION, IMPLICATION AND LIMITATION ........................................ 76
Discussions ................................................................................................... 76
Implications ................................................................................................... 80
1. Academic Implications ................................................................ 80
2. Managerial Implications .............................................................. 83
Limitations .................................................................................................... 87
REFERENCES........................................................................................................ 90
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APPENDICES ...................................................................................................... 103
APPENDICES A. QUESTIONNAIRE ............................................................ 104
APPENDICES B. OKLAHOMA STATE UNIVERSITY
INSTITUTIONAL REVIEW BOARD APPROVAL ......... 109
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LIST OF TABLES
Table 1. The History of Taobao and EachNet ............................................................ 17
Table2. The Comparisons of the Business Strategy between Taobao and EachNet ... 19
Table 3. The Comparisons of Website Features between Taobaod and EachNet ........ 30
Table 4. Summary of WebQual 4.0 ........................................................................... 35
Table 5. Doll and Torkzaden’ s (1988) EUCS Instrument ......................................... 37
Table 6. Application of the EUCS Model .................................................................. 43
Table 7. Focus Group Interview Results .................................................................... 58
Table 8. Measurement of the Pre-test ........................................................................ 61
Table 9. Factor Analysis for the Pre-test.................................................................... 62
Table 10. Distribution of Survey ............................................................................... 65
Table 11. Demographic Characteristic of the Samples............................................... 67
Table 12. Previous Experience of Taobao and EachNet ............................................. 68
Table 13. Results of Factor Analysis for the Main Survey ......................................... 72
Table 14. Regression Results of Website Features Factors and Satisfaction ............... 74
Table 15. Regression Results of Satisfaction and Loyalty.......................................... 74
Table 16. Regression Results of Factors for
Website Features Dimensions and Satisfaction .......................................... 74
Table 17. Mean Values for Website Features, Satisfaction,
and Loyalty (Taobao and EachNet)............................................................ 75
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LIST OF FIGURES
Figure1. Numbers of Internet Users in China from 1997 to 2008 ............................. 10
Figure2. User Scale of Chinese Online Shopping Industry 2001-2010 ..................... 11
Figure 3. China Per Capita Online Shopping Amount 2003-2008 ............................ 12
Figure 4. The Comparison of Market Share between Taobao and EachNet by Years 18
Figure 5. Research Model of E-loyalty among Chinese Consumers .......................... 47
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CHAPTER I
INTRODUCTION
Background
Catalyzed by the increasing number of Chinese Internet users, online shopping is
becoming one of the major Internet activities among Chinese. In the middle of 2008, the
number of Internet users reached 253 million, making China the largest Internet market in
the world (Barboza, 2008). According to the China Internet Network Information Center
(CINIC), about one-fourth (Approximately 73 million) Internet users shopped online in
2008, and the number is predicted to exceed 100 million in 2010 (“China’s online
shopping in 2008,” 2009). Most of Chinese online shoppers are well-educated, and the
26-30 age group is a major force in the Internet consumption (Xinhua, 2008). Most online
consumers come from metropolitan cities such as Beijing, Shanghai, and Guangzhou
(Xinhua, 2008). As the number of Chinese Internet users and online shoppers increase
continuously, there is no doubt that the online shopping market in China will see a rapid
and great rise in development with many investment opportunities (“The research report
of online shopping,” 2008).
The development of China’s online market was slow until 2006. High Internet
access fees and perceived security risks were regarded as the major concerns among
1
Chinese consumers (Fu, Huang & Wei, 2007). Moreover, inefficient logistic and online
payment system are among the other problems hindered the development of China online
market (Dieter & He, 2000; Li & Suomi, 2006). However, by overcoming these initial
problems, the Chinese online market has been growing rapidly. Chinese consumers are
actively involved in online shopping and have considered it an efficient and convenient
shopping method in the recent years (Cui, Lai & Liu, 2008).
Historically, in China, Taobao and EachNet were the two major players
dominating the online consumer-to-consumer (C2C) market (Chen, Zhang, Yuan &
Huang, 2007). EachNet was established by two Chinese Harvard graduates in 2002 and
then acquired by eBay (U.S.) in 2003. EachNet was successful at first until a Chinese eretailer company, Alibaba, invested in its C2C business named Taobao in 2003. Finally,
EachNet failed in the Chinese market and it was taken over by a local company,
Tom.com, in 2007. In spite of eBay’s power in the U.S., online businesses originating
from western countries seemed to have difficulty adapting to the Chinese environment
and localizing their business and websites in China (Li & Liu, 2007). In 2003, the market
share of EachNet was 84%, while Taobao’s was only 8% (iRearch, 2006). However, in
2008, Taobao has reached a 75% market share, while EachNet had fallen to 7% (Hu,
2009). According to government statistics, Taobao’s gross merchandise volume (GMV)
equaled approximately 1.4% of China’s total retail trade in the first half of 2009, and will
soon be the primary online shopping destination for the largest online population in the
world (“Taobao sees significant new trends,” 2009).
2
Problems
The emerging online C2C market in China is gaining more attentions from scholars and
marketers. China has been considered one of the countries that has a low Internet
penetration rate, but recent statistics showed that the online shopping penetration rate was
up to 70% in 2008, indicating that the Chinese people have a high tendency to make
online purchases (“China to be Asia-Pacific's largest,” 2008). While online market
studies are actively conducted, little research has been performed on the Chinese online
market.
As the Chinese online market grows and matures, loyalty will be a significant
issue because of its positive effect on long-term profitability to e-retailers (Ribbink, Riel,
Liljander, & Streulcens, 2004). Loyal and returning customers are vital to online firms
because of the financial benefits to e-retailers (Gummerus, Liljander, Pura, & Riel, 2004;
Reichheld & Schefter, 2000). Many current e-loyalty models have been developed and
tested in western countries (Cyr, Kindra, & Dash; 2008; Jin, Park, & Kim, 2008; Kim,
2005; Rinbbink et al., 2004), but few applications on Asian countries were found. Thus,
there is a need to focus on Chinese e-loyalty and identify the influencing factors.
Additionally, few studies revealed the unique structure in Chinese online market.
Although there are a number of reasons that explain the success of Taobao, we need to
understand why Chinese shoppers switched from EachNet to Taobao from the consumer
perception. Thus, exploring Chinese e-loyalty helps us provide a better understanding of
the Chinese consumers’ switching behavior and how Taobao won the market. This study
intended to understand how Taobao beat EachNet and became a leader in the Chinese
C2C online market. While previous studies compared Taobao and EachNet by employing
3
a qualitative approach (Li, Li, & Lin, 2007; Ou & Davison, 2009), this study used both
qualitative and quantitative approaches by conducting the focus group interviews and
consumer survey in order to investigate Chinese consumers’ perceptions of online
shopping.
Purpose of the Study
The existing voids in the current literature directed the goal of this study. First, as website
features is an important factor influencing e-loyalty, this study intended to examine the
influences of website features on e-satisfaction, ultimately e-loyalty among Chinese
online consumers focusing on the two e-retailers: Taobao and EachNet. Taobao was
established by a Chinese local company and accounted for 75% of the market shares in
the Chinese C2C online market in 2008 (iRearch, 2006). EachNet is operated by a
Chinese company currently and was once owned by eBay (U.S.) (“E-commerce in
China,” 2008). EachNet occupied the Chinese online C2C market until Taoabao emerged
as a big competitor in 2003. In order to understand the advantages of Taobao in the
Chinese C2C online market, the second goal of this study is to compare two websites
(Taobao and EachNet) in terms of the perception of website features that affect esatisfaction and e-loyalty.
Significance of the Study
This study contributed to the provision of important implications for both researchers and
practitioners. For the academic implications, this study used both qualitative and
quantitative approaches to find Chinese consumers’ perceptions of online shopping.
4
Based on the focus group interviews and a survey, several unique website features were
identified among Chinese consumers. Second, this study developed a research model to
investigate the influences of website features on satisfaction and loyalty among Chinese
consumers by extending Doll and Torkzadeh’s (1988) End-User Computing Satisfaction
(EUCS) model. Third, this study compared Chinese consumers’ perceptions of Taobao
and EachNet in terms of website features, satisfaction and loyalty in order to understand
the reasons behind Taobao’s popularity and success.
For the managerial implications, this study identified the unique website features
that affected Chinese consumers’ satisfaction, and ultimately their loyalty. Thus, foreign
e-retailers who intend to start business need to understand Chinese consumers’ online
shopping behavior in order to satisfy their unique needs. Also, by learning Taobao’s
successful lesson, foreign e-retailers need to create an innovative strategy for the local
needs without imitating others’ strategy.
Hypotheses
H1-H4: Relationships between the perception of website features, e-satisfaction, and
e-loyalty
H1a. Ease of use influences satisfaction among Chinese online consumers.
H1b. Format influences satisfaction among Chinese online consumers.
H2a. Content influences satisfaction among Chinese online consumers.
H2b. Timeliness influences satisfaction among Chinese online consumers.
H3a. Merchandise influences satisfaction among Chinese online consumers.
H3b. Payment influences satisfaction among Chinese online consumers.
5
H3c. Entertainment influences satisfaction among Chinese online consumers.
H3d. Security influences satisfaction among Chinese online consumers.
H3e. Delivery influences satisfaction among Chinese online consumers.
H3f. Communication influences satisfaction among Chinese online consumers.
Chinese online consumers’ satisfaction with websites influences with loyalty.
H5-H9: The comparison between Taoabao and EachNet
H5a. Chinese consumers perceive Taobao more positively than EachNet for the
ease of use.
H5b. Chinese consumers perceive Taobao more positively than EachNet for the
format.
H6a. Chinese consumers perceive Taobao more positively than EachNet for the
content.
H6b. Chinese consumers perceive Taobao more positively than EachNet for the
timeliness.
H7a. Chinese consumers perceive Taobao more positively than EachNet for the
merchandise.
H7b. Chinese consumers perceive Taobao more positively than EachNet for the
payment.
H7c. Chinese consumers perceive Taobao more positively than EachNet for the
entertainment.
H7d. Chinese consumers perceive Taobao more positively than EachNet for the
security.
6
H7e. Chinese consumers perceive Taobao more positively than EachNet for the
delivery.
H7f. Chinese consumers perceive Taobao more positively than EachNet for the
communication.
H8. Chinese consumers are more satisfied with Taobao than EachNet.
H9. Chinese consumers are more loyal to Taobao than EachNet.
Definition of Terms
E-loyalty is the customers’ favorable attitudes toward a given e-retailer, resulting in
repeat buying behavior.
E-satisfaction is the contentment of the customers with respect to his or her prior
purchasing experience with a given e-retailer.
Usability is users’ ability to use and interaction with a website.
Information is an accurate and efficient information presentation.
Service interaction is a convenient and efficient communication between customers and
e-retailers.
Limitations
This study only considered college female students in China as samples. In the future
study, we may focus on both female and male college students. Also, this study was only
performed in two cities, which might lead to different responses if the study was
conducted in other areas. In addition, several unique factors of website features from a
7
qualitative study (focus group interviews) were found, but some of them can’t be
identified from a quantitative study (survey).
Outline of Work
This thesis consists of five chapters. Chapter one provides an introduction of the problem
area, the problems acknowledged in the previous literature, a statement of the purpose of
the research, discussion of the potential significance of the findings, suggested
hypotheses, definitions of terms used in the study, and the limitation inherent in the
research design. Chapter two includes an overview of existing literature regarding the
Chinese online market, e-loyalty and the antecedent and the EUCS model. This chapter
also develops the research model that underlies this study and offers the hypotheses to be
tested. Chapter three presents the methodology used in this study, including the
procedures of focus group interviews, pre-test and main survey. Sampling and data
collection for each method are also described in this chapter. Chapter four provides the
results of the exploratory factor analysis, regression analysis and t-test analysis. Chapter
five presents the findings of this study. Also, based on these findings, academic and
managerial implications and limitations are discussed.
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CHAPTER II
LITERATURE REVIEW
Chinese Online Market
1. Internet Users in China
Internet usage in China is moving beyond its infancy (Du, 1999). When the first website
for scientists and researchers was first linked to the Internet in China in May 1994, the
estimated number of total Internet users was only 1,600 (Du, 1999; Wong, Wang, Song,
Bielski, & Ganger, 2004). There is no doubt that there has been a powerful surge in
Internet adoption in China since 1994, resulting in a dramatic increase of Internet users
(Fang, Chan, Brzezinski, & Xu, 2006). In 2003, the number of Internet users in China
had reached 68 million, making China the second largest Internet market in the world,
behind the U.S. (CNNIC, 2003). According to the China Internet Network Information
Center (CNNIC), the number of Internet users reached 137 million by Dec 30 th, 2006
(CNNIC, 2006). Figure 1 presents the number of Internet users increased to 253 million
by the middle of 2008, surpassing the U.S. and becoming the largest Internet market in
the world (Barboza, 2008). It is expected that the number of Internet users still has a
potential for future growth, since this number only accounted for 19% of China
population (Barboza, 2008).
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If one considers the demographics of Chinese Internet users, 68% of Internet
users are less than 30 years old (“China’s Internet users,” 2009). Research shows that
men use the Internet more frequently than women (Fang et al., 2006). Students form the
largest segment of Internet users, accounting for 29% of the total users (“China’s Internet
users,” 2009). About 34% of Internet users go online at Internet cafes and most of the
Chinese Internet users live in the coastal and metropolitan areas such as Beijing,
Shanghai, and Guangzhou (Fang, et al., 2006). Major activities of Internet use range from
obtaining information, social networking to entertainment (“China’s Internet users,” 2009;
Fang et al., 2006).
Figure 1. Numbers of Internet Users in China from 1997 to 2008.
2. Online Shoppers in China
In 1998, the first online commercial transaction was conducted in China (Dieter & He,
2000). As the number of Internet users increases in China, so does the number of online
10
shoppers. According to Figure 2, in 2003 the number of shoppers reached 15.2 million,
which was approximately 26% of Internet users, considering there were 59.1 million
internet users at that time. After rapid growth during the initial period, the growth of the
number of shoppers slowed down. By the end of 2006, the number of online shoppers in
China was 43.1 million, increasing by 32.6% from 2005. This number may exceed 100
million in 2010 (“China’s online shopping in 2008,” 2009). As Figure 3 shows, the per
capita online shopping amount has kept growing. The amount spend increased was raised
from $19 in 2003 to $229 in 2008 (MarketAvenue, 2009).
Figure 2. Growth of Chinese Online Shopping Industry 2001-2010.
Source: www.iresearch.com.cn
The demographics of Chinese online shoppers are similar to those Internet users
in general. Male online shoppers outnumber female, accounting for 55% of the total users
(“E-commerce in China,” 2008). The 26-30 age group is a major force in Internet
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consumption (XinHua, 2008). Most of the shoppers come from big cities such as Beijing,
Shanghai and Guangzhou (XinHua, 2008). The top ten retail items on Chinese websites
such as Taobao are apparel, mobile phones, cosmetics, household goods, sporting goods,
personal computers & accessories, jewelry, laptop computers, home appliances, and
stored value cards (for mobile phones) (Steiner, 2009).
Figure 3. Per Capita Online Shopping Amount in China 2003-2008.
3. Hindrance of the Initial Development of Chinese Online Market
The development of the Chinese online market was slow until 2006 (Fu et al., 2007). The
inability to understand Chinese consumers, slow Internet speed but high cost for Internet
access, inefficient logistics, and undeveloped online payment systems all contributed to
the slow development. When e-commerce initially appeared in China, most of the
Chinese e-retailers could not provide any unique benefits to their customers. Customers
expected lower prices than in retail stores, 24-hour customer service, a better selection of
merchandise, and etc. (Dieter & He, 2000). However, few e-retailers could meet
customers’ expectations.
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The slow speed and high cost of online access also limited the numbers of
Chinese online shoppers. At the beginning stage of online shopping in China, most
people had to use a calling card issued by the telecommunication company to access to
the Internet, and the accessing fee per minute was high for ordinary Chinese people (Bin,
Chen, & Sun, 2003). For example, Chinese Internet users had to spend 20 % of monthly
income to access Internet for only one hour each day, while Americans spent roughly
only 2% of their monthly income for unlimited access to the Internet and their monthly
telephone charges (Dieter & He, 2000). In the U.S., broadband access helped American
Internet users access the Internet more quickly, so they did not care about the time spent
online (Bin et al., 2003). In China, it took a long time to navigate a web page using
Internet access through the dial-up. Broadband service gradually became available in
some big cities, but service charges for renting broadband of sufficient width were higher
than those for renting the narrower band used in telephone access at that time (Dieter &
He, 2000). Therefore, More than half of Internet users still used dial-up to access the
Internet, whereas only 10% of people use broadband (Wong et al., 2004).
Inefficient logistics also existed because of undeveloped transportation
infrastructure, fragmented distribution system, and limited use of technology. Delivery
requirements had resulted in some unique Chinese adaptations to meet customers’ needs.
Chinese e-retailers not only hired national carriers such as China Post or Express Mail
Service (EMS) but also relied on traditional labor-intensive delivery systems such as their
own door-to-door delivery teams or on the small and specialized local delivery systems
(Dieter & He, 2000). The delivery time through the post office was slow and sometimes
mishandled (Bin et al., 2003). In addition, although some foreign competitors such as
13
EMS began to be present in the large cities, they were very expensive (Bin et al., 2003).
Therefore, hiring hourly workers to deliver goods and collect money for those goods was
very popular in China. Bin et al. (2003) suggested that labor delivery was not the best
solution in e-retailing, but advanced logistic systems based on technologies enable eretailers to provide efficient order confirmation and precise tracking and billing details.
Another constraint was that Chinese people had little desire to use an online
payment system using a debit or credit card. In the beginning of the online market in
China, the credit card system was not developed well because banking services were
expensive and inefficient (Li & Suomi, 2006). To get a credit card, people had to go
through a long process. Also, Chinese banks lacked a centralized settlement system that
allowed people use debit or credit cards in every place or even on websites. Credit card
usage was also not welcomed because Chinese people did not like running into debt and
paying the annual credit card service fees. Additionally, the Chinese did not trust online
transactions. People wanted to pay when they received the products, not before (“What is
impeding growth,” 2005). Therefore, until 2000, the most common payment method
among Chinese online shopping websites was still cash payment through website-hired
deliverymen that picked up and delivered at door-to-door (Bin et al., 2003).
4. Growth of Chinese Online Market
The Chinese online market is growing after overcoming initial problems. Online
shopping is now popular in China because people perceive it as an efficient shopping
method that facilitates the users to participate in trading activities and provides cheaper
prices, convenient access, and a large variety of products (Cui et al., 2008).
14
One of the reasons for the transition from initial difficulty to current growth is the
wide diffusion of Internet technologies into business and households, as well as the active
role of Chinese Internet users in the online market (Li et al., 2007). In the past,
affordability and slow speed were the major factors that slowed down the Chinese
Internet growth. But now, the improvement of broadband infrastructure has helped cut
down the connection cost and more people can have Internet connection (Gray, 2007).
The average connection fee dropped by almost 20 percent to $10.75 per month at the end
of 2006 (Grey, 2007).
The rapid development of a logistical system is another reason for the market
growth. In the past, e-retailers realized the problem of the inefficient traditional system
(Fu et al., 2007). Two ways of logistical distribution were devised for Chinese online
market. One is that e-retailers set up their own storage and distribution centers where
online consumers are densely populated. Another way is that e-retailers co-operate with a
third party professional logistics distribution institution to deliver goods.
The development of a credit card system also contributes to the Chinese online
market. Chinese banks such as China Merchants Bank (CMB) are pushing hard to
develop credit cards that appeal to younger Chinese customers to use in online
transactions (Bin et al., 2003). Besides, China’s financial services market is also opening
its doors to global banks such as Citibank to launch their credit card to Chinese
consumers (Bin et al., 2003). In the past three years, the annual growth rate of credit card
holders in China has reached 54% (“Credit card system in China,” 2010). However,
China lacks an online payment system that handles online transaction in a safe and
efficient manner. In order to solve this problem, Taobao is developing its secure payment
15
service “Alipay”, which temporarily keeps the money for the purchase before the buyer
confirms to receive the purchase (Yang, Liu, Zhao, Qi & Lin, 2009). By using Alipay,
customers could experience a reliable and secure e-shopping environment.
5. Chinese Online C2C Market: Taobao vs. EachNet
In China, the B2C market is not dominating the online market share, nor has it seen a big
grown over the past several years (Wong et al., 2004). Instead, since the appearance of
EachNet, the C2C market gradually became very popular among Chinese consumers.
Followed by Taobao, the C2C market has played a major role in the development of
Chinese online market.
As shown in Table 1, the beginning of the Chinese online C2C market was in
1999. EachNet, the first Chinese online auction website, was started by two Chinese
Harvard graduates. eBay (U.S.) acquired one third of the market shares of EachNet in
2002 (Lin & Li, 2005). In 2004, eBay (U.S.) finally took over EachNet but kept the
company name “EachNet” (Ou & Davison, 2009). TaoBao (www.taobao.com) was
founded in 2003, which was a subsidiary of Chinese company, Alibaba (Ou & Davison,
2009). At that time, EachNet dominated the Chinese C2C online market, accounting for
84% of the market share, while Taobao’s market share was only 8%. The name of
“Taobao” has a strong cultural meaning, meaning “treasure rush” (Lin & Li, 2005).
Before Taobao launched in China, EachNet was the only player in the C2C online market
(Lin & Li, 2005). However, the fierce competition between EachNet and Taobao was
16
Table 1. The History of Taobao and EachNet.
Taobao
Founder
History
EachNet
A Chinese e-retailer, Alibaba



2003- Established as a wholly
owned subsidiary of Chinese
company.
2006- Became the biggest
C2C market in China.
2008- Launched the B2C
platform.
Established by two Chinese Harvard
graduates






Market
Share




2003: 8%
2008: 75%
1999- Established as the first
Chinese online auction
website.
2002- eBay (U.S.) invested
EachNet and gain 33% stock
of EachNet.
2004- eBay totally took over
EachNet.
2006- EachNet started to
cooperate with Tom.com.
2007- eBay decided to
withdraw Chinese market.
2009- Owned and controlled
solely by Tom.com.
2003: 84%
2008: 7%
apparent from the beginning of 2004 (“What is impeding growth,” 2005). TaoBao
emerged as a key rival to EachNet and Taobao grew from 9% of the online C2C market
share in the first quarter of 2004 to 50% by the fourth quarter of the same year (Lin & Li,
2005). At this year, EachNet’s market share dropped to 35%. In 2005, Taobao’s market
share was 57%, whereas EachNet’s was 34% (Liu, 2006). In 2006, Taobao took almost
two thirds of the online C2C market share (Liu, 2006). eBay (U.S.) decided to withdraw
from the China market in 2007. In the same year, a Chinese online service company,
Tom.com, started to work with EachNet. In 2008, Taobao kept dominating the C2C
online market and accounted for 75% of the market share, whereas EachNet had only 7%
(Hu, 2009). In the same year, Taobao launched its B2C platform. In 2009, EachNet was
17
owned and controlled solely by Tom.com. Although Tom.com made a significant
improvements for EachNet, the cooperation was still not as successful (Lu, Zhao, &
Wang, 2009).
By defeating EachNet, Taobao gradually made itself a well-known e-commerce
website by dominating Chinese C2C market (see Figure 4). In the following parts, this
study will explore how Taobao became leading e-commerce website and how it defeated
EachNet in such a short time.
Figure 4. The Comparison of Market Share between Taobao and EachNet by Years.
6. Growth Factors for Taobao
Taobao’s strong growth was driven by a number of factors including the increase of
Internet usage in China, and the rising penetration of domestic e-commerce. Several other
factors were taken into account for Taobao’s success: The location where Taobao started
its business, right target market and the investment made for Taobao’s free listing fees,
18
variety of merchandise, promotion and B2C market (Table 2 ). These factors ensured the
overall experience of buyers and sellers remained the best in the business (Steiner, 2009).
Table 2. The Comparisons of the Business Strategy between Taobao and EachNet.
Location
Target
Market
Listing
Fee
Taobao
Business started from
medium-small cities.
20-30 years old college
students and people with
good education levels.
No listing fee at the
beginning
Unique
Needs
Comprehensive product
offering
provided steady source of
goods for sellers.
Promotion
Strategy
Outdoor promotion (e.g.,
public transportation;
outdoor billboards)
C2C format
Cooperated with famous
local and foreign brand
companies to launch a
B2C market.
Less auctions, more fixed
prices
Auction
Structure
EachNet
Business started from big
cities.
20-40 years old, well
educated, and highly
income people.
2001- charged listing fee.
2004- lowered listing fee.
2008- no listing fee .
Fewer variety of
merchandise
Bad service could not
satisfy Chinese
consumers’ needs.
Advertisement contract
with major websites.
C2C format; no B2C
format
More auctions, less fixed
prices
6-1. Location
Different from EachNet, which started businesses in big cities such as Shanghai, Taobao
decided to extend its business in “Jiang-Zhe” area, located in the Mid-eastern coast of
China with many medium scale cities such as Hangzhou and Nanjing. Taobao chose this
area because it contained many intensive small and medium-sized state-owned
19
enterprises, which helped Taobao find a steady source of goods (baidu.com, 2010).
Taobao helped these enterprises to develop a relationship with customers and provided a
platform for them to sell their products or exchange information (baidu.com, 2010). This
environment allowed more sellers on Taobao, and thus more buyers were attracted to
look for their needs from sellers.
6-2. Target Market
Choosing a right target market is another factor which contributed to the success of
Taobao. With the popularity of Internet in China, students became the major Internet
activists (Mederios, 2009). According to the report in 2007, student buyers made up a
quarter of entire online shoppers (Barboza, 2008). When EachNet started its business in
1999, the Internet was not popular. EachNet identified its customers as 20 - 40 years old
as well as having a high income (Liu, 2006). EachNet targeted older people because it
believed that this group of people would have more financial ability to access to the
Internet, which in turn made them able to purchase online. However, while EachNet
targeted the broader group of people, Taobao targeted on the group of young people 20 30 years old who have more potential for online shopping.
6-3. Strategy of Listing Fees
In 2001, EachNet began to charge customers’ listing fees, such as a transaction service
fee, product list fee, and promotion fee. This immediately resulted in a 40% decline in the
number of customers (Chen et al., 2007). In response to EachNet’s fee charging, Taobao
decided not to charge any listing fees in order to attract more people to start their
20
business. With this action, Taobao captured the market rapidly and took more than a 60%
market share in two years (Yang et al., 2009). Taobao believed that providing this service
for free was a huge investment that could lead to a long-term benefit to gain the loyal
customers. Even though EachNet has kept lowering its listing fee since 2004, people have
not returned to EachNet because of their satisfaction with Taobao (Yang et al., 2009).
6-4. Unique Needs
The other reason people want to shop on Taobao is because Taobao provides the most
comprehensive product offerings, ranging from hard-to-find items to mainstream retail
categories such as apparel, sporting goods, and household products (Hu, 2009). Since
Taobao provided a steady source of goods, a growing number of sellers were attracted to
build a business on this platform. However, EachNet’s IT engineering decision-making
was centralized in the U.S., prohibiting EachNet from responding rapidly to Chinese
costumers’ needs (Xin, Nie, & Pucik, 2007). For this reason, sellers did not want to sell
their products on a website with bad service, which in turn influenced buyers who were
seeking for a better choice of merchandise. Therefore, sellers turned to Taobao to sell
their products, increasing the number and variety of merchandise sold on Taobao and
exceeding that of EachNet. Buyers also did not want to buy from a website that had fewer
sellers and bad service. According to CNNIC (2006), the ratio of products selling on
Taobao to those on EachNet was 24:1. A Taobao buyer commented that she could find
almost everything she needed through Taobao, from underwear to furniture, from candy
to DVD players (Rong, 2010). Taobao has a service that helps customers buy products
abroad, that might not be available in China. Thus, Taobao’s variety of products and
21
special services meet Chinese buyers’ unique needs, which in turn positively influences
their experience with Taobao.
6-5. Promotion
EachNet and Taobao adopted different promotion strategies to promote their services.
EachNet focused on the mainstream media such as China’s national TV channels and
major websites (Chen et al., 2007). Also, EachNet allowed customers to send mail to
other registered users in order to get more customers (Chen et al., 2007). On the other
hand, Taobao’s promotion strategy more relies on non-mainstream media and small
websites because the big websites had already signed one-year exclusive contracts with
EachNet. Thus, Taobao launched a large-scale advertising campaign in the public such as
subways, buses and outdoor billboards throughout China’s main cities to attract
widespread media and public attention (Xin et al., 2007). The result was beyond their
expectation. Many customers were attracted by Taobao’s promotion and quickly turned
to its service (Sina.com, 2006). After EachNet discontinued the contracts with the portal
websites in 2005, Taobao announced a strategic alliance with Sohu.com, one of the
biggest website in China (Yang et al., 2009). These two websites work together to share
their large active user group and promote their business.
6-6. Auction Market in C2C Format
Online auctions were not popular in China as compared to the U.S. Chinese people
preferred a direct relationship between sellers and customers and fixed prices (Yue, 2008).
People did not want to spend much time to get the products with a little lower price
22
because they could find the best price by comparing millions of sellers’ stores (Yue,
2008). Considering this factor, Taobao had only 10% of its listings for auction, while
auction accounts 40% of EachNet’s listing in 2005 (Wang & Emurian, 2005).
Compared to EachNet’s single C2C format, Taobao also launched a B2C platform
that allowed domestic and overseas retailers sell indirectly to Chinese customers. Like
traditional department stores, the B2C companies are source of quality products for
buyers of good taste. These companies offered guaranteed quality, good compensation
policies and more convenient payment methods (“Taobao sees significant new trends,”
2009). With the addition of the B2C format, more and more famous companies have
launched their stores on Taobao, such as China’s biggest book store-xinhua and Japanese
casual wear seller UNIQLO (Barboza, 2008). Through its B2C format, Taobao provided
a new platform to better meet both sellers and buyers’ needs, which contributed to
Taobao’s continued success.
7. Website Features of Taobao and EachNet
In order to find the reasons of Taobao’s success, previous articles compared the website
features of Taobao and EachNet (Bin et al., 2003; Chen et al., 2007; Lin & Li, 2005; Ou
& Davision, 2009; Yue, 2008). This part will review the major unique website elements
in these two websites – Taobao and EachNet (Table 3).
7-1. Website Interface Design
Taobao is considered a cute, beautiful and user friendly website by customers (Yue,
2008). The website interface on Taobao is picture-rich, mostly consisting of smooth
23
rectangles against an orange background (Chen et al., 2007). Also, Taobao has a greater
variety of product listings. For example, Taobao's listings categories are classified into
“men,” “women,” “student,” “apparel,” “beauty,” “fashion,” “home,” “cellphone,” and
“sports” (Taobao.com, 2010). In addition, customers are encouraged by Taobao to make
suggestions about the website design and personalize their own webpage and service
(Yue, 2008). For example, sellers on Taobao can design coupons for every transaction.
On the other hand, EachNet’s interface design looks more international and
professional (Yue, 2008). For example, EachNet is text-rich, mostly consisting of
rectangles, against a green and blue background (Chen et al., 2007). Besides, EachNet
uses a global platform, grouping users into “men,” “women,” “home,” “cellphone,” and
“electronics” (EachNet.com, 2010). There were not personalized design and services
available for the sellers before 2005 (Yue, 2008). In 2008, EachNet learned a lesson from
Taobao’s interface design and tried to copy it. But the new website design did not have
any innovation to attact customers (Yue, 2008).
7-2. Customer Service
According to Yue (2008), Taobao provides many kinds of customer service to meet both
sellers’ and buyers’ needs. Customers can ask questions or make complaints through call
centers, live chat, or emails. A call center is available 24 hours, seven days a week, and
Taobao promises that any questions and complaints will be settled within 24 hours.
Customers can also enter “Taobao Helping Community” to have a live chat with the other
members to offer and receive help. Different from EachNet and eBay, Taobao’s top
24
management executives frequently communicate with their customers in order to better
understand their needs and requirements.
In contrast, EachNet has experienced slower growth in terms of customer service
(Ou & Davision, 2009). Until 2005, EachNet did not provide a contact number for
customers’ service. Instead, the only way to contact EachNet was by e-mail or online
discussion groups (Rein, 2006). However, this method was disliked by customers since it
was inefficient to handle customers’ urgent problems (Rein, 2006). Also, due to the lack
of online live chat, EachNet’s buyers could not immediately report their problems or
complaints and receive answers. After 2005, because of competition from Taobao,
EachNet began to improve customer service by providing a variety of contact methods
such as a call center, live chat or emails. However, compared to Taobao’s 24 hours, seven
days a week, EachNet’s customer service was only available during office hours until
2008 (Yue, 2008). The most complaints about EachNet’s customer service happened in
2005. Since EachNet used its server in the U.S. to run the website, the distance slowed
down the loading speed, which brought an unstable system and a slow loading speed.
Even though EachNet conducted system maintenance, it was inconvenient to customers,
resulting in a significant number of EachNet’s buyers and sellers switch to Taobao (Chen
et al., 2007).
7-3. Payment System and Method
Both Taobao and EachNet have their own payment system. In 2003, an online payment
tool “Alipay” launched on Taobao, and became the key of Taobao’s innovation (Chen et
al., 2007). Alipay has its Chinese name-“Zhi Fu Bao”, meaning “A valuable payment
25
system.” In China, since people do not easily build trust with each other, buyers do not
want to pay until seeing products and sellers do not want to send out items before
receiving money (Lin & Li, 2005). For this reason, Alipay was designed as a third party
guarantee for meeting both sellers’ and buyers’ needs. In this payment system, Alipay
temporarily keeps buyers’ money after the buyers confirmed the transaction. Then the
sellers are notified to send out the items. After the buyers receive the goods and ensure
that there is no problem with the products, Alipay will send money to the sellers (Li &
Liu, 2007).
Before 2007, EachNet used eBay’s payment system-Paypal. However, through
paypal, buyers pay directly to sellers without any middle transaction. After 2007,
EachNet improved its payment system, “An Fu Tong”, which is similar to the function of
Taobao’s Alipay. During the An Fu Tong payment process, EachNet itself serves as a
third party guarantee. Besides, EachNet also set up the An Fu Tong assurance fund,
which provided full assurance of the transaction. Under this service, if the transaction
value of goods is lower than 2, 000 Yuan (approximately 294 dollar), EachNet would
recommend buyers to pay by Paypal, and the purchases will be under protection with
Paypal up to 2,000 Yuan. If the purchase is more than 2, 000 Yuan, EachNet
recommends its buyers to use An Fu Tong.
The variety of Taobao’s payment methods meet everybody’s needs. On Taobao,
there are two types of payment methods: online and offline payment. Online payment
includes debit, credit card, or a recharge card for cell phone or a recharge Taobao card
bought from a specific convenient store. Regarding the offline payment method, if a
buyer does not have a debit card or he/she has concerns about paying online, Taobao will
26
arrange an individual to deliver the item to buyers’ home and receive the money at that
time. Buyers also can go to convenient stores to pay by swiping their debit card, or going
to a post office to mail the money to a sellers’ account (Li & Liu, 2007).
EachNet, however, only has three ways to pay: debit card, remittance from a post
office and Face-to-Face (FTF) cash payment (Li & Liu, 2007). Regarding its online
payment system, customers have to download a gateway system connected to the
corresponding bank (Li & Liu, 2007). There is no credit card payment or recharge cards
available (Bin et al., 2003). Also, EachNet does not have connection with any convenient
stores or supermarkets, which would provide an offline payment method (EachNet.com,
2010).
7-4. Communication Tool and Community
When Taobao discovered its customers were willing to negotiate with sellers before
purchasing, the company quickly provided an online messaging service called “AliWangwang.” Ali-Wangwang provides instant communication between buyers and sellers,
and enables buyers to get thorough product knowledge in a short time and a chance to
negotiate before they decide to purchase (Yue, 2008). Through Ali-Wangwang, buyers
can check sellers’ statuses through an icon (active blue or inactive grey) (Ou & Davision,
2009; Yang et al., 2009).
Conversely, EachNet provides limited opportunity for buyers to contact sellers
immediately. There were no instant messaging or direct communication between the two
parties until 2006 when it adopted Skype (Chen et al., 2007). Also, sellers’ online status
was unknown until buyers tried to contact them by logging into Skype. In 2007, EachNet
27
created its own online message tool “Yi Qu Tong”, which has a function similar to
Taobao’s Ali-Wangwang (www.ebay.com.cn). But at that time, people were already
familiar with Ali-Wangwang and were not willing to switch to another communication
tool.
Both Taobao and EachNet have their own community, which provides peer
evaluation, chat rooms, and public forums in order to encourage customers to
communicate through the community (Ou, Sia, & Banerjee, 2007). Their community
functions are similar: both are initiated and organized by the members themselves and
they are more willing to share information than emotional experiences (Chen et al., 2007).
Taobao fosters a stronger and more active community and encourages customers to share
their knowledge, personal stories, and feelings, which provides an emotionally-oriented
virtual community (Chen et al., 2007). Most of the activities in the Taobao community
are initiated and organized by the members themselves (Yue, 2008). Some people believe
that they are respected by others because their articles receive a lot of replies, even from
Taobao’s top management team. Therefore, this motivates to get more involved into the
community (Yue, 2008). EachNet also organizes and sponsors online and off-line
community activities. The members of the EachNet community are more willing to share
information about just products or sellers whereas Taobao’s community is more active in
sharing an emotional buying experience (Yue, 2008). This emotional connection with
Taobao makes people feel more comfortable using Taobao and emphasizes a lack of
personal interactions in the EachNet’s community.
7-5. Feedback System
28
Both Taobao and EachNet have a similar feedback system. Every EachNet member has a
profile in the Feedback Forum. A profile has basic information about the sellers and a list
of feedback left by their trading partners from previous transactions. Sellers’ feedback
scores are determined by rating from buyers (Li & Liu, 2007). However, Taobao
differentiates in its feedback system from EachNet. First, Taobao’s buyers rate sellers
based on the following criteria: 1) sellers’ attitudes; 2) speed of delivery; 3) whether the
picture match the product (Taobao.com, 2010). Second, only buyers whose payment is
accomplished through Alipay can impact feedback ratings and determine sellers’
feedback. Buyers using other payment channels can attend the rating process but have no
impact on others’ scores (Li & Liu, 2007). Third, Taobao’s evaluation rules state that
every 14 days, the buyer can evaluate again and influence the buyer’s score another time
(Li & Liu, 2007). Fourth, on Taobao, a two-score profile of each member is available:
one is reputation score as seller, and the other as buyer. This distinguishment is helpful
because one takes different role during each transaction. By this means, the other
participant can get detailed information about his partner (Lin & Li, 2005).
On the other hand, on EachNet, the feedback criterion includes a positive,
negative, or neutral rating, and a short comment (Li & Liu, 2007). Unauthorized buyers
can even leave evaluation, which lead to reputation abuse or fear of retaliation (Lin & Li,
2005). Also, buyers can evaluate sellers’ feedback score only once and only buyers can
evaluate sellers on EachNet.
29
Table 3. The Comparisons of Website Features between Taobao and EachNet.
Website
Interface
Design



Customer
Service



Payment
System and
Method


Communication
Tool
Community
Feedback
System






Taobao
Customer-centric;
Picture-rich, friendly
Greater variety of
product listing
Personalized design
24 hours service
Call center; live chat
and emails
In “Taobao helping
community”, top
managers frequently
communicate with
customers
Alipay in 2003
Debit card; credit card;
recharged card for
cellphone/ Taobao
recharged card;
remittance from post
office; cash payment
Ali-Wangang in 2003
More activity
Seller’s feedback score
was evaluated by a
positive, negative, or
neutral rating, and a
short comment
Anyone can evaluate
through this system.
Sellers and buyers can
evaluate each other
Buyers can evaluate
sellers’ feedback score
only by one time








Paypal before 2007
An fu Tong in 2008
Debit card; remittance
from post office; cash
payment




2006- imported Skype
Yi Qu Tong in 2007
Less activity
Seller’s feedback
score was evaluated
by sellers’ attitude;
speed of sending out
products; whether the
pictures match with
the products.
Only buyers who pay
through Alipay can
evaluate sellers
Sellers and buyers
can evaluate each
other
One can evaluate
another and
influencing its score
for another time



30
EachNet
Product centric; Textrich, professional
Global listing
platform
No personalized
design
Office-hours service
No call center before
2005
E-loyalty and the Antecedents
Researchers identified satisfaction as the primary driver of online shoppers’ loyalty
behavior, and many empirical studies confirmed the relationships (Cyr et al., 2008;
Gummerus, et al., 2004). Previous studies also suggested website features as an
antecedent of online shoppers’ loyalty. Therefore, this review will focus on e-loyalty and
its antecedents, satisfaction, and website features.
1.E-loyalty
Loyalty has been defined in many different study contexts. Engel, Kollat and Blackwell
(1982) referred to brand loyalty as the “the attitudinal and behavioral response toward
one or more brands in a product category expressed over a period of time by a consumer”
(p. 22). Similarly, customer loyalty refers to the degree of repeat purchasing behavior
with a service provider or a positive attitudinal disposition toward a service provider
(Gremler & Brown, 1997). These definitions consider both behavioral and attitudinal
perspectives, which is consistent in the concept of e-loyalty. Anderson and Srinivsan
(2003) defined e-loyalty as the customer’s favorable attitude toward an electronic
business resulting in repeat buying behavior. Thus, as Gremler (1995) suggested, both
behavioral and attitudinal dimensions are needed to measure loyalty. The behavioral
aspect of loyalty consists of repeated purchases, whereas the attitudinal aspect includes a
degree of positive disposition which is caused by some unique value associated with the
brand or a service provider (Chaudhuri & Holbrook, 2001).
Building loyalty and increasing the number of returning customers are vital to
online firms. Acquiring new customers on the Internet is enormously expensive, but
31
having loyal customers will save cost and increase profit (Srinivasan, Anderson, &
Ponnavolu, 2002). Thus, if e-retailers could solicit repeat business on their websites, the
company will profit (Reichheld & Schefter, 2000). Retailers should devise market
strategies in order to gain the benefits associated with loyal customers (Srinivasan et al.,
2002). For example, e-retailers maintain contact with their customers via email to deliver
new products or promotion information (Merisavo & Raulas, 2004).
2. E-satisfaction
According to Oliver (1997), satisfaction is the summary of the psychological state that
results when the emotion surrounding disconfirmed expectations is coupled with a
consumer’s prior feelings about the consumers’ experience. Similarly, Gummerus et al.
(2004) suggested that satisfaction is a cumulative and attitude-like judgment that is based
on customers’ past experiences. In accordance with the definition of satisfaction in the
offline market, Anderson and Srinivasan (2003) defined e-satisfaction as the contentment
of the customers with respect to his or her prior purchasing experience with a given eretailer.
Satisfaction is significant in sustaining profitability to e-retailers (Delgado &
Aleman, 2001; Flavian et al., 2006; Schaupp & Belanger, 2005). A satisfied customer
tends to develop a closer relationship with e-retailers and takes steps to increase
dependence on them (Gummerus et al., 2004). Increased customer satisfaction will lead
to customer loyalty which results in increased profits (Bansal, McDougall, Dikolli, &
Sedatole, 2004). However, if customers have a negative experience and are dissatisfied
with a service provider, they may easily switch to a new provider. A dissatisfied customer
32
is more likely to search for information on an alternative website and may wish to
redefine his/her relationship with the retailers (Gummerus et al., 2004; Tversky &
Kahneman, 1974). Thus, assessing customer satisfaction levels in online shopping is
essential in gauging the ultimate success or failure of e-retailers (Schaupp & Belanger,
2005).
3. Website features
Previous researchers categorized website features in different ways (Barnes & Vidgen,
2001; Wolfinbargar & Gilly, 2003; Yoo & Donthu, 2001). WebQual is one of the most
popular and the most comprehensive tools to measure the quality of a website (Loiacono,
2002). WebQual has been applied by many researchers in different online contexts,
including general online shopping and online auctioning.
The WebQual instrument has been under development since early 1998 and has
evolved via a process of iterative refinement in different ecommerce domains (Tarigan,
2008). The first version of the WebQual instrument was developed with students
respondents who were asked to consider the qualities of an excellent business school
website (Barnes & Vidgen, 2001). As a result, four major dimensions were identified:
Ease of use, experience, information, and communication and integration (Barnes &
Vidgen, 2001). WebQual 2.0, which was developed in the B2C context, is an extension
of WebQual 1.0 model and has the additional dimension of interaction quality. The new
version of the instrument was tested in the online auction context. WebQual 3.0 found
that all of quality dimensions could be categorized into three distinct areas: Site quality,
information quality, and service interaction quality (Barnes and Vidgen, 2001).
33
Barnes and Vidgen (2003) developed WebQual 4.0 to evaluate the quality of a
website in the context of online shopping. The authors adopted the three dimensions of
website quality from WebQual 3.0, usability, information and service interaction.
Usability deals with the qualities related to the functional use of a website and the
website design such as ease of navigation and website appearance. Information focuses
on the quality of the content of the website such as accuracy, reliability and up-to-date
content. Service interaction concerns how a user experiences the service provided by a
website such as the transaction and security mechanism, and the delivery and
communication systems.
By reviewing the previous literature related to information system research, the
authors developed twenty-two items to evaluate the dimensions of usability, information
and service interaction. The study was conducted through the online survey focusing the
target population of online bookstore consumers among the college students in the UK.
The subjects were asked to evaluate the three largest online bookstores (Amazon, BOL
and Internet Bookshop) and answer the online questionnaire. Through the factor analysis
among 376 respondents, the results yielded the dimension of information quality loading
as a single factor, while the dimensions of usability consisted of two factors: usability and
interface design. Service interaction quality included two factors of trust and empathy.
WebQual 4.0 was applied in various retail contexts in different cultures. For example,
Park and Baek (2007) examined the website quality of four representative Internet
bookstores in Korea. Other researchers extended this instrument and investigated the
impact on e-loyalty (Weber, Murphy, Schegg, & Murphy, 2005). The findings showed
that good website quality, which includes user interface, online resources, customer
34
confidence, relationship service and perceived value, can deliver satisfaction and create
or sustain loyalty. Table 4 presents the summary of WebQual 4.0.
Table 4. Summary of WebQual 4.0
Measures
(Source)
WebQual
4.0
Barnes and
Vidgen
(2003)
Dimensions



Usability
Users’ ability to
use and
interaction with
a website
Information
An accurate and
efficient
information
presentation
Service
interactive
An convenient
and efficient
communication
between
customers and
e-retailers


35
Development
Applications
Sample collection
Target population of
online bookstore
customers constitutes of
samples.
Instrumentation and
procedures
Three sites were
evaluated though online
survey: Amazon, BOL
and Internet Bookshop.
376 usable Respondents
evaluate each of the
sites using a 7-point
scale.
Using independent
samples for the
evaluation of each
Website to remove any
bias from the process of
multiple evaluations.
Park and Bark
(2007);
Weber et
al.(2008)
End-User Computing Satisfaction (EUCS) model
The End-User Computing Satisfaction (EUCS) model was used as a framework for this
study. The model introduces the factors of website features that affect users’ satisfaction
in the information system. The EUCS model has been validated and applied in the ecommerce context. The next section will describe the development of the model and how
the model was applied in different studies.
1. Development of the EUCS Model
The End-User Computing Satisfaction (EUCS) model was developed by Doll and
Torkzadeh (1988) and was designed to measure the satisfaction of information system
(IS) users. In the traditional IS environment, two types of IS users were identifiedprimary and secondary. The primary users have to rely on secondary users’ assistance in
the performance of their jobs. Here, the primary user is the one who uses the software,
and the secondary user is the one who installs the software. However, the primary users
also play the secondary role and directly interact with their applications. That means
software users install and run a program on a computer by themselves. While direct
interaction with a computer application was an emerging phenomenon of the 1980’s
(Benson, 1983), there was little study on the new IS environment. Thus, researchers
started to explore the satisfaction of IS users who combined the two roles, and examined
what factors would affect IS users’ satisfaction when they directly interacted with their
computer applications.
EUCS model contained four factors with 12 items measuring website features that
affected users’ satisfaction using an information system (see table 5). One of the factors
36
is content, which refers to a precise and clear information presentation. A second factor,
regarding an accurate system that functions properly, is named accuracy. The next factor
is format, which means a system needs to be designed and organized in a useful and clear
manner. Timeliness is the fourth factor which refers to up-to-date and timely information.
Finally, the last factor, ease of use, is the user friendly website design.
Table 5. Doll and Torkzaden’ s (1988) EUCS Instrument
Content
Accuracy
Format
Timeliness
Ease of use












Does the system provide the precise information you need?
Does the system provide reports that seem to be just about
exactly what you need?
Does the system provide sufficient information?
Does the information content meet your needs?
Is the system accurate?
Are you satisfied with the accuracy of the system?
Is the information clear?
Do you think the output is presented in a useful format?
Does the system provide up-to-date information?
Do you get the information you need in time?
Is the system user friendly?
Is the system easy to use?
2. Application of the EUCS Model
Doll and Torkzadeh’s (1988) EUCS model has been adopted and applied to the online
shopping context in recent years. Researchers tried to replicate the study by testing the
model to examine the factors which affect consumers’ satisfaction with online shopping.
The measures in the EUCS model were modified based on different context. The views
of application of the EUCS model are explained in this section, and the summary of each
study is shown in the Table 6.
37
Liu and Guo (2008) applied the EUCS model to the online shopping context in
order to examine how customers view an online shopping website and what factors
would affect their satisfaction with online shopping. Four hundred and twenty-two
undergraduate and graduate students in Taiwan participated in this survey. Liu and Guo
(2008) believed that Doll and Torkzadeh’s (1988) instrument could be applied to
electronic commerce. The results suggested that all of Doll and Torkzadeh’s (1988) five
factors contributed to customers’ satisfaction with an online shopping website. Each
factor here has a specific meaning towards online shopping context. First, a shopping
website should provide a complete, correct, and relevant product and service content.
Second, on the online shopping website, web users need a correct technical function of
the website system, which represents the factor of accuracy. For example, the website
should not have broken links and missing pages. Also, it should be strong enough to
withstand peak traffic. Third, a good online shopping website needs to have a clear and
logical format. Fourth, ease of use will be perceived as how useful the shopping website
is. Finally, timeliness means that an online shopping website needs to provide a fast
response time (e.g., downloading) and up-to-date information. This study also suggested
that the ECUS model can be applied to a specific online business, such as the C2C online
auction environment.
Rauniar, Rawski and Simms (2009) developed a framework for measuring C2C
online auction website performance. The purpose of this study was to identify the factors
which would influence C2C auction buyers’ satisfaction. In this study, a structure
interview and pretest were conducted in order to generate measure items. Finally, 42
question items under seven factors were measured by 430 college students. The
38
participants were asked to evaluate the C2C auction website – eBay. The authors
employed Doll and Torkzadeh’s (1988) five factors and also added new factors by
referring the other researchers’ work because a shopping auction website has unique
operational and functional characteristics as well as buyer’s behaviors during the bidding
process. Thus, it would not be appropriate to limit the measures of C2C online auction
website performance based on the EUCS model (Rauniar et al., 2009). For this reason,
they adopted four factors from Doll and Torkzadeh’s (1988), which were content, format,
ease of use, timeliness in the original EUCS model. Another factor, accuracy, was
eliminated in their study. While accuracy measured accuracy of system quality, the other
four factors were more related to information quality. The definitions of these four factors
in the online context were consistent with the original definitions in the EUCS model. For
example, a website also needs to contain relevant and complete information content.
Format reflects a clear information presentation and well designed layout of the auction
site for the buyers. Ease of use is defined as how easy a shopping auction website is to
use and how effective it is for bidders to accomplish bidding and winning activities.
Timeliness is the extent to which the auction-related information keeps customers
updated with the bidders. Additionally, the study included three more factors: security,
transaction, and product variety. Security measures the website's ability to protect buyer's
personal information and protect them from fraudulent sellers. Transaction refers to the
post-bidding activities facilitated by the website to transfer the merchandise from the
seller to the auction buyer and payment from buyer to the seller. Finally, product variety
refers to the different product categories, different brands within each product category
and different auction listings of the same product by different sellers on the website.
39
After factor analysis, the results indicated that the factors of format and ease of use were
merged into a single factor, which was then named “user friendliness”. The author
explained that factors format and ease of use are highly interconnected because the
buyers do not realize the difference between the two theoretically separate factors.
Finally, the results indicated that buyer's satisfaction towards an online auction C2C
website is positively influenced by website's content, user friendliness, timelines,
security, transaction, and product variety.
Based on the EUCS model, Cheung and Lee (2005) also proposed a framework to
explore what factors would affect consumer satisfaction with internet shopping. The
framework considered information quality, system quality, and service quality as the key
dimensions of consumer satisfaction. Four of Doll and Torkzadeh's (1988) five factors content, accuracy, format, and timeliness - were under the category of information
quality. Here, the definitions of content, format, and timeliness were consistent with the
definitions in the original EUCS model. While accuracy was defined to measure system
quality in the original mode, this study modified the definition of accuracy and referred to
the reliability of website content. Ease of use was categorized under system quality
because the author considered this factor was more related to system quality. Then, the
authors added three more factors as system quality. They were navigation, response time,
and security. Here, navigation deals with the sequencing of pages, the organization of
layout, and consistency of navigation tools. Response time refers to the speed of access
and information downloading, and the availability of the websites at all times. Lastly,
security refers to the website's ability to protect consumer personal information collected
from its electronic transaction through unauthorized use or disclosure. In addition to
40
information quality and system quality, the author proposed that service quality might
influence customer satisfaction with Internet shopping. The authors referred to
Parasuraman, Zeithamal and Berry’s (1991) SERVQAUL which measured the customer's
expectation and perception of service. Five factors were included in the service quality:
tangibles, reliability, responsiveness, assurance, and empathy. In the online context,
tangible service benefit can be described as an appealing interface, or the clarity of the
purchase procedures. Reliability refers to the promised service in a reliable and
dependable manner. For example, the website provides the service on time. However, this
study suggested that tangible and reliability overlap with some of the dimensions of
information quality and system quality. Therefore, the other three factors of
SERVQUAL were considered to affect customers' satisfaction. Responsiveness can be
described as when the website provides prompt service and helpful guidance when
problems occur. Assurance is the ability of the online stores to convey trust and
confidence to their customers. For example, the website provides detailed company
background and mission statement. Empathy focuses on the care and individual attention
to customers through customized contents, personal greetings and individualized email.
Therefore, the framework in this study explicitly considers information quality, system
quality and service quality as key drivers of consumers' satisfaction with Internet
shopping. Also, this study is one of the very first studies that incorporates direct variables
from the literature of EUCS satisfaction and SERVQUAL which helps our understanding
of customers' satisfaction in the online context. However, there is no quantitative data to
empirically test the research model proposed in this study. Therefore, further study is
41
needed to examine and validate the research model and find the dimensions and
antecedence of consumers' satisfaction with online shopping.
The EUCS model was also validated in other contexts. For example, McKaney,
Yoon and Zahedi (2002) tested Doll and Torkzadeh's (1988) and explored whether the
EUCS model can be commonly used as a surrogate measure for success of business
software in a Taiwanese setting. Another study was conducted by Pikkarainen,
Pikkarainen, Karjaluoto and Pahnila (2006) who validated the EUCS model in an online
banking context in Finland.
Overall, the EUCS model has been considered a validated model for applying in
different online contexts and cultures. The following part introduces the current research
framework which was developed by adopting the EUCS model in the Chinese online
context.
42
Table 6. Application of the EUCS Model.
Authors and context
Liu and Guo (2008)
Online shopping
website in Taiwan
Rauniar et al. (2009)
C2C online auction
website in the U.S.
Factors











-

-
Content
complete, correct, and relevant product and service
information
Accuracy
a correct technical function of website system
Format
a clear and logical format
Ease of use
how useful the shopping website is
Timeliness
fast response time and up-to-date information
Content
relevance and completeness information
Format
a clear information presentation and well designed
layout
Ease of use
how easy a shopping auction website is to use and
how effective for bidders to accomplish bidding
and winning activities
Timeliness
Up-to-date information
Security *
protect buyer’s personal information and from
fraudulent sellers
Transaction *
the post-bidding activities facilitated by the
website to transfer the merchandise from the seller
to the auction buyer and payment from buyer to
the seller
Product variety *
the different product categories, difference brands
within each product category and different auction
listing of the same product by different sellers on
the website
Note: * additional factors
43
Factors
Authors and
context
Cheung and
Lee (2005)
Information
quality



-
Online
shopping
System quality


-


-

-
Service quality

-


Note: * additional factors
44
Content
relevance and completeness of
website information
Accuracy
the reliability of website content
Format
how the information presented in
the website
Timeliness
Updated information
Ease of use
how easy the online shopping
system is to use and how effective
they are in helping customers to
accomplish their tasks
Navigation *
the sequencing of pages, the
organization of layout, and
consistency of navigation tools
Response time *
the speed of access and
information downloading, and the
availability of the websites at all
times
Security *
the website’s ability to protect
consumer personal information
collected from its electronic
transaction through unauthorized
use or disclosure
Responsiveness
Providing prompt service, helpful
guidance when problems occur,
and accurate information about
the products or service
Assurance
knowledge and courtesy of
service providers and their ability
to provide trust and confidence
Empathy
Creating a personalized service
through customized contents,
personal greetings and
individualized email
Model Development and Hypotheses
1.Model Development
A research model was developed based on the EUCS model, incorporating the concepts
from the website quality literature (Figure 5). The basic frame of the ECUS model is the
five website features that influence a system user’s satisfaction. Retaining the original
frame, the current research model provides additional constructs.
First, the EUCS model included five website features, but this research model
proposed ten features under three sub-dimensions. Barnes and Vidgen’s (2003) website
features can be categorized into three conceptual groups, usability, information and
service interaction. Usability deals with the qualities related to the functional use of a
website and the website design such as ease of navigation and website appearance.
Information focuses on the quality of the information of the website such as accuracy,
reliability and up-to-date content. Service interaction concerns how a user experiences
the service provided by a website. According to the concept, the website features from
the EUCS model were categorized into usability (ease of use and format) and information
(content and timeliness), which affect satisfaction. While the original EUCS also
included another website feature, accuracy, to measure accuracy of the website system,
other researchers (Liu & Guo, 2008; McKaney et al., 2002) used the term to indicate the
accuracy of the information. With the development of information technology, the
problem of system accuracy concerns less users, especially in online shopping. Thus, this
study excluded system accuracy and measured information accuracy as a part of
information content. In this study model, the EUCS model was extended to measure the
45
service interaction as a sub-dimension. From the literature (Elliott & Speck, 2005; Liu et
al., 2008; Rauniar et al., 2009), six aspects of service interaction were identified:
merchandise, payment, entertainment, security, delivery, and communication. We
assumed that these website features are important in order for Chinese consumers to build
satisfaction towards online shopping, which in turn affects loyalty.
46
Website Features
EUCS MODEL
Ease of use
(H1a)
H1
Usability
Format
(H1b)
H4
Satisfaction
Content
(H2a)
Information
H2
Timeliness
(H2b)
Merchandise
(H3a)
Security
(H3b)
Service
Interaction
Entertainment
(H3C)
Payment
(H3d)
Delivery
(H3e)
Communicati
on (H3f)
Extended Factors
Figure 5. Research Model
47
Loyalty
2. Hypotheses
2-1. Website features and e-satisfaction
This study proposed factors of usability (ease of use and format) and information (content
and timeliness) may directly influence Chinese consumers’ satisfaction with online
shopping.
Ease of use is defined as the extent to which the website is “user-friendly” and the
extent to which it helps consumers accomplish their tasks (Cheung & Lee, 2005). Recent
studies have yielded increasing evidence in support of the positive influence of ease of
use on overall user satisfaction in the Internet shopping context (Jones & Leonard, 2007;
Rauniar et al., 2009; Yoon & Donthu, 2001). Customers are satisfied with a shopping
website that is easy to access, use, and navigate because consumers want to find
information quickly and with little effort (Lu, Wang, Yu, & Wu, 2009; Nah & Davis,
2002). Most online shopping stores provide a product search engine, site map, and a
navigation sequence guiding function to help customers find their way quickly (Park &
Kim, 2003). Format refers to the way the information is presented on the website
(Cheung & Lee, 2005). A well-formatted website is attractive, which can develop higher
positive feelings in delivering information, which in turn enhances customers’
satisfaction (Cheung & Lee, 2005; Rauniar et al., 2009). For example, customers may
experience visual pleasure if information presented in a stimulating and appealing way
with the use of multimedia, such as flashy graphics, pop-up windows, or an online
tutorial (Bauer, Falk, & Mammerschmidt, 2006; Palmer & Griffith, 1998). Based on the
previous literature reviews, the first set of hypotheses present as the following.
H1a. Ease of use influences satisfaction among Chinese online consumers.
48
H1b. Format influences satisfaction among Chinese online consumers.
Content refers to the relevance and completeness of information on the website
(Cheung & Lee, 2005). Previous studies showed that the availability of concise, detailed
product-relevant information will lead to higher levels of customers’ e-satisfaction (Liu et
al., 2008; Peterson, Sridhar, & Bart, 1997; Rauniar et al., 2009). Customers rely on the
product information displayed on the website to make a purchase decision. In order to
satisfy consumers’ needs, the website must be designed to display detailed product
information such as size, color, price, availability, delivery time and transaction terms.
(Madu & Madu, 2002; Katerattanakul, 2002; Nah & Davis, 2002). Timeliness refers to
the up-to-date information provided on a website (Cheung & Lee, 2005). Previous studies
found that timeliness is considered an important contributor for building customers’
satisfaction with online shopping (Liu & Guo, 2008; Rauniar et al., 2009). Providing upto-date information about products, services, news and promotions could generate
customers’ positive attitudes, which lead to their satisfaction towards an e-retailer (Elliott
& Speck, 2005). Madu and Madu (2002) explained that if the information is not updated
frequently, the website will not deliver the expected performance, and therefore it will
provide no added value to customers. Thus, we posited that hypotheses 2 as below.
H2a. Content influences satisfaction among Chinese online consumers.
H2b. Timeliness influences satisfaction among Chinese online consumers.
Merchandising is defined here as a wide assortment and uniqueness of products as
well as a reasonable price. A positive relationship between merchandise attribute and
satisfaction was found in Szymanski and Hise’s (2000). When consumers desire products
that cannot be easily found or are not widely distributed, providing abundant choices to
49
customers will increase the probability that the customers’ needs will be satisfied (Liu et
al., 2008; Szymanski & Hise, 2000). Lu (2005) indicated that Chinese people are very
sensitive to price of product and are accustomed to comparing prices; offering
competitive product prices would therefore lead to Chinese customers’ satisfaction with
online shopping. Therefore, we hypothesized that:
H3a. Merchandise influences satisfaction among Chinese online consumers.
Payment refers to the method of a website processing money transactions through
the Internet and offering clear transaction procedures (Liu et al., 2008). A wellperforming and user-friendly payment system could meet users’ needs and influence their
satisfaction towards online shopping (Abrazhevich, 2004). Xue, Harker and Heim (2000)
suggested that customers feel more comfortable when they have more choices of payment
because multiple methods of payment (e.g., credit card; payment card; check) give
customers more flexibility to choose their preferred way to pay online. Also, clear
payment instructions would lower users’ concerns about fraudulent transactions, which
would result in an increase in their satisfaction towards the payment system
(Abrazhevich, 2004). Thus, next hypothesis was:
H3b. Payment influences satisfaction among Chinese online consumers.
Entertainment refers to all website elements that promote enjoyment for the users
(Wolfinbarger & Gilly, 2003). An exciting, imaginative and interesting shopping website
will attract customers and evoke positive feelings, which in turn enhances satisfaction
(Gommans, Krishnan, & Scheffold, 2001). More and more customers are seeking to have
an enjoyable online shopping experience rather than simply completing a shopping task
(Childersa, Carrb, Peckc, & Carsond, 2001). Elements of entertainment with high-
50
resolution graphics, colorful and humorous product commentary, or devices such as
games, puzzles, and virtual videos can increase customer enjoyment (Coyle & Thorson,
2001). On shopping website, Chinese people perform a variety of entertainment activities
besides shopping. For example, they like browsing entertainment news or fashion trends,
playing online games and listening to the music. Thus, we proposed that:
H3c. Entertainment influences satisfaction among Chinese online consumers.
Security refers to the website’s ability to protect consumers’ personal information
from unauthorized use (Cheung & Lee, 2005). Since online payment security, reliability,
and the privacy policy of a website have been recorded as a big concern of Internet
shoppers, e-retailers have been trying to find ways to ensure that online transactions are
safe (Yen & Lu, 2008). Rauniar et al. (2009) suggested that a security mechanism (a
secure payment system) will help customers gain confidence and then will enhance their
satisfaction with online shopping. Thus, we hypothesized that:
H3d. Security influences satisfaction among Chinese online consumers.
Delivery refers to diverse distribution methods which meet customers’ needs and
which accurately deliver a product within the promised time frame (Wolfinbarger &
Gilly, 2003). A thoughtful delivery system that guarantees a fast delivery speed and
diverse delivery methods contributes to customer satisfaction (Gommans et al., 2001). On
the other hand, a delayed delivery is one of the major reasons for consumers’
dissatisfaction (Liu et al., 2008). It is reported that 25% of Chinese customers were not
satisfied because of delayed delivery or wrong product delivery (CNNIC, 2006). In
China, the variety of delivery methods provided by the shopping website satisfy Chinese
consumers’ different needs, including national carriers such as China Post or small and
51
specialized local delivery systems with lower cost of delivery expense. Therefore, we
stated our hypothesis that:
H3e. Delivery influences satisfaction among Chinese online consumers.
Communication refers to the availability and effectiveness of customer support
tools on the website. These tools facilitate two-way communication between customers
and sellers or e-retailers (Srinivsan et al., 2002). Compared with efficient communication
tools, customers do not want to wait one or two days for answers via email (Srinivsan et
al., 2002). Through direct communication, customers will get more detailed product
information from sellers and be able to choose the exact products desired. Also,
increased levels of communication will make consumers trust sellers or e-retailers more.
All of which will enhance customers’ e-satisfaction (Alba et al., 1997). Thus, we posited
that:
H3f. Communication influences satisfaction among Chinese online consumers.
2-2.E-satisfaction and E-loyalty
Satisfaction has been defined as a cumulative and attitude-like judgment that is
based on customers’ past experiences (Gummeris et al., 2004). Consumer satisfaction is
believed to mediate consumer learning from prior experiences and purchase intention. In
addition, customer satisfaction could explain a key post-purchase behavior such as
repurchase intention (Luarn & Lin, 2003). Customers’ affective responses towards online
experiences, such as enjoyment, excitement, and pleasure, are important to overall
customer satisfaction. Positive moods also could increase loyalty (Dick & Basu, 1994).
52
Therefore, in order to build customer loyalty, it is important for e-retailers to develop a
website that gives consumers satisfaction and good feelings (Luarn & Lin, 2003).
The positive relationship between e-satisfaction and e-loyalty was supported in
the earlier empirical studies (Anderson & Mittal, 2000; Kim, 2005; Ribbink et al., 2004).
Culture may be the reason behind this fact. Particularly, the stronger link between
satisfaction and loyalty was found to be positive in collectivism cultures (Jin et al., 2008).
Chinese shoppers appear to be more likely than individualist users to adhere to an eretailer once they are satisfied with the online experiences. Therefore, we expect that
greater customer satisfaction towards a website will lead to a greater degree of loyalty
among Chinese consumers.
H4. Chinese online consumers’ satisfaction with websites influences loyalty.
2-3.Comparisons of Taobao and EachNet
Previous studies indicated Chinese people were more satisfied with Taobao than
EachNet (Li et al., 2007; Ou & Davison, 2009). According to Liu (2006), half of
EachNet’s users migrated to Taobao since 2005. Taobao satisfies the most important
needs of customers and delivers an emotional experience for each customer, which drives
their satisfaction (Lee, 2007). Also, more and more Chinese consumers switched to
Taobao, showing their loyalty was towards to Taobao rather than EachNet. A survey with
several open-ended questions was conducted to explore the Chinese consumers’
perception of both Taobao and EachNet by asking their entire experiences with these two
websites (Lee, 2007). The results found that respondents had higher overall positive
feelings toward Taobao than EachNet. Convenience, product variety, safety and trust
53
were considered the most “loved” factors on Taobao, while product quality, website
design, service, product variety, and safety were the most “hated” factors on EachNet.
While previous comparisons of Taobao and EachNet mainly focused on a
qualitative approach (e.g. interview), a quantitative study is needed to investigate the
perception of these two websites among Chinese consumers. Therefore, we posited that
Chinese consumer perceived Taobao as better than EachNet in term of website features,
satisfaction and loyalty.
H5a. Chinese consumers perceive Taobao more positively than EachNet for the
ease of use.
H5b. Chinese consumers perceive Taobao more positively than EachNet for the
format.
H6a. Chinese consumers perceive Taobao more positively than EachNet for the
content.
H6b. Chinese consumers perceive Taobao more positively than EachNet for the
timeliness.
H7a. Chinese consumers perceive Taobao more positively than EachNet for the
merchandise.
H7b. Chinese consumers perceive Taobao more positively than EachNet for the
payment.
H7c. Chinese consumers perceive Taobao more positively than EachNet for the
entertainment.
H7d. Chinese consumers perceive Taobao more positively than EachNet for the
security.
54
H7e. Chinese consumers perceive Taobao more positively than EachNet for the
delivery.
H7f. Chinese consumers perceive Taobao more positively than EachNet for the
communication.
H8. Chinese consumers are more satisfied with Taobao than EachNet.
H9. Chinese consumers are more loyal to Taobao than EachNet.
55
CHAPTER III
METHODOLOGY
This chapter introduces the methods of the empirical study. The first part explains the
procedure and the results of the focus group interview. The second part discusses the
procedure of the pre-test, including samples, data collection, and data analysis. The third
part presents the measurements development for the main survey, data and samples as
well as data analysis.
Focus Group Interviews
Since the existing literature was not yet rich enough to provide a sound conceptual
foundation of Chinese people’s perception of online shopping, exploring research such as
a focus group interview was required. Santo (2003) suggested that the focus group
interview is a helpful approach in exploratory research for generating new ideas. In this
study, the goals of the focus group interview were: 1) to confirm the factors of website
features from the previous literature; 2) to identify the new factors of website features in
the perception of Chinese consumers; 3) to develop questionnaire items for a survey.
Eighteen Chinese college students, divided into three groups, participated in our focus
group interviews. Each group had six people. Two groups of interviews were conducted
in Beijing in China. Two Chinese graduate students were trained as interviewers
56
to conduct the focus group interviews in China. Another interview was performed by a
researcher with Chinese college students in the U.S. for both in China and in the U.S. The
interviewers explained the purpose of the study, and then they asked the students about
the specific e-retailers they prefer and their important website features for online
shopping. Each interview lasted for approximately 20 – 30 minutes, and the whole
process was recorded by the interviewers and the records were collected by a researcher.
A qualitative analysis was conducted referring to the analysis process of a focus group
interview from Rabiee’s (2004) study. Every sentence of the records was written down in
Chinese on a blank sheet of paper. Next, two graduate students separately analyzed the
transcripts to make groups of the sentences based on the meanings. After the initial
categorization, the two graduates compared their identification and discussed any
contradictions and then finalized categories of the transcripts which have common
elements (Table 9).
According to the results, Taobao and EachNet were the mentioned e-retailers
among respondents. Based on their experiences on their websites, we identified several
categories of website features (Table 7). One of the categories was website design,
including the components of interface design, navigation and user friendliness. This
category was similar to the factors of ease of use and format (usability) from the EUCS
model. Next, the category of information concerned the issues of information content and
up-to-date information. This was consistent with the content and timelines from the
EUCS mode. We also identified six categories of service interaction, including
merchandise, payment, entertainment, security, delivery and communication. These
included the uniqueness of Chinese website features. First, some people mentioned that
57
online shopping is very cheap because Chinese shopping websites such as Taobao and
EachNet allow buyers to negotiate the merchandise price with sellers. These comments
were categorized into merchandise. Payment category was about the perception of a safe
Table 7. Focus Group Interview Results.
Statement Examples
Website design


Information

Merchandise




Payment


Entertainment


Security



Delivery
Communication




“It is not easy to navigate on Taobao because there is much
information on it.”
“Taobao has too many pictures and information; I think
EachNet is much better.”
“An online shopping website should have up-to-date product
information, otherwise, I don’t want to purchase on this
website.”
“Taobao has sufficient information that satisfies my needs.”
“Taobao sells everything; we can find everything.”
“On EachNet, I can buy a foreign product.”
“Price is important to me; the reason I shop online is to find
some cheap but decent-quality products.”
“Taobao’s payment system is convenient to use; I can use
many ways to pay online.”
“ Alipay is trustworthy, I never worry about that my money
will be lost.”
“I like the games designed by Taobao, they are so fun.”
“Sometimes, I don’t buy products, but I am interested in
browsing the fashion trends on Taobao.”
“I think it is safe to shop on Taobao.”
“Everybody can evaluate sellers; the evaluation will influence
the sellers’ credit scores that are posted on their web pages.”
“If a seller sells products that are fake or are not the ones they
describe on the website page, we will report it to Taobao.
Taobao has strict punishments for sellers who are fraudulent.”
“Taobao provides many delivery options that I can choose.”
“Delivery speed is important to me.”
“It is easy to discuss details about products through
Wangwang on Taobao.”
“I will share my purchase experience with the other buyers in
the community.”
58
and convenient payment system. Regarding entertainment, interviewees said they
enjoyed many entertainment activities on the website besides shopping, such as playing
games, listening to music, and browsing news. Delivery was related to the perception of a
fast delivery service and diverse delivery options. Communication included interaction
between sellers and buyers through instant message or community. People commented
that through communicating with sellers, they can get detailed product information,
negotiate price and experience the warm relationships.
Based on the focus group interviews, we confirmed that the dimensions of
usability (ease of use and format) and information (content and timeliness) exist in the
perception of online shopping websites among the Chinese. Six factors of service
interaction were also identified: merchandise, payment, entertainment, security, delivery
and communication. In addition, several comments for the focus group interviews were
adopted to develop question items in the survey.
Pre-test
Based on the results of focus group interviews and the previous literature, the
measurements were developed (Table 8). The identified factors from the focus group
interviews were examined by a pre-test. The measurements were developed in English
and then translated in Chinese (Mandarin) and the online version of the questionnaire was
set up on the survey website (www.surveymonkey.com). Through emails, this website was
introduced to female college students in Beijing in China. The survey collected 135
responses for Taobao and 38 for EachNet. We finally identified 143 valid responses,
among which 127 were for Taobao and 16 for EachNet.
59
The pre-test analysis was assessed by the exploratory factor analysis using SPSS
17.0. In this procedure, the factors of merchandise (4 items) and communication (3 items)
were deleted because we found that the items within these two factors interfered with
other factors, and therefore they are not forming individual factors as we expected. Then,
among the remaining 13 items, we inspected the variables and the items, and then deleted
two items (“I feel cheerful when I use this site” and “This site provides a variety of
delivery methods”) due to the conceptual inconsistency. Finally, the remaining 11 items
were clustered into four factors of service interaction: payment, entertainment, security,
and delivery (Table 9).
60
Table 8. Measurements of the Pre-test
Dimensions
Usability
Measurement of Website Features
Ease of use
1. This site has accessible information that is easy to find.
2. This site is user friendly.
3. This site is easy to navigate.
4. This site is convenient to use.
Format
5. The site is aesthetically pleasing to the eye.
6. This site is well organized.
7. The sequence of this main screen is clear.
8. The site’s format is easy to read.
Information
Content
1. This site’s information content fits my needs
2. This site provides me with precise information.
3. This site provides sufficient information.
Timeliness
4. This site provides up-to-date information.
5. I get information in a quick period of time.
6. This site frequently updates information.
Service
Merchandise
Interaction
1. This site has a good product selection.*
2. The product range of this site is comprehensive.*
3. The products sold on this site are difficult to find elsewhere.*
4. The general pricing of the products is reasonable.*
Payment
5. This site provides clear payment instructions.
6. This site provides a variety of payment method options (e.g.
post office remittance, online payment, and cash on
delivery).
7. Payment on this site is easy and convenient.
Entertainment
8. I can experience a variety of enjoyable activities on this site.
9. This site is designed in an entertaining manner.
10. I feel cheerful when I use this site.*
Security
11. This site verifies the authenticity of the sellers.
12. This site has reasonable credit evaluation mechanism.
13. I can evaluate sellers with a feedback system on this site.
Delivery
14. The product from this site is delivered by the time promised
by the sellers.
15. I get what I ordered from this site without error.
16. The product that came was represented accurately by the site.
17. This site provides a variety of delivery methods (e.g. post,
express delivery, home delivery).*
Communication
18. This site makes it easy to communicate with the sellers or
Taobao.*
19. I can interact with the sellers in order to receive information
tailored to my specific needs.*
20. Customer share experiences about the site/product online
with other customers of this site.*
Note: * the items deleted from pre-test factor analysis
61
Sources
Rauniar et al.
(2009)
Rauniar et al.
(2009)
Rauniar et al.
(2009)
Liu et al. (2008);
Donthu (2001)
Rauniar et al.
(2009); Liu et al.
(2008)
Elliott and Speck
(2005);
Researcher
Rauniar et al.
(2009);
Researcher
Liu et al. (2008);
Researcher
Liu et al. (2008);
Researcher
Table 9. Factor Analysis for the Pre-test
Dimensions
Cumulative
%
Usability
36.40
68.20
Information
36.10
65.49
Service
Interaction
21.87
42.01
57.94
73.66
Factors and Items
Factor 1: format
The sequence of this main screen is clear.
The site’s format is easy to read.
This site is well organized.
The site is aesthetically pleasing to the eye.
Factor 2: ease of use
This site is user friendly.
This site is convenient to use.
This site is easy to navigate.
This site has accessible information that is
easy to find.
Factor 1: content
This site provides me with precise
information.
This site’s information content fits my needs.
This site provides sufficient information.
Factor 2: timeliness
This site frequently updates information.
I get information in a quick period of time.
This site provides up-to-date information.
Factor 1: payment
This site provides a variety of payment
method options (e.g. post office remittance,
online payment, and cash on delivery).
This site provides clear payment instructions.
Payment on this site is easy and convenient.
Factor 2: entertainment
I can experience a variety of enjoyable
activities on this site.
This site is designed in an entertaining
manner.
Factor 3: security
This site verifies the authenticity of the
sellers.
This site has reasonable credit evaluation
mechanism.
I can evaluate sellers with a feedback system
on this site.
Factor 4: delivery
I get what I ordered from this site without
error.
The product that came was represented
accurately by this site.
The product from this site is delivered by the
time promised by the sellers.
62
Factor
Loadings
Reliability
0.88
0.87
0.79
0.77
0.72
0.88
0.88
0.85
0.79
0.58
0.71
0.88
0.67
0.65
0.76
0.83
0.80
0.77
0.83
0.90
0.84
0.77
0.92
0.76
0.83
0. 84
0.83
0.66
0.52
0.69
0.86
0.77
0.75
Measurement Development for the Main Survey
In order to compare Taobao and EachNet in terms of website features, e-satisfaction, and
e-loyalty, the main survey was developed into two versions; one was for Taobao while
the other one was for EachNet. The survey consisted of four sections. In first section,
respondents were asked to describe their overall experiences on the website (Taobao or
EachNet). First, respondents were requested to answer whether they had the experiences
on Taobao or on EachNet. Then, if they answered “Yes”, they moved on to the following
questions. The four questions asked the following: 1) How often do you visit this website
per month on average? 2) How many hours per visit do you spend browsing or
purchasing on this website on average? 3) What is the best estimate of the dollar amount
spent on products purchased in 2009 via this website?
In the second part of the survey, respondents were asked to rate either of Taobao
or EachNet on the various aspects of website features. The measurements of website
features were the ones refined by a pre-test (refer to Table 8 and Table 9). Ultimately,
eight factors with 25 items were measured. All factors were measured by multiple items
and by a 5-point Likert scale ranging from “strongly disagree” to “strongly agree”.
The fourteen items for measuring usability and information were adapted from the
items initially developed by Cheung and Lee (2005), Doll and Torkzadeh (1988) and
Rauniar et al. (2009). Service interaction contained four factors with 11 items. Payment
was evaluated from two aspects: convenience and variety of payment methods. The three
items were taken from Rauniar et al. (2009) and Liu et al. (2008). Entertainment was
evaluated based on the enjoyment and fun of shopping. Two items were taken from
Elliott and Speck (2005) and the researcher. Security was measured by transaction
63
security, private protection, and evaluation and feedback system, consisting of three items
taken from Rauniar et al. (2009) and the researcher. Finally, delivery was evaluated by
assurance of delivery. The three items were borrowed from Liu et al. (2008) and from the
researcher.
The third part is about the respondents’ level of e-satisfaction and e-loyalty
towards the websites evaluated. The measures of e-satisfaction were adopted from the
studies of Luarn and Lin (2003). The respondents rated their agreement or disagreement
with the following statements: 1) I am satisfied with the experience on this e-retailer, 2)
This website meets my expectation, and 3) I am overall satisfied with these online
retailers. The concept of e-loyalty was measured adopting scales used by Anderson and
Srinivasan (2003). The respondents rated their agreement or disagreement with the
following statements: 1) When I need to make a purchase, this website is my first choice,
2) I believe this is my favorite website to buy the same kind of product, 3) I try to
purchase at this online retailer whenever I need to make a purchase, and 4) As long as the
present service continues, I doubt that I would switch to another website. All
measurements were developed by using on a 5-point Likert-type scale. The final section
solicited demographic information such as age, location, education level, income and
allowance.
Data Collection
We chose college students as our sample because they are the major group for online
shopping in China. To include respondents from big and small cities, we selected
students from three universities in Beijing in YanTai. Beijing was chosen because most
64
Chinese Internet shoppers come from metropolitan cities (“China’s online shopping in
2008”, 2008). YanTai, as a typical small-coast city, represented the place where the
online shopping is just getting popularity. Thus, this survey sample concerned diverse
geographic backgrounds. The main survey was dispatched through the online survey to
approximately 300 students for each school, 900 in total (refer to Table 10). Two versions
of online surveys, one for Taobao and one for EachNet, were designed in Chinese, and
the link for each online survey was emailed to 150 students for each school. After taking
out surveys because of incompleteness and in-sincerity of the answers, 688 usable data
were obtained and used for data analysis. 386 usable data were obtained for Taobao and
302 for EachNet. Table 13 presents the demographic characteristics of the sample and
Table 14 presents Chinese consumers’’ previous experience of Taobao and EachNet.
Table 10. Distribution of Survey
Location
Beijing
YanTai
School
A
School
B
School C
Taobo
150
150
150
EachNet
150
150
150
300
300
300
Total
900
Characteristics of Sample
65
About 70% of survey respondents were between the ages of 21 and 25. Approximately
78% of the samples were located in Beijing. We obtained 21% of respondents from the
city of YanTai. Students in this area are originally from small cities or rural areas where
online shopping has not developed very well. About 55% of students have an average
allowance per month under 600 RMB (85 U.S. dollars). The sample’s monthly allowance
is slightly higher than the national average, 500 RMB (60 U.S. dollars) (“China’s internet
users”, 2009).
Approximately 40% of the Taobao respondents answered that they visit Taobao
less than one time a month, and 36% of respondents visit between one and five times. For
the EachNet respondents, 69% of them visit less than one time per month, and 23% of the
respondents visit between one and five times. About 87% of both groups’ respondents
spend less two hours browsing or purchasing on Taobao and EachNet. About 72% of our
respondents on Taobao spend less than RMB 500 purchasing products in 2009, compared
with the 84% of our respondents on EachNet. Table 11 and 12 presents the demographic
characteristics of the samples and previous experience of Taobao and EachNet.
66
Table 11. Demographic Characteristic of the Samples
Characteristics
Age
City
Education
Income Per Month
Allowance
Items
18-20
21-25
26+
Beijing
YanTai
Others
Freshman
Sophomore
Junior
Senior
Under RMB 1,000
RMB 1,000-RMB2,000
RMB 2,001-RMB3000
RMB 3,001-RMB4,000
RMB4 ,001-RMB5,000
RMB 5,001-RMB6,000
RMB 6,001-RMB10,000
Over 10,000
Under RMB 200
RMB 201-RMB 400
RMB 401-RMB 600
RMB 601-RMB 800
RMB 801-RMB 1,000
Over 1, 000
67
Frequency
162
489
11
542
147
missing
121
148
328
687
132
153
127
99
52
65
36
26
199
185
129
92
51
31
%
23.3
70.4
6.3
78.1
21.2
0.7
17.4
21.3
47.3
13.0
19
22
18.3
14.3
7.5
9.4
5.2
3.7
28.7
26.7
18.6
13.3
7.3
4.5
Table 12. Previous Experience of Taobao and EachNet
How often do you
visit this Website
per month on
average
Taobao
EachNet
How many hours
per visit do you
spend browsing or
purchasing on this
Website on average?
Taobao
EachNet
What is the best
estimate of the dollar
amount spent on
products purchased
in 2009 via this ?
Taobao
EachNet
Less than 1 time
1 -5 times
6-10 times
11-20 times
21-30 times
More than 30 times
Less than 1 time
1 -5 times
6-10 times
11-20 times
21-30 times
More than 30 times
Less than an hour
1-2 hrs
3-4 hrs
5-6 hrs
7-8 hrs
More than 8 hrs
Less than an hour
1-2 hrs
3-4 hrs
5-6 hrs
7-8 hrs
More than 8 hrs
Under RMB 500
RMB 501-RMB 1000
RMB 1,001-RMB 1,500
RMB 1,501-RMB 3,000
RMB 3,001-RMB 5,000
RMB 5,001-RMB 8,000
More than RMB 8,001
Under RMB 500
RMB 501-RMB 1000
RMB 1,001-RMB 1,500
RMB 1,501-RMB 3,000
RMB 3,001-RMB 5,000
RMB 5,001-RMB 8,000
More than RMB 8,001
68
Frequency
160
146
38
29
13
13
206
65
10
12
5
2
187
163
34
7
4
5
216
50
21
11
2
1
288
63
19
9
6
12
3
254
31
12
0
1
2
1
%
39.8
36.3
9.5
7.2
3.2
3.2
68.5
21.5
3.3
4.0
1.7
0.7
46.5
40.5
8.5
1.7
1.0
1.2
71.5
16.6
7.0
3.6
0.7
0.3
71.6
15.7
4.7
2.2
1.5
3.0
0.7
84.1
10.3
4.0
0
0.3
0.7
0.3
Data Analysis
First, an exploratory factor analysis (EFA) was conducted for the constructs of website
features using measures identified from the pre-test. Reliability was calculated for each of
the factors to assess each factor’s internal consistency. Then, the hypotheses (H1- H4)
were examined by the regression analysis to test the relationships between website
features, e-satisfaction, and e-loyalty. Finally, this study compared the Chinese people’s
different perceptions towards two websites – Taobao and EachNet (H5-H9) – through a ttest.
69
CHAPTER IV
FINDINGS
Dimensions of Website Features
Exploratory factor analysis was conducted on a set of 682 cases and was performed on
the 25 items related to website features. Principal component analysis with a varimax
rotation was performed to examine the underlying dimensions of the website feature
dimensions, as given in Table 15. Three separate factor analyses were conducted to
identify the factors in usability, information and service interaction. The results of the
first factor analysis indicated that usability included two factors, ease of use and format,
as we expected. The loadings for each item ranged in this dimension of usability
from0.51 to 0.87. The cumulative percentages for ease of use and format accounted for
69.90%, and Cronbach’s alphas for these two factors were 0.84 and 0.77. The second
factor analysis identified two factors of information. The pre-test results suggested that
information is composed of content and timeliness. However, these two factors were not
separate in the same way in the main survey results. That is, the first factor was about
sufficient, precise, and timeliness information, and thus it was named
sufficiency/accuracy/timeliness. The second factor only had one item-fit of the
70
information for individuals’ needs-which was named, content. Factors’ loadings range for
the items in this dimension of information from 0.46 to 0.90. The cumulative
percentages for sufficiency/accuracy/timeliness and content accounted for 58.08%, and
Cronbach’s alphas for sufficiency/accuracy/timeliness were 0.57. According to the result
of the third factor analysis, service interaction had four factors: payment, entertainment,
verification, and delivery. Similar to the result from the pre-test, the three items of
payment were grouped into a category. However, one item from security (evaluation of
feedback system) was also loaded with the other items of payment. Therefore, this factor
was named payment/security. The other two items from security loaded into one factor.
Since these two items were about verifying sellers’ credibility and authenticity, the factor
was named verification. The other two factors, entertainment and delivery, were
identified as categorized in the pre-test. The factors’ loadings range for the items in this
dimension of service interaction were from 0.46 to 0.86. The cumulative percentages for
payment/security, entertainment, verification and delivery for 68.56%, and Cronbach
alphas for each factor were 0.78, 0.71, 0.70, and 0.61 respectively.
Overall, inspection of the loading of items on their respective constructs revealed
a high degree of individual item reliability as all items have a loading of greater than 0.4
on their respective constructs (Hair, Anderson, Tatham, & Black, 1998). The Cronbach
alphas’ scores for the identified factors ranged from 0.57 to 0.84, indicating high internal
consistency within the factors. Table 13 presents the results of factor analysis for the
main survey.
71
Table 13. Results of Factor Analysis for the Main Survey
Dimensions Cumulative
Factor and items
%
Usability
Factor 1: ease of use
37.38
This site is user friendly
This site has accessible information that is easy
to find.
This site is easy to navigate.
This site is convenient to use.
69.90
Information
30.97
58.08
Service
Interaction
23.61
42.78
57.40
68.56
Factor 2: format
This site is well organized.
The sequence of this main screen is clear.
The site is aesthetically pleasing to the eye.
This site’s format is easy to read.
Factor 1: sufficient/accuracy/timeliness
I get information in a quick period of time.
This site provides sufficient information.
This site provides up-to-date information.
This site provides me with precise information.
This site frequently updates information.
Factor 2: content
This site’s information content fits my needs.
Factor 1: payment/security
This site provides clear payment instructions.
This site provides a variety of payment method
options (e.g. post office remittance, online
payment, and cash on delivery).
Payment on this site is easy and convenient.
I can evaluate sellers with a feedback system
on this site.
Factor 2: entertainment
I can experience a variety of enjoyable
activities on this site.
This site is designed in an entertaining manner.
Factor 3: verification
This site has reasonable credit evaluation
mechanism.
This site verifies the authenticity of the sellers.
Factor 4: delivery
The product from this site is delivered by the
time promised by the sellers.
I get what I ordered from this site without
error.
The product that came was represented
accurately by this site.
72
Factor
loadings
Reliability
0.84
0.87
0.86
0.75
0.57
0.77
0.80
0.78
0.76
0.51
0.57
0.77
0.76
0.74
0.62
0.46
0.90
0.78
0.82
0.78
0.63
0.46
0.71
0.86
0.79
0.70
0.80
0.74
0.61
0.83
0.66
0.61
The Relationship between Website Features, Satisfaction and Loyalty (H1-H4).
To explore how the factors of website features affect satisfaction, we performed three
separate regression analysis: first, for the factors of ease of use and format (usability);
next for the factor of content and timeliness (information); finally, for the factors of
payment (H3b), entertainment (H3c), security (H3d) and delivery (H3e) (service
interaction). The β weights and other summary statistics from all three regression
analyses are reported in Table 14.
The first hypotheses (H1a and H1b) proposed the positive influence of ease of use
(β =.31, p<.01) and format (β =.52, p<.01)on satisfaction. The second hypotheses (H2a
and H2b) were also supported; sufficiency/accuracy/timeliness (β =.51, p<.01) and
content (β =.12, p<.01) positively influenced satisfaction. The third hypotheses (H3a-f)
posited service interaction factors have an influence on satisfaction. Table 14 shows the
significant impact of payment/security (β =.41, p<.01); entertainment (β =.23, p<.01);
verification (β =.27, p<.01); and delivery (β =.32, p<.01). According to the results,
payment/security was found to have a stronger effect on satisfaction than factors in
service interaction. Merchandise and communication were not identified as a website
dimension in the quantitative analysis; thus, they were not tested. The hypothesis 4 was
supported since satisfaction was had a positive relationship with loyalty (β =.61, p<.01)
(Table 15)
An additional regression was performed to compare the effect size of usability,
information, and service interaction on consumers’ satisfaction (Table 16). The results
found that all website features dimensions positively related to consumers’ satisfaction.
73
Service interaction has the strongest influence (β =.62, p<.01), followed by usability (β
=.59, p<.01), and information (β =.48, p<.01).
Table 14. Regression Results of Website Features Factors and Satisfaction
Predictor variable
Ease of use
Format
β
SE
T-value
.52
.31
.03
.03
16.95**
10.11**
sufficiency/accuracy /timeliness
Content
.51
.12
.03
.03
15.52**
4.25**
Payment/security
Entertainment
Verification
Delivery
.41
.23
.27
.32
.03
.03
.03
.03
13.44**
7.66**
8.88**
10.47**
F
Adjusted
R2
194.93**
.37
129.23*
.27
107.93**
.39
Dependent variable: satisfaction
* *Significant at p value <.01. β= Standardized coefficient. SE= Std. Error
Table 15. Regression Results of Satisfaction and Loyalty
Predictor variable
Satisfaction
β
SE
T-value
.61
.03
20.23**
F
175.51**
Dependent variable: loyalty
** Significant at p value <.01. β= Standardized coefficient. SE= Std. Error
Adjusted
R2
.37
Table 16. Regression Results of Factors for Website Features Dimensions and
Satisfaction
Predictor variable
β
SE
T-value
F
Usability
.59
.05
18.97**
Information
.48
.05
14.23**
Service interaction
.62
.05
23.32** 409.32**
Dependent variable: satisfaction
* *Significant at p value <.01. β= Standardized coefficient. SE= Std. Error
74
Adjusted
R2
.37
Comparisons of Taobao and EachNet (H5-H9)
To examine the difference between Taobao and EachNet from the consumers’
perceptions, this study conducted multiple t-tests to compare website features,
satisfaction and loyalty towards the two websites (H5-H9). The results indicated that the
significant differences of the two websites are from the factor of ease of use (p < .001),
sufficiency/accuracy/timeliness (p < .001) and payment/security (p < .001). Therefore,
H5a, H6a and H7b were supported. The average mean values for all factors of ease of use,
sufficiency/accuracy/timeliness and payment/security were rated higher for Taobao than
for EachNet. Results also reported significant mean differences for website satisfaction
and loyalty, indicating higher mean values for Taobao than those for EachNet, which
supported H8 and H9 (p < .001). The other factors of website features, such as format,
information, entertainment, security, and delivery, did not appear statistically significant.
Table 19 presents mean values for website features, satisfaction, and loyalty for Taobao
and EachNet.
Table 19. Mean Values for Website Features, Satisfaction, and Loyalty (Taobao and
EachNet)
Factor
Mean Comparison
t-Value
Tabao Vs. EachNet
Usability
Ease of use
3.37>3.09
1.90***
Format
3.38>3.29
5.18
Information Sufficiency/accur
3.35>3.31
2.62***
acy/timeliness
Content
3.20>3.33
- .16
Service
Interaction
Payment/security
Entertainment
Verification
Delivery
Satisfaction
Loyalty
Note: *** p < .001
3.55>3.33
3.42>3.38
3.38<3.39
3.22>3.21
3.44>3.24
3.46>3.18
75
4.54***
.83
- .26
.05
3.83***
4.98***
CHAPTER V
DISCUSSION, IMPLICATION, AND LIMITATION
The current study identified the Chinese perceptions of website features, under the
dimensions of usability, information and service interaction, by employing qualitative
and quantitative approaches. Based on the Doll and Torkzadeh (1988)’s EUCS model, a
research model was developed to examine the relationship between the dimensions of
website features, satisfaction, and loyalty among Chinese online consumers. In addition,
in order to understand Taobao’s success and popularity, this study explored the Chinese
perceptions of website features by comparing the two websites. This chapter presents the
discussion of research findings, implications to academics and practices and limitation of
this study.
Discussions
In terms of the categorization of website features using a quantitative approach, the
results from the pre-test and main test were not exactly same, particularly for information
and service interaction dimensions. For the dimension of information, content and
timeliness were identified as two factors in the pre-test. Main survey results did not
categorize information into the same way. Specifically, the main survey results separate
sufficient, accurate, and timeliness information from the unique information content that
fits to individual customers’ needs. In addition, for the dimension of service interaction,
76
the main test results identified that payment/security and verification instead of payment
and security in the pre-test results. For Chinese consumers, payment options or payment
convenience are perhaps related to online transaction security. The verification system
was perceived as an individual category among Chinese online shoppers. Both the main
and pre-test identified the factors of entertainment and delivery. Overall, the two test
results slightly differed, but basically had similar characteristics. The main test results
should be more reliable and less biased, considering the inclusion of the geographic
regions and retailers. The main survey was from two different regions with a similar
sample size for the two target websites, while the pre-test survey was conducted in one
city (Beijing) with more samples of Taobao than EachNet.
According to the regression results, most of the hypotheses (H1-H4) were
supported. The factors of ease of use (H1a) and format (H1b) within in the dimensions of
usability were found to have influenced on Chinese consumers’ satisfaction as predicted.
These findings were consistent with Lu et al.’s (2009) who suggested that customers’
satisfaction was determined by the website functionality and interface design. Customers
want to shop on a website that is easy to navigate instead of taking time to learn. Also, a
stimulating and appealing website interface design will make customers feel that it is
enjoyable (Bauer et al., 2006). The factors of sufficiency/accuracy/timeliness (H2a) and
content (H2b) within the dimension of information were found to have influenced
Chinese consumers’ satisfaction. These are consistent with other studies, which explained
that customers want to find detailed and up-to-date product information on a shopping
website (Madu & Madu, 2002; Rauniar et al., 2009). Regarding H3, payment/security,
entertainment, verification and delivery in the dimensions of service interaction were
77
found to have positive relationships with satisfaction. Among these relationships,
payment/security was found to be the most important factors that influence Chinese
consumers’ satisfaction. A secure payment system may reduce customers’ concerns about
online transaction fraud in a high-risk culture (Ou & Davision, 2009). Also, checking
sellers’ credit is important for them to make a purchase decision because buyers want to
know the reliability of sellers in order to develop sufficient confidence to engage in an
online transaction. Besides, Chinese consumers perceived online entertainment activities
(such as playing games; listening to music) designed by a shopping website would
enhance their satisfaction of this website. Furthermore, a strict verification system
provided by a shopping website may help customers build trust with sellers through
verifying sellers’ credibility and authenticity. Building trust is important among Chinese
consumers in the high-risk environment (Ou & Davison, 2009). In addition, Chinese
consumers would be more satisfied with an e-retailer who provided quality delivery
service (e.g., speed delivery). Overall, among the three dimensions of website features,
service interaction was perceived as the most important one that affected Chinese
consumers’ satisfaction.
Finally, the results also supported that satisfaction has a positive relationship with
e-loyalty among Chinese online consumers (H4). This finding was consistent with Luarn
and Lin’s (2003) who suggested that satisfaction leads to loyalty in the online context,
which was also supported in other studies (Anderson & Srinivasan, 2003; Oliver, 1999).
The authors explained that if customers are satisfied with their past experiences with a
specific e-retailer, they are more likely to stick to this e-retailer rather than move to
another one.
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We also compared Chinese perceptions of website features between Taobao and
EachNet in order to find the reason for Taobao’s popularity. As we expected, Chinese
consumers are more satisfied with and loyal to Taobao than EachNet (H8 and H9).
Taobao has successfully developed its business strategy, spiraling from a small sized new
entrant to a very large and dominant player in the Chinese online C2C market. A
comparison of Taobao and EachNet suggested that a key determinant of success of
Taobao is that the customers perceive Taobao as easier to use (H5a), having more precise,
sufficient and up-to-date information (H6a), and having more reliable payment/security
system (H7a). Taobao was evaluated with a higher score on its ease of use than EachNet.
The reason might be that Taobao has more search engines which make it easy for
customers to navigate (Ou & Davision, 2009). Also, Taobao’s clear product category
may help customers find information and products easily (Liu, 2006). Customers are
more satisfied with Taobao’s information content because there are more sellers on
Taobao than EachNet, and thus the opportunity to find the right product information is
increased. Besides, Taobao not only has product information, but also has other
information such as cosmetics or fashion trends that may appeal to female consumers.
Before EachNet created its own payment system, An Fu Tong, EachNet adopted eBay
(U.S.)’s payment system, Paypal (Li & Liu, 2007). The function between EachNet’s
Paypal and Taobao’s Alipay was different. Paypal only serves as the third party to
transfer money between buyers and sellers after buyers pay, whereas Alipay keeps the
money for buyers until buyers receive the products. It was reasonable that Chinese
consumers are more satisfied with Alipay than Paypal because Alipay was perceived as a
more secure method for an online transaction. Although EachNet created a similar
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payment system, An Fu Tong, one year after Taobao’s Alipay, once customers were
satisfied with using Taobao’s payment system, they did not want to switch from (Alipay)
to another one (An Fu Tong). Moreover, customers feel that it is easy to pay on Taobao
because Taobao comprehensively cooperates with all the leading banks in China, creating
more payment options than EachNet (Li & Liu, 2007). For example, Taobao allows
customers to pay using credit cards, whereas EachNet cannot. In addition, customers feel
more confident in checking seller’s credit score in the evaluation system because Taobao
allows buyers to evaluate a seller after a transaction is complete. However, on EachNet,
buyers only can evaluate sellers before the transaction, which may lead to the problems
of reputation abuse
Implications
This study identified unique website features in the perceptions of Chinese consumers in
order to examine Chinese consumers’ satisfaction and loyalty. A comprehensive
comparison of Taobao and EachNet was conducted to study different perceptions of the
websites. The findings have important implications for both researchers and practitioners
as below.
1.Academic Implications
First, this study used both qualitative and quantitative approaches to find Chinese
consumers’ perceptions of online shopping. Our quantitative method identified four
factors of website features that affected Chinese consumers’ satisfaction and loyalty.
They were payment/security, entertainment, verification and delivery. These results were
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slightly different the findings from the focus group interviews, which suggested two more
additional factors: merchandise and communication.
Based on the focus group interviews, we identified the unique website features
among Chinese consumers’ perception of online shopping. While the focus group
interviews supported six factors, two factors of merchandise and communication were not
identified from the quantitative research. The reasons might because each of these two
factors contain multiple facets which were perceived as individual factors. For example,
the facet of merchandise includes the aspects of uniqueness, variety, and price;
Communication contains communication tool and community.
Although the quantitative stud did not identify merchandise and communication,
the focus group interview results presented that these two factors are important
considerations for Chinese online consumers. One of the main reasons for their online
shopping was to find unique merchandise (e.g., antiques; hand-crafted accessories) that
may not be available in retail stores. Also, reasonable prices and good quality of the
products also made online shopping appealing to Chinese consumers.
Additionally, buyers’ directly communication with sellers is important. In that
way, buyers get detailed information about products such as size, color and delivery and
payment methods. Also, buyers expected a warm relationship with sellers by
communicating with them. Lu, Zhao and Wang (2009) indicated that building friendships
is important when doing business in the “relationship-oriented” Chinese culture. Ou and
Davison (2009) explained that communicating between sellers and buyers is good for
building mutual understanding and reduces uncertainty in relation to the extremely high
risk of fraud in China.
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Thus, these six factors suggest these important website features that Chinese
considered as they were conducting an online shopping activity. While previous research
focused on the western culture, this study concerned a different culture. Thus, this study
provides a better understanding of the different online shopping behaviors between China
and the western cultures.
Second, while the original Doll and Torkzadeh’s (1988) EUCS model focused on
a user’s satisfaction with a computer system, this study adopted the EUCS model to
investigate Chinese consumers’ satisfaction with a shopping website. By extending the
EUCS model, we identified additional factors that were not included in the original
model. These factors (payment, entertainment, security and delivery) were related to
service interaction that also played in a role in building satisfaction for Chinese
consumers. In addition, this study suggested a positive relationship between the identified
factors of website features and e-satisfaction, which, in turn, influenced e-loyalty. A
further study may want to test our research model using different samples or e-retailers,
since this study only focused on the female college students and two target e-retailers.
Third, using a quantitative approach, this study compared Chinese consumers’
perceptions of Taobao and EachNet in terms of website features. Previous studies only
conducted the focus group interviews or simply survey for a small sample. This research
conducted a study with a large size sample (n= 685). Taobao was perceived as more
popular than EachNet in terms of ease of use, sufficiency/accuracy/timeliness and
payment. These website features could be the reasons for Chinese consumers’ higher
satisfaction and loyalty to Taobao over EachNet. A following study could do further
exploration to investigate these factors.
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2.Managerial Implications
This study identified the unique website features that affected Chinese consumers’
satisfaction and, ultimately, their loyalty. A foreign e-retailer who may intend to start an
e-business needs to understand Chinese consumers’ online shopping behaviors in order to
satisfy their unique needs. First, providing merchandise with a cheap price but good
quality may attract Chinese customers, because Chinese people are very price-sensitive
(Lin & Li, 2005). However, e-retailers should not focus too much on setting a very cheap
price because Chinese consumers also believe “cheap products are never good” (Li &
Suo, 2006). Also, it is important to understand what the Chinese consumers’ online needs
are. For example, the top-selling products in the U.S. (e.g., vehicles) might not be a
proper choice for the Chinese consumers, who like shopping for clothes, electronic
products and cosmetics (Ou et al., 2007). In addition, Chinese consumers like searching
for unique products such as foreign products which can not be easily found in the retail
stores. In China, there is a service called procurement service emerging as very popular in
recent years (Baidu, 2010). This service helps Chinese online shoppers buy foreign
products in Japan, Korea, America or European countries. Some products, like luxury
perfume or handbags are not available in the Chinese market. Therefore, using this
service, customers save the money for the flight to buy whatever products they want from
outside of China. Also, if a customer wants to buy foreign luxury brand name clothes
using procurement service, the price is much cheaper than the one in the retail store in
China. Even though this procurement service charges a 10% service fee, the price is still
reasonable to Chinese consumers. For example, a shopper said, “using this service, I
could buy a latest Coach handbag which is not available in the retail store in China. If I
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buy a similar one, the price in China is twice as the one in the U.S.”(“E-commerce in
China,” 2008). Thus, since procurement service has started to become one of the online
shopping styles in China, foreign e-retailers may target this group of consumers who
desire unique foreign products in the Chinese market.
Second, based on Chinese consumers’ perception of high risk of an online
transaction, designing a secure payment system is very important for an e-retailer to build
trust with a buyer (Lu, 2005). Some e-retailers continue to develop its off-line payment
system, such as cash-on-delivery, to satisfy those customers who are still concerned about
online security (Dieter & He, 2000). Also, in order to build confidence for an online
transaction, a strict verification system is needed to avoid online fraud problems. eBay
(U.S.) verified sellers’ identification by means of phone number and address, which is a
feasible and trustworthy verification system among the American consumers (Li & Liu,
2007). However, in China, it is not enough for building trust through just a phone number.
One could have several phone numbers which could bring fraud problems. In order to
avoid fraud problems, Taboo develops its own verification system which requires sellers
to process identification verification when they register as a member of Taobao. To do su,
every seller needs to upload his/her photocopy ID. In this case, if fraud problems happen
to any sellers, Taobao’s security system could easily find the seller based on their ID.
Thus, through this strict verification system, Taobao helps buyers build trust with sellers.
Third, Chinese consumers like a shopping website which also contains
entertainment elements. For example, they like being involved a variety of activities,
such as playing games. Taobao designs its game to attract customers who want to have
fun while they are shopping. The winners earn a coupon from Taobao that can be spent
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on any products on the Taobao website. Also, Taobao organizes an online fashion show
every year that asks buyers to evaluate the best or the most popular sellers to show off
their clothing selections. One seller said: “Taobao makes my store popular and makes me
become successful” (“E-commerce in China,” 2008). Besides that, Taobao has created
one product category called Super Star Street, which sells popular movies and star
singers’ or singer stars’ second-hand products. Buyers even have the opportunity to
directly communicate with those super stars on Taobao. All of these entertainment
strategies attract Chinese customers, especially young people, to spend their time and
money on Taobao. Thus, Taobao’s entertainment selling strategy is worth learning for eretailers.
Fourth, a retailer needs to find a reliable and quick delivery company that meets
Chinese consumers’ delivery needs. In China, some e-retailers such as Taobao permit
sellers and buyers to negotiate the delivery methods depending on the buyer’s needs.
Chinese customers need to be reassured that the expected products they bought will be
exactly what the seller promised. Taobao, for instant, has already signed contracts with
big logistic companies such as China post office and EMS. However, some customers
who live in the smaller cities or towns do not prefer to use these big companies due to the
expensive prices. Therefore, in recent years, some small and local logistical companies
have been rapidly developing in order to target these groups of consumers who desire a
reliable but lower price service. Thus, Taobao’s personalized delivery service satisfies
different groups of consumers, the idea of which could be borrowed by foreign eretailers.
85
Finally, communication is very important in the Chinese friend-relationship
culture. This is a convenient communication tool that helps buyers find sellers easily in
order to better understand each other’s needs. Through becoming involved in a discussion
on the quality and price of products, buyers and sellers communicate with each other to
enhance the confidence between both parties (Li & Liu, 2007). More importantly, Taobao
allows buyers and sellers to negotiate price. This is different from U.S. based online
shopping where the price of products is fixed. On Taobao, through communicating with
sellers, buyers will know more about the details of products such as size, color or
availability. Sometimes, sellers may introduce or recommend customers their new
products that are coming soon. If a buyer is a loyal customer with a seller, based on their
business relationship, the buyer could acquire a lower price for the products compared to
the others. In addition, using Taobao’s instant communication tool, wangwang, buyers
could ask questions about products at any time. Wangang is very convenient because it is
bound with the seller’s cellphone, so that a buyer’s message can be sent to sellers even if
sellers are not online. In this way, sellers could answer buyers’ questions in a reasonable
time frame. Also, Taobao designed a well developed community forum, which provides a
platform for sellers and buyers to share their experiences. For example, buyers will
communicate about which sellers have the best quality product. Sellers can discuss how
to earn money and where to find the best merchandise suppliers. Thus, designing a
convenient instant communication tool is very important for a foreign e-retailer who
starts its business in a friendship based shopping environment. Meanwhile, providing an
online community is vital to creating an opportunity for both sellers and buyers to
enhance mutual understanding.
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Our comparison between Taobao and EachNet, in terms of website features, also
provided the reasons for Taobao’s success and popularity. Although Taobao just
established the company when EachNet was dominating the Chinese online market,
Taobao beat the competitor within several years. When EachNet was first adopted in
China, it carried the original strategy that was applied in the U.S., without considering the
local unique needs among Chinese consumers. Taobao reflected the local preferences on
their business to meet Chinese consumers’ specific needs. Although EachNet imitated
Taobao’s localized strategy such as Taoabao’s unique communication tool (Wangwang)
and payment system in recent years, it is still difficult for EachNet to recover from its
earlier failure. Taobao already has the loyal customers who are satisfied with their past
shopping experiences, making it difficult for them to change to a new shopping
environment. Thus, foreign e-retailers need to create an innovative strategy at the entry
level for the local needs.
Limitations
The samples in this study only focused on college female students, which might raise a
question regarding the generalization of the results to the population of online shoppers.
In the future, we may consider both genders’ perception of online shopping among
Chinese consumers. Also, this study was only conducted in two cities in China. Thus, the
findings might vary if the study was performed in other areas. Therefore, researchers may
consider different locations and populations in a future study. In addition, this study
indentified six factors of website features relating to Chinese consumers’ perception from
the qualitative study (focus group interviews). However, we failed to find the factors of
87
merchandise and communication from quantitative study (survey); thus, future study may
need to identify and confirm these two factors in different sampling.
88
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APPPENDICES
102
APPENDICES A
QUESTIONNAIRE
103
Date______________
No. ___________
Dear Participants,
We are conducting a research study of online shoppers. The purpose of this study is to
examine Chinese perceptions of two Websites – Taobao and EachNet, and their loyalty
intention. Your participation is absolutely voluntary. During the survey you may choose to
stop participating at any time. Your responses will be anonymous; data will be combined
and analyzed as a whole unit. Your individual responses will be totally unidentifiable in this
combined format. If you have any questions, please contact Wenwen Xu (405-334-8981 or
wenwen.xu@okstate.edu). Your participation in the study will be greatly appreciated.
Oklahoma State University
Dept. Design, Housing & Merchandising
Wenwen Xu (Master’s Student)
Dr. Hira Cho (Assistant Professor)
Section I (This section questions your experience on Taobao.)
Have you ever visit and search information at Taobao? (If yes, please answer the
following questions)
1. Yes
2. No
How often do you visit this Website per month on average?
1. Less than 1 time
4. 11-20 times
2. 1 -5 times
5. 21-30 times
3. 6-10 times
6. More than 30 times
How many hours per visit do you spend browsing or purchasing on this Website on
average?
1. Less than an hour
4. 5-6 hrs
2. 1-2 hrs
5. 7-8 hrs
4. More than 8 hrs
3. 3-4 hrs
6.
5.
What is the best estimate of the dollar amount spent on products purchased in 2009 via
this website? ($1=RMB 6.8)
4. RMB 1,001-RMB 1,500
1. Under RMB 500
2. RMB 1,501-RMB 3,000
2. RMB 501-RMB 800
5.
3. Over RMB 3,000
3. RMB 801-RMB 1,000
6.
4.
5.
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Section II (Website features)
We would like to know your evaluation of Taobao. Please indicate the extent to which
you agree or disagree with each of the following.
Stron
Stron
gly
gly
Disagr
ee
Agree
This site has accessible information that is
easy to find.
This site is user friendly.
This site is easy to navigate.
This site is convenient to use.
The site is aesthetically pleasing to the eye.
This site is well organized.
The sequence of this main screen is clear.
This site’s format is easy to read.
This site’s information content fits my
needs.
This site provides me with precise
information.
This site provides sufficient information.
This site provides up-to-date information.
I get information in a quick period of time.
This site frequently updates information.
The product range of this site is
comprehensive.
The products sold on this site are
difficult to find elsewhere.
The general pricing of the products is
reasonable.
This site provides clear payment
instructions.
This site provides a variety of payment
method options (e.g. post office remittance,
online payment, and cash on delivery).
Payment on this site is easy and
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convenient.
This site provides security for my
transaction data.
This site provides security concerning my
privacy.
I feel safe in my transactions on this site.
This site verifies/certifies the authenticity
of the sellers.
This site has reasonable credit evaluation
mechanism.
The product is delivered by the time
promised by the sellers.
I get what I ordered from this site without
error.
The product that came was represented
accurately by the website.
This site provides a variety of delivery
methods (e.g. post, express delivery, home
delivery).
I can experience a variety of enjoyable
activities on this site (e.g. searching
cosmetics information).
This site is designed in an entertaining
manner (e.g. play game, listen music).
I can interact with the sellers or Taobao in
order to receive information tailored to my
specific needs.
I can evaluate sellers with a feedback
system.
Customer share experiences about the
site/product online with other customers of
the website.
Customer service personnel are always
willing to help me.
Inquiries are answered promptly.
This site provides friendly return policies.
This site has a strict measurement for the
sellers who are fraud.
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Section III (E-Satisfaction and E-Loyalty)
We would like to know about your attitudes and behaviors toward Taobao. Please
indicate the extent to which you agree or disagree with each of the following.
Strongly
Disagree
I am satisfied with the experience on this eretailer.
This website meets my expectation.
I am overall satisfied with these online
retailers.
When I need to make a purchase, this
Website is my first choice.
I believe this is my favorite Website to buy
the same kind of product.
I try to purchase at this online retailer
whenever I need to make a purchase.
As long as the present service continues, I
doubt that I would switch to another
Website.
Section IV
We request general demographic information to help with our analysis.
1. How old are you?
years
2. Which city are you in? 1）Beijing 2) YanTai
3. What’s your degree in college?
1) Freshman
2) Sophomore
3) Junior
4) Senior
4. Please indicate your household income per monthon average? ($1=RMB 6.8)
1) Under RMB 1,000
2) RMB 1,000-RMB2,000
3) RMB 2,001-RMB3000
4) RMB 3,001-RMB4,000
5) RMB4 ,001-RMB5,000
6) RMB 5,001-RMB6,000
6)
7) RMB 6,001-RMB10,000
8) Over 10,000
9) ($1=RMB 6.8)
5. Please indicate your allowance per month on average?
1) Under RMB 200
2) RMB 201-RMB 400
3) RMB 401-RMB 600
4) RMB 601-RMB 800
5) RMB 801-RMB 1,000
6) Over 1, 000
10)
“Thank you again for your participation for this survey”.
107
Strongly
Agree
APPENDICES B
OKLAHOMA STATE UNIVERSITY
INSTITUTIONAL REVIEW BOARD APPROVA
108
109
110
111
112
113
VITA
Wenwen Xu
Candidate for the Degree of
Master of Science
Thesis: WHY TAOBAO OUTPERFORMED EACHNET: THE IMPORTANCE OF
WEBSITE FEATURES ON E-SATISFACTION AND E-LOYALTY
Major Field: Merchandising
Biographical:
Education:
Completed the requirements for the Master of Science in Merchandising at
Oklahoma State University, Stillwater, Oklahoma in July, 2010.
Completed the requirements for the Bachelor of Science in Clothing
Engineering at Beijing Institution of Clothing Technology, Beijing, China in
2010.
Experience:
Research Assistant, Department of Design, Housing &
Merchandising (DHM), Stillwater, OK, (Jan. 2008 – May. 2005)
Assistant Merchandiser, Beijing Representative Office of TAV Ltd (Cook
Islands), Beijing, China (Jul. 2007 – Oct. 2007)
Professional Memberships: International Textile and Apparel Association
Name: Wenwen Xu
Date of Degree: July, 2010
Institution: Oklahoma State University
Location: Stillwater, Oklahoma
Title of Study: WHY TAOBAO OUTPERFORMED EACHNET: THE IMPORTANCE
OF WEBSITE FEATURES ON E-SATISFACTION AND E-LOYALTY
Pages in Study: 114
Candidate for the Degree of Master of Science
Major Field: Merchandising
Scope and Method of Study: The first purpose of this study was to examine the
influences of website features on e-satisfaction, ultimately e-loyalty among Chinese
online consumers focusing on the two e-retailers: Taobao and EachNet. The second
purpose was to compare two websites (Taobao and EachNet) in terms of the perception
of website features that affect e-satisfaction and e-loyalty. This study employed both
qualitative and quantitative approached by conducting the focus group interviews and
consumer survey in order to understand Chinese consumers’ perception of online
shopping. Exploratory factor analysis, regression analysis and t-test were conducted
through the SPSS 17.0 program.
Findings and Conclusions: Focus group interview identified eight dimensions of website
features that were important to Chinese consumers towards online shopping. There were
1) service; 2) communication; 3) format; 4) ease of use; 5) payment/transaction system;
6) assurance; 7) timeliness; and 8) product information. The regression analysis
confirmed a positive relationship among web site features, e-satisfaction, and e-loyalty
among Chinese consumers. By comparing Chinese perception of website features
between Taobao and EachNet, the t-test found that Chinese consumers are more satisfied
with and loyal to Taobao than EachNet. Specifically, Chinese consumers perceived
Taobao as easier to use, having more precise, sufficient and up-to-date information, and
having more reliable payment/security system. This study demonstrated the practical
implications for foreign e-retailers that intend to tailor their e-commerce strategies to
Chinese consumers’ unique needs, in order to gain competitive advantages in China.
ADVISER’S APPROVAL: