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Assessing channel quality to measure customers' outcome in online purchasing

Article in International Journal of Electronic Customer Relationship Management · January 2018

DOI: 10.1504/IJECRM.2018.10011240

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ASSESSING CHANNEL QUALITY TO MEASURE CUSTOMERS’
OUTCOME IN ONLINE PURCHASING.

Arsalan Najmi
Department of Management Sciences,
IQRA University
Karachi-75300, Pakistan
Email: arsalan-najmi@hotmail.com
Tel: +92-321-277-7900
(Corresponding Author)

Waqar Ahmed
Department of Management Sciences,
IQRA University
Karachi-75300, Pakistan
Email: waqar120@gmail.com
Tel: +92-300-241-3913
 ASSESSING CHANNEL QUALITY TO MEASURE CUSTOMERS’ OUTCOME IN
ONLINE PURCHASING.

ABSTRACT
Purpose – In this intense competitive era, businesses surrounded with different internal and

external factors are striving to improve their distribution strategy. Online distribution channel is

the emerging and still evolving medium through which products are moved to their consumers.

This study investigate the effects of dimensions of E-Channel Quality and Product Values on E-

Customer satisfaction, leading to E-Customer Loyalty in an economy where E-Commerce is still

in evolving phase.

Design/methodology/approach – E-channel quality served as a higher order factor which

includes: perceived ease of use (EOU), perceived usefulness (PU), convenience (CON),

entertainment (ENT), selection (SEL) and return-ability (RTN); whereas product values served

as a higher order factor for product quality (PQ) and price consciousness (PC). Data was

collected from 224 university students and PLS-SEM was applied.

Findings – The results revealed that quality attributes of E-Channel and Product values have

significant impact on E-customer satisfaction which leads to E-customer loyalty. Based on the

findings, the results are discussed and directions for future research are also provided.

Originality/value – This paper provides a framework to measures the ECS through online

distributional capabilities and how e-commerce channel designers should formulate their

strategies in the technology evolving context.

Keywords: E-channel quality, e-customer satisfaction, e-customer loyalty, product values, higher

order PLS.
1: INTRODUCTION
The recent years have shown a rapid growth in e-services and e-commerce market (Sousa

& Voss, 2012). Using internet for purchasing of goods and services is also being growing in last

few years (Santouridis, Trivellas & Tsimonis, 2012). With an increase in the number of online

stores, online transactions are also nurturing (Liang & Lai, 2002) whereas revenues from e-

commerce markets had also shown a dramatic growth (Rohm & Swaminathan, 2004). The

aggregate sales revenues from online transactions were estimated slightly greater than $ 1

Trillion at the beginning of year 2012 and was predicted to cross $ 1.5 Trillion by 2014

(eMarketer, 2014). Increase in the expenditure of the existing buyers on online transactions,

entrance of new online websites enabling platform for purchasing by the offline stores and

presence of untapped potential users who used or willing to use purchasing for the very first

time, are some of the reasons of evolution in e-commerce (Clements, 2011). Moreover,

companies are also depending more on internet because by that they can easily create interactive,

cost efficient, access ease, adapted and personal oriented environment for their customers or

consumers (Park and Baek, 2007).

E-commerce is defined as the trading place on internet which includes transactions

pertaining to stocks or shares; banking; exchange of bonds, funds, financial instruments or

payments; electronic checking and electronic retailing; by means of communication technology

and information technology (Gunasekaran et al., 2002). Precisely for retail business, there are

various advantages that complement and boost the trends to transform the typical and traditional

brick and mortar store to online stores. These includes reduction in operational cost like labor,

handling & carrying cost of inventory, equipment, rent of stores, reduction in production and

purchasing cycles. On the other hand, increase in turnover of products and a vibrant 24/7 access
for customers also gives a competitive edge to the retailers (Wen, Prybutok, Blankson & Fan,

2014).

Retailers have comprehended that measures to retain edge are not just the presence of

website or the efficient products’ prices but it also includes the presence of Excellency in E-

service quality (Zeithaml, 2002, Santouridis, Trivellas & Tsimonis, 2012; Al-Debei, Akroush &

Ashouri, 2015). This is because customers not just care about the product, but they also care

about the overall process by which they are having their products right from the logging-in to the

website, to the delivery of the product (Katz, 2001).

In addition to measure and evaluating the quality performance benchmarks pertaining to

service by typical brick and mortar retailers; measuring, conceptualizing and empirically

investigating the service quality attributes for online websites are also found to be an important

issue by the researchers and practitioners (Carlson & O’Cass, 2011). Since e-service quality is

becoming the grounding factor for long term survival and success of retailors (Parasuraman et

al., 2005), such e-service quality factors are considered as important and crucial for increasing in

satisfaction which subsequently make customers loyal (Kim et al., 2009). Therefore, online

customers along with the quality of product and service, considers website quality as the crucial

determinant of satisfaction (Smith & Chaffey, 2005).

On the other hand, an online store is different from a typical or traditional brick or mortar

retail store in many ways. First, there is no or least human presence to serve and guide the

customers, which differentiate it from the typical store (Froehle & Roth, 2004). Secondly, online

stores are not restricted by the opening or closing hours and distance, thus providing a more

convenience to the customers who are purchasing online (Fernández-Sabiote & Román, 2012).
Thirdly, an online store can provide a vast range of alternatives to the customers without even

holding it, thus providing more options for selection to customers and directly assign the order to

the manufacturer (Li, Lu & Talebian, 2014). In addition to this, and online store provides an

environment which is an easy to use, engaging, entertaining and appealing for the customers,

thus adding and increasing efficiency, entertainment and convenience to the online purchasing

experience (Wen, Prybutok, Blankson, & Fang, 2014).

In e-commerce market, the success of the purchasing experience or in other words, the

satisfaction and loyalty of the customer with the product and/or store is gauged by the re-

purchase intention, therefore in order to remain competitive, firms or online stores should give

more preferences on the intention to re-purchase from the same channel (Wen et al., 2011). In

other words, as the customers’ perceived quality of the product and channel is the determinant of

e-satisfaction which leads to e-loyalty, therefore an in-depth understanding and evaluation of the

said causal relationship which is E-quality → E-satisfaction → E-Loyalty needs to be

highlighted so that the online stores can improve their management and operations (Wen et al.,

2014).

According to the survey by Internet World Stats (2013), Asia contributed 1 Billion to the

total internet users across the globe, which is the highest number of internet users. On the other

hand, many emerging Asian Countries ranked low, prominently Pakistan which was ranked 105th

out of 144 countries in the readiness towards information and communication technology

(Global Information Technology Report, 2013). Though the literature related to e-service quality

dimensions are filled with many factors studied in advanced, developed and/or developing

countries, but those dimensions still requires more studies to understand consumers’ preferences

in the context of regions which is more prone to the social, political, and economic and specially
terrorism exposures. This paper seeks to answer how online consumers in circumstances like

these will prefer in online distribution attributes. World dynamics is changing rapidly and

different regions in the world are seeming to involve in similar crisis which ultimately impacts

the business environment and consumer behavior in both developed and developing countries

(Ashraf, Thongpapanl, & Auh, 2014, Ali & Raza, 2015, Arif, Afshan & Sharif, 2016). Therefore,

studying and identifying e-service quality dimensions in Pakistan can contribute to the literature

significantly because of the culture and development differences.

1.1 Research Questions and Objectives

In the light of the aforementioned discussions, following research questions are proposed.

RQ1: What are the important factors that formulate the e-channel quality?

RQ2: To what extent the identified e-channel quality dimensions affect the customers’

outcome?

Hence, the objectives of the study are:

RO1: To identify the important factors that formulates the e-channel quality.

RO2: To propose and evaluate the improved measurement model for measuring customer’s

outcome.

The rest of the paper is organized in a way that next chapter includes the review of the

related literature, followed by the operationalization of the study which is methodology. After

that, results of the statistical analysis are shown and then the results and findings are discussed

followed by the managerial implications and directions for future researcher.

2: REVIEW OF THE RELATED LITERATURE

Following paragraphs summarizes the explanation of the constructs that were used in this

study, followed by the derivation of the hypotheses.

2.1 E-Channel Quality and E-Customer Satisfaction

Customers are now at discretion to purchase the product from any of the channels

available to them (Madlberger, 2006). There was a time when only physical stores were available

for purchasing but with an increase in the online stores and the ease and convenience of having

the product without visiting the stores gave a rise to e-commerce business (Santouridis, Trivellas

& Tsimonis, 2012). But still, after the need recognition and initiating the process for the

satisfaction and meeting of that need, the selection of the channel by which the order should be

places is of significance importance.

While selecting, if the online channel has successfully positioned its quality in the mind

of the customers, then the customer will continue using it otherwise he will give preference to

the other channel (Wen et al., 2014). In addition to this, the expectations that the customer will

again purchase through the online channel is quite high if the previous purchasing experience

satisfied him (Ding et al., 2010). Therefore, the determinants and attributes that formulates the E-

channel quality and further increase the satisfaction of the customer need to be identified,

researched and adopted by the retailers.

EOU and PU are adopted from the Technology Acceptance Model (TAM) by Davis

(1989). EOU refers to the ease, comfort and the effortless completion of purchasing or

transaction by a user on an e-commerce website or store, whereas PU refers to the usefulness that
the online store creates by increasing the purchasing experience of the user (Wen et al. 2011).

Due to the involvement of websites and technology in online purchasing, PU and EOU are

considered as a significant antecedents of the channel quality for increasing satisfaction and

leading towards loyalty (Devaraj et al. 2002). Numerous researchers have urged the use of PU

and PEOU as the determinants of intention to use online channels (Celik, 2011; Roca et al. 2009;

Thakur & Srivastava, 2014). In addition to this, PU and PEOU also found to have a significant

influence over intention to re-purchase online (Taylor & Strutton 2010). Wen et al., (2014)

examined the PU and PEOU as the antecedents and determinants of the E-channel quality and

further evaluated there impact on e-satisfaction and e-loyalty.

Customers always look for CON with respect to time, search, effort and place while

purchasing and hence CON also become a significant factor while selecting channel for

purchasing (Rohm & Swaminathan, 2004; Kim et al., 2008). This is also in agreement with the

findings of Madlberger (2006), who conclude time, access, search and place as the dimensions of

CON. On the contrary, numerous researchers conclude that CON is the significant component

which is valued by customers and ultimately motivates them to purchase online (Zhang and

Prybutok, 2005; Jih, 2007). Anderson and Srinivasan (2003) reported that purchasers who

valued convenience are more likely to remain loyal as they have less tendency to look for new

service providers. Therefore, CON is found to be an important element of E-channel quality.

According to Srinivasan et al., (2002), there is no need for online retailers or

stores to hold the inventory like a typical brick and mortar store, therefore they also at ease to

have many alternatives available on their website for their customers. As soon as they got the

order, all they have to do is just to arrange it and deliver it to the customers without investing in

inventory or having a proper replenishment system. Therefore, online retailers also have the
privilege to make many options related to product available for their customers (Ding et al.,

2010). In addition to this, customer preferred online purchasing also because of the fact that,

websites are engaging and entertaining, and customer also values images, styles, appearance,

pictures and information. Therefore, websites are tempting and appealing which engage the

customers from the beginning of the search for product to the completion of the purchase process

(Wen et al., 2014). Hence SEL and ENT are also important constructs and dimensions of E-

Channel quality.

In addition to this, while using online channel for purchasing, customer do not

experience the product before purchasing, therefore a risk is associated with the product related

to its quality, which leads to have a proper return policy by the online retailers in order to make

their customers loyal (Li, Xu & Li, 2013). According to Su (2009), more than 70% of the online

purchasers, before placing the order, contemplate return policies in order to mitigate the risks

associated with the online purchase. Though researchers stated that consumers react differently

as are the return policies accordingly in retailing (Shulman et al., 2009; Ai et al., 2012), but the

researchers are also in agreement of considering return policies as a significant predictor of

consumer purchase decision (Huang et al., 2011). Therefore return-ability (RTN) by an online

store is also an important dimension of E-Channel quality.

In the presence of the above literature hence we concluded the aforementioned

dimensions which are PU, PEOU, CON, SEL, ENT and RTN as the antecedents of the E-channel

Quality. On the other hand, as the E-channel Quality positively influences the level of customer

satisfaction (Wen et al., 2014), therefore we hypothesized it as follows:

H1: Customers’ perceived E-Channel Quality have positive impact on E-Customer

Satisfaction
2.2 Product values and E-Customer Satisfaction

Customers’ expectation of product attributes including quality and price is of as

significance and importance as any other thing that affect the decision making process while

purchasing (Zhou et al., 2011). Chen and Dubinsky (2003) further classified the product

attributes into two i-e intrinsic and extrinsic, in which material, design and functionality are

intrinsic, whereas appearance, packaging and most importantly price are termed as extrinsic. In

addition to this, they further reported that extrinsic factors dominates, in the purchase decision,

over intrinsic as the customers do not have proper engagement with the intrinsic attributes unless

the purchase process in completed and the product is delivered to the customers. In other words,

customers perceived their online purchase decision of high value after gauging and evaluating

the difference between satisfaction and dis-satisfaction from their last purchase decision, as

while purchasing they cannot physically evaluate the product. Therefore, researchers have shown

an agreement in stating that, perceived product attributes of last shopping experience have

positive impact on customer satisfaction and future intention to buy again from online stores

(Petre et al., 2006; Snoj et al., 2004; Kim et al., 2008; Wen et al., 2014). Since the product

quality is termed as a universal gauge for an overall product’ evaluation (Kim et al., 2008; Fang,

Wen, George & Prybutok, 2016), therefore recent years had shown increased expectations in

product quality from buyers’ perspective (Li & Wen, 2013; Li, Wen & Shi, 2015). Particularly in

online environment, in addition to the website attributes, trust and service quality, product

quality is considered to be significant factor (Tsao & Tseng, 2011; Li, Wen & Shi, 2015).

Moreover, pricing remains an indispensable issue for the both conventional and e-commerce

retailers (Paul & Beckmann, 2012). Retailers have shown a disagreement in whether to charge

similar prices across the channels (Flores & Sun, 2014), or to have different prices while offering
similar products via multiple channels (Paul & Beckmann, 2012). Thus consumers are found to

be price conscious while purchasing (Fassnacht & Unterhuber, 2016). Therefore product quality

and price consciousness are considered as important product values (Zhou et al., 2011; Wen et

al., 2014). Hence we hypothesized it as:

H2: Customers’ perceived product’s values have positive impact on E-Customer Satisfaction

2.3 Customer E-Satisfaction and E-Loyalty

Customer satisfaction refers to the overall satisfaction of the customer (Gustafsson et al.,

2005). In the context of e-commerce, e-satisfaction refers to the overall satisfaction from online

retail store from the previous purchase decision (Anderson and Srinivasan, 2003). On the other

hand, the ultimate objective of the online stores or e-retailers is the customer loyalty which has

an inverse relationship with the switching towards alternatives, and which can only be achieved

if the customer is satisfy from his previous purchase experience, that force him to purchase again

(Tsiotsou, 2006; Chiou & Pan, 2009). In addition to this, a strong and significant correlation is

reported between satisfaction and loyalty in e-commerce comparing to typical brick and mortar

store (Shankar et al., 2003), whereas e-satisfaction tends to have a positive impact on e-loyalty

(Yoo, Kim, & Sanders, 2015; Chou, Chen & Lin, 2015; Gallarza, Ruiz-Molina, & Gil-Saura,

2016). Though the literature support the evidence of having different affect with respect to

strength and significance of the satisfaction and loyalty in an online context (e.g., Balabanis et

al., 2006 vs. ForeSee Results, 2008) but still this relationship needs to be more explored

(Christodoulides and Michaelidou, 2011), specially in the scenario of this study which is on an

emerging e-commerce market. Therefore, we hypothesized it as:

H3: Customers’ e-satisfaction have positive impact on customers’ e-loyalty

 The summary of the aforementioned hypotheses can be viewed in the hypothesized

framework which is presented in Figure 1.

< Insert Fig 1 Here>

3: METHODOLOGY

3.1 Instrument and Measures

For the purpose of data collection, an instrument was designed by adopting and adapting

the measures from the existing literature. The layout of the instrument was consists of two

sections; one for the measures of the latent variables and second to measure the demographics of

the respondents. Measures include dimensions of E-Channel quality which are EOU and PU

from Devaraj et al, (2002); CON from Yang and Lester (2004), Madlberger (2006),

Christodoulides and Michaelidou, (2011); ENT and SEL from Wolfinbarger and Gilly (2003),

Srinivasan et al., (2002) and RTRN from Lee and Huddleston (2006). Product values include

dimensions of PQ from Wen et al., (2014) and PC from Darden and Perreault, (1976). The items

to measure the ECS and ECL were adopted from Yang and Lester, (2004), Carlson and O’Cass,

(2011); and Srinivasan et al., (2002) respectively. All items were measured on five point likert

scale ranging from 1 for strongly disagree to 5 for strongly agree. The developed survey

instrument was then further validated by 6 academic and industry experts. The suggestions of the

experts were incorporated in order to make the instrument more easy and convenient for the

respondents. Furthermore, pilot survey was conducted before having an ample data collection.

The results of the pilot survey were found satisfactory therefore the instrument was then

circulated among respondents.

3.2 Sample and Data collection

 The data for this study was collected from the students of private sector universities of

Pakistan. The collection of data from the students was due to three reasons. First, the data from

students reflects the culture (Craig and Douglas 2005). Second, university students tends to have

good understanding, ease and comfort while engaging with the Internet, IT, websites,

applications and others (Wen et al., 2014). Thirdly, the literature also supports the selection of

students as respondents for the study in the context of online purchasing (Walczuch and

Lundgren, 2004; Lee and Lin, 2005; Cyr et al., 2006; Wen et al., 2011). Therefore, as per the

convenience of the researchers, private sector universities students were addressed the survey

questionnaire.

Since the present study focused on online purchasing, therefore only those students were

conveniently approached who are registered in business administration program and had an

online purchasing experience. In addition to this, as the e-commerce in Pakistan is still in

induction phase (Ashraf, Thongpapanl, & Auh, 2014, Ali & Raza, 2015), where only 17.8% of

the total population uses Internet (Internet World Stats, 2016), of which majority belongs to age

group of 21-30. Therefore, the 500 self administered survey questionnaire were distributed

among students. Out of them 260 were returned leading to the response rate of 52%. Response

rate above 50% in business and management research is termed as “Good” as discussed by

Mellahi and Harris (2016), thus the present study meets the requirement. From the collected

sample, 36 questionnaires were rejected because of incomplete responses thus leading to final

sample of 224 university students that reflects the objective of this study as all the respondents

were having online purchasing experience. The sample size of the current study meets the

minimum sample requirement of 10 times the number of arrows pointing to a latent construct
anywhere in the model (Hair et al., 2013). Table 1 summarizes the demographic profile of the

respondents.

< Insert Table 1 Here>

3.3 Common Method Variance

Since all the constructs were measured through the same survey instrument therefore

there could be possibility of common method variance (Podsakoff, MacKenzie, Lee, &

Podsakoff, 2003). Common method bias is a major concern when a single factor emerges from

the factor analysis which accounts for most covariance among the measures (Podsakoff et al.,

2003). Firstly, Common method variance is examined by using a statistical method of Harman’s

(1967) single factor approach. Using SPSS; unrotated factor analysis keeping Eigen’s value

greater than 1 has run and the result of this study shows that 9 factor emerged which explains

63.657% of the variance. The first factor explained only 28.409% of variance. Secondly, having

value of 0.9 and more of inter-construct correlations also indicates the presence of method bias

(Ali, Kim & Ryu, 2016). Table 5 is showing the highest value of 0.724, thus both tests are

indicating that method bias does not arise as a serious issue in this study.

4. STATISTICAL ANALYSIS AND RESULTS

The objective of this research was to study the proposed model that hypothesizes the joint

effect of e-channel quality (ECQ) and product value (PV) on the e-customers satisfaction (ECS)

& finally examined an impact of ECS on e-customer loyalty (ECL). Therefore, for higher order

factor, the repeated indicators approach on mode B was followed as recommended by Becker,

Klein and Wetzels (2012). The validity and reliability of the outer model was confirmed and
models and hypotheses were examined through SmartPLS 3.2.3 (Ringle, Wende, and Becker,

2015).

4.1 The Measurement, Outer Model

The construct validity and reliability of the model were examined through the content

validity, convergent validity and discriminant validity as described in the following sections.

4.1.1 The content validity

Content validity is considered to be strong if the factor loadings of items within a

construct are higher than rest of the constructs in the model (Chin, 1998; Hair et al., 2013). Items

with higher loading on other constructs more than their construct loadings were eliminated.

Moreover majority of the factor loadings are greater than 0.7 which shows property of items for

measuring related concept. Results are tabulated in Table 2 and 3 confirming the content validity

of measurement model, where all items were significantly loaded on their respective constructs

higher than other constructs.

< Insert Table 2 Here>

< Insert Table 3 Here>

4.1.2 The Convergent Validity

Convergent validity is the extent to which a group of items converge to measure a same

concept (Hair et al., 2013; Najmi & Khan, 2017). It is examined by three methods. Firstly, highly

loaded factor loadings with at least more than 0.7 of factor loadings and statistically significant.

Secondly, value of average variance extracted (AVE) above 0.5, is considered as an acceptable
threshold for convergent validity (Fornell and Larcker, 1981). Thirdly, it is validated through

composite reliability which should be greater than 0.7 (Afshan & Sharif, 2016). Table 4

illustrates all the values above the limits which confirms the assumption of convergent validity.

< Insert Table 4 Here>

4.1.3 The Discriminant Validity

Discriminant validity is defined as the extent to which set of items can distinguish a

variable from other variable in the model (Mehmood & Najmi, 2017; Ahmed & Omar, 2017). In

this research discriminant validity was analyzed through three criterion. First, all items within the

construct checked to be strongly loaded on their respective constructs than the other constructs

and differences between loading on respective construct and the cross-loading were higher than

0.1 (Gefen and Straub, 2005). Second, discriminant validity approach was suggested by Fornell

and Larcker (1981). The correlation matrix in Table 5 has a diagonal line of elements represent

the square roots of AVE with the absolute value of their correlation of the constructs in rows and

columns. The values in the diagonal line are greater than the other in the rows and columns

values confirming the discriminant validity. Thirdly, the heterotrait-monotrait ratio of

correlations (HTMT) estimates in Table 6 indicates that none of the HTMT measures are greater

than 0.85 (Henseler, Ringle, and Sarstedt, 2015).

< Insert Table 5 Here>

< Insert Table 6 Here>

4.2 The Structural Model (Inner Model) and Hypotheses Testing

 After analyzing & establishing construct validity and reliability, the next step was to

examine the proposed hypotheses using PLS-SEM (Partial Least Squares- Structural Equation

Modeling) in SmartPLS 3.2.3 (Ringle, Wende, and Becker, 2015). PLS-SEM was preferred for

analyzing the research data because of its appropriateness for handling complex models having

formatively measured constructs like used in this research (Hair, Ringle, and Sarstedt, 2011;

Henseler et al., 2014) as it provides the better estimates over other covariance based approaches

(Hair, Ringle, and Sarstedt, 2011; Hair et al., 2012).To estimate both the measurement model and

the structural model PLS analysis employs bootstrapping (Efron & Tibshirani 1986; Haenlein

and Kaplan, 2004). Results have been reported below in Table 7A, 7B, figure 2 and figure 3

using a bootstrap resampling procedure of 5000 subsamples (Hair, Ringle, and Sarstedt, 2011).

< Insert Fig 2 Here>

< Insert Fig 3 Here>

< Insert Table 7A Here>

< Insert Table 7B Here>

There are 6 significant indicators for the formative construct e-channel quality i.e.

convenience, entertainment, ease of use, perceived usefulness, return-ability, and selection while

perceived product value is formulated through 2 significant indicators that is Product quality and

price consciousness as illustrated in table 7(A), 7(B) and Figure 3.

4.2.1 Predictive relevance of the model

The predictive power of the construct is examined through R square and Cross-Validated

Redundancy (Q square). Value of R square higher than 26% is considered to be substantial

(Cohen,1988). Table 8 shows that 62.1 % of e-customer satisfaction is explained by e-channel

quality and perceived product values; whereas this satisfaction explains 52.4% of behavior of
loyal customers to repurchase. This confirms that construct used in this research is highly

predictive to understand the outcome.

Furthermore, to assess the quality of model, the values of Cross-Validated Redundancy

(Q square) was tested by applying the Blindfolding method in SmartPLS with omissions

distances at 6. Q square technique was first developed by Stone (1974) to measures the

predictive relevance of a model by predictive sample reuse technique. Q square > 0 shows the

model has predictive relevance. Table 8 shows that the Q square values were 0.396 and 0.288 for

E-customer satisfaction and E-customer loyalty respectively. Therefore, the value confirmed

model fitness that the model has a worthy prediction quality.

< Insert Table 8 Here>

The goodness of fit measures validity of model in PLS-SEM (Tenenhaus et al., 2005). It

is measured by computing the square root of product of average R-square and the geometric

mean of AVE for the endogenous constructs. The standard values suggested by Wetzels et al.

(2009) are (0.36 and above is large, 0.25=medium, 0.1=small). In this study, using standard

formula, GoF is calculated to be 0.595 which indicate excellent adequacy of the model validity.

As shown in Figure 3 and Table 9, E-Channel Quality has a positive and significant effect

on E-Customer Satisfaction at the 0.01 level of significance (β=0.391, t= 7.257, p<0.01). Product

Value has a positive and significant effect on E-Customer Satisfaction at the 0.01 level of

significance (β=0.526, t= 9.378, p<0.01). Finally, E-Customer Satisfaction leads to a positive and

significant effect on E-Customer Loyalty at the 0.01 level of significance (β=0.724, t= 20.271,
p<0.01). Therefore, the results supported the proposed hypotheses H1, H2 and H3 as proposed

earlier in this study.

< Insert Table 9 Here>

Above illustrated results provide support for the main notion of this study that E-channel

quality & perceived product values together play a significant role in developing E-customer

satisfaction which then has a significant role in making customer loyal.

5. CONCLUSION, DISCUSSIONAND IMPLICATIONS

E-commerce has opened a new and lucrative avenue for the suppliers to reach their

potential customers (Wen et al., 2014). Purchasing through online website is still very new in

developing countries like Pakistan but it is evolving in a rapid pace with the acceptance of new

technology and awareness of usage and benefits in consumers. It is not only cost efficient for

suppliers, manufacturers and distributors in many ways but also becoming attractive medium

from customers’ perspective (Ashraf, Thongpapanl, & Auh, 2014). The value e-channel creates

for their customers is the mix of both traditional and contemporary. This includes 1) ease of

usefulness with provision of accurate and timely information, 2) convenience with the benefit of

spatial ease and accessibility 3) Product Selectivity with ease of comparing variety of

specifications and prices on a click , 4) Entertainment to attract the attention and engagement of

customers 5) Perceived usefulness to create value against time and money and finally, 6) Return-

ability, for strong after sales services to reduce the perceived risk from customers’ mind in

transaction through online channel. This research confirmed the importance of these dimensions

on customers’ satisfaction. Therefore, marketing, sales & operations decision makers are

suggested to develop a good understanding about these dimensions of online channels which are

needed to be fine-tuned to offer right package to their potential customers and getting ahead of

their competition.

The growing trend of competition on internet based supply chains are easily observed

(Sousa & Voss, 2012). Suppliers are inspired to use online distribution of their goods through

various websites. Various online channels are selling products with different prices and channel

offerings. Increasing trend of e-commerce & online shopping has made customers buying

decision easy in many ways with little complexity (Santouridis, Trivellas & Tsimonis, 2012).
Firstly, it is really difficult for customers to feel the quality of tangible product during e-

shopping. This creates uncertainty regarding product quality against the price and thus they are

little hesitant to make buying decisions accordingly. Secondly, customers think what if the

product purchased online is not delivered as per their specification or expectations. This makes

e-channel quality become vulnerable for online buyers while decision-making. Therefore

perceived product quality & price was selected as indicator of product features and induced the

return-ability as a variable in e-channel quality to mitigate the perceived risk.

This research also provides indepth understanding for further academic researchers to

envisage the risk perception associated with online purchasing. In this research, every dimension

included in e-channel quality & product value is significant to customer with different ratings.

Findings suggest that e-retailers while developing their online distribution strategy should

emphasize both on product value as well as channel quality. Product value is something

customers gives more weightage for their overall satisfaction. Quality of product is highly

valuable for the online buyers to keep them loyal to the e-tailer. While channel quality creates

the perception of service quality on the online buyers which usually differentiate one e-tailer

from the other. It creates the strong impression about the online channel operators. Well planned

and executed distribution services provide strong sense of satisfaction on consumer’s mind and

influences their re-buy intentions. The study reflects that customers give more importance to the

e-tailer which provides more utility and ease to customer. Moreover, online consumers are also

attracted to level of entertainment and fun provided while their online buying experience.

Therefore managers and strategy makers associated with online distribution must develop their

services keeping the consumers preferences established through this study.

 This provides an insight for sales and operations managers to offer value proposition

focusing more on product performance as it plays a vital role in creating satisfied customers’. At

the end customers experience what they use. Moreover e-distribution quality needed to be spot

on for making strong competitive advantage over other e-commerce channels. Risk associated

with services of online buying can be mitigated through proper returnability mechanism. As

result suggested, every indicator used in this model has an impact on customers’ decision making

to buy and rebuy. Excellent perceived product features and e-channel quality together can make

customer delighted and create loyalty to choose the same supplier or e-channel again and that is

how supply chain managers can differentiate and survive in this emerging and highly

competitive online channel market.

Like many researches, this study also has some limitations. Selecting students as a unit of

analysis; collecting data only from private sector universities and making an exclusive case of

Pakistan limits the generalize-ability of this research. Furthermore, the present study is

quantitative and the model is limited to the factors identified from the existing literature only.

Therefore, future researchers are recommended to further explore the identified phenomenon

qualitatively and/or quantitatively across different customer segments, from different cultural

groups and backgrounds, of different countries. Moreover, the way the online supply chain

businesses are thriving to sustain in this highly competitive market, it also triggers researchers to

study more on diverse factors in this domain. It is recommended that for future researches, the

study can further be expanded with inclusion of more operational performance related variables

like responsiveness, adaptability, lead time, innovation, failure recovery, order management,

reliability, stock-outs and performance comparison against competition etc. to better explain

customers’ satisfaction and loyalty.

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Figure 1: The research Framework

Figure 2: SEM Output (T-Statistics)

Figure 3: SEM Output (Factor Loadings and Path Coefficients)
 Table 1 Demographic Profiles
Description (Sample size = 224 students) Frequency Percent
Gender Male 136 60.7
Female 88 39.3
Age 20 years or less 30 13.4
21 to 25 years 158 70.5
26 to 35 years 21 9.4
36 to 40 years 5 2.2
41 to 45 years 2 0.9
More than 45 years 8 3.6
Transaction mode Cash on delivery 174 77.7
Credit card 19 8.5
Others 31 13.8

Table 2 - Factor Analysis Results

Constructs Items CON ENT EOU ECL PC PQ PU RTN ECS SEL

CON1 0.73 0.29 0.44 0.28 0.14 0.24 0.26 0.20 0.32 0.30

CON2 0.72 0.10 0.38 0.26 0.16 0.18 0.34 0.07 0.26 0.23
CON
CON3 0.75 0.23 0.34 0.17 0.18 0.12 0.24 0.17 0.23 0.31

CON5 0.71 0.32 0.46 0.30 0.19 0.19 0.39 0.17 0.31 0.40

ENT1 0.33 0.78 0.43 0.31 0.13 0.30 0.36 0.21 0.36 0.40

ENT2 0.11 0.75 0.25 0.23 0.08 0.20 0.17 0.22 0.26 0.33
ENT
ENT3 0.32 0.83 0.43 0.43 0.12 0.30 0.37 0.28 0.44 0.39

ENT4 0.23 0.73 0.35 0.33 0.04 0.20 0.32 0.18 0.38 0.40

EOU1 0.52 0.29 0.80 0.38 0.19 0.23 0.35 0.06 0.35 0.31

EOU2 0.42 0.38 0.83 0.37 0.19 0.27 0.39 0.09 0.40 0.29
EOU
EOU3 0.47 0.42 0.84 0.40 0.18 0.32 0.54 0.19 0.51 0.41

EOU4 0.40 0.44 0.74 0.41 0.11 0.27 0.48 0.29 0.38 0.38

ECL1 0.16 0.25 0.31 0.65 0.12 0.33 0.32 0.32 0.52 0.28

ECL ECL2 0.19 0.31 0.27 0.73 0.06 0.35 0.40 0.18 0.52 0.30

ECL3 0.31 0.38 0.42 0.84 0.15 0.46 0.41 0.19 0.59 0.33
 ECL4 0.33 0.36 0.41 0.76 0.21 0.46 0.34 0.16 0.57 0.38

ECL5 0.29 0.32 0.43 0.77 0.14 0.48 0.39 0.24 0.54 0.26

ECL6 0.29 0.29 0.32 0.72 0.13 0.41 0.37 0.37 0.51 0.29

PC1 0.16 0.10 0.14 0.17 0.79 0.14 -0.02 0.19 0.16 0.14

PC PC2 0.25 0.12 0.19 0.18 0.86 0.15 0.09 0.21 0.23 0.20

PC3 0.17 0.09 0.19 0.10 0.83 0.16 0.04 0.12 0.15 0.11

PQ1 0.15 0.22 0.24 0.46 0.16 0.80 0.26 0.13 0.53 0.29

PQ2 0.25 0.28 0.29 0.42 0.16 0.82 0.28 0.12 0.53 0.31
PQ
PQ3 0.23 0.27 0.28 0.47 0.14 0.91 0.34 0.14 0.64 0.31

PQ4 0.22 0.33 0.33 0.53 0.16 0.84 0.39 0.15 0.68 0.32

PU1 0.20 0.27 0.39 0.31 0.04 0.23 0.71 0.17 0.36 0.27

PU2 0.23 0.23 0.32 0.35 -0.08 0.22 0.70 0.09 0.30 0.27
PU
PU3 0.17 0.28 0.32 0.20 -0.04 0.22 0.68 -0.02 0.29 0.22

PU4 0.53 0.36 0.52 0.50 0.16 0.36 0.76 0.14 0.46 0.36

RTN1 0.17 0.22 0.26 0.32 0.07 0.05 0.21 0.74 0.19 0.24

RTN2 0.12 0.27 0.10 0.21 0.18 0.18 0.08 0.77 0.22 0.24
RTN
RTN3 0.19 0.18 0.11 0.17 0.15 0.18 0.05 0.75 0.20 0.21

RTN4 0.14 0.13 0.09 0.22 0.25 0.09 0.01 0.65 0.16 0.14

ECS1 0.35 0.41 0.44 0.57 0.20 0.61 0.48 0.20 0.80 0.41

ECS2 0.33 0.44 0.47 0.63 0.22 0.59 0.39 0.23 0.82 0.43

ECS ECS3 0.29 0.37 0.42 0.57 0.13 0.58 0.47 0.19 0.82 0.38

ECS4 0.30 0.35 0.33 0.60 0.15 0.47 0.40 0.23 0.81 0.38

ECS5 0.32 0.36 0.43 0.57 0.18 0.51 0.31 0.24 0.81 0.32

SEL1 0.42 0.37 0.41 0.38 0.14 0.30 0.39 0.24 0.42 0.85
SEL
SEL2 0.29 0.45 0.31 0.29 0.16 0.30 0.26 0.24 0.36 0.80
 Table 3 - Factor Loading Significant
Standard
Constructs Items Loadings T Value P Value
Error
CON1 0.73 0.044 16.332 ***
CON2 0.72 0.053 13.714 ***
CON
CON3 0.75 0.043 17.343 ***
CON5 0.71 0.050 14.188 ***
ENT1 0.78 0.028 28.414 ***
ENT2 0.75 0.050 15.148 ***
ENT
ENT3 0.83 0.023 36.510 ***
ENT4 0.73 0.044 16.389 ***
EOU1 0.80 0.029 27.943 ***
EOU2 0.83 0.023 35.426 ***
EOU
EOU3 0.84 0.020 42.414 ***
EOU4 0.74 0.036 20.181 ***
ECL1 0.65 0.051 12.758 ***
ECL2 0.73 0.040 18.376 ***
ECL3 0.84 0.023 36.289 ***
ECL
ECL4 0.76 0.033 22.886 ***
ECL5 0.77 0.035 21.906 ***
ECL6 0.72 0.053 13.440 ***
PC1 0.79 0.089 8.883 ***
PC PC2 0.86 0.081 10.608 ***
PC3 0.83 0.084 9.915 ***
PQ1 0.80 0.031 25.414 ***
PQ2 0.82 0.029 28.111 ***
PQ
PQ3 0.91 0.012 75.249 ***
PQ4 0.84 0.026 31.921 ***
PU1 0.71 0.050 14.042 ***
PU
PU2 0.70 0.048 14.600 ***
 PU3 0.68 0.056 12.048 ***
PU4 0.76 0.025 30.782 ***
RTN1 0.74 0.075 9.881 ***
RTN2 0.77 0.049 15.913 ***
RTN
RTN3 0.75 0.058 12.754 ***
RTN4 0.65 0.084 7.734 ***
ECS1 0.80 0.026 30.766 ***
ECS2 0.82 0.024 34.715 ***
ECS ECS3 0.82 0.027 30.447 ***
ECS4 0.81 0.029 27.605 ***
SAT5 0.81 0.027 30.306 ***
SEL1 0.85 0.027 31.387 ***
SEL
SEL2 0.80 0.051 15.453 ***
Note: ***p<0.01

Table 4 - The Convergent Validity Analysis

Constructs Items Loadings CR AVE

CON1 0.73

CON2 0.72
CON 0.817 0.528
CON3 0.75

CON5 0.71

ENT1 0.78

ENT2 0.75
ENT 0.856 0.599
ENT3 0.83

ENT4 0.73

EOU1 0.80

EOU2 0.83
EOU 0.878 0.643
EOU3 0.84

EOU4 0.74
 ECL1 0.65

ECL2 0.73

ECL3 0.84
ECL 0.883 0.559
ECL4 0.76

ECL5 0.77

ECL6 0.72

PC1 0.79

PC PC2 0.86 0.869 0.688

PC3 0.83

PQ1 0.80

PQ2 0.82
PQ 0.907 0.711
PQ3 0.91

PQ4 0.84

PU1 0.71

PU2 0.70
PU 0.806 0.511
PU3 0.68

PU4 0.76

RTN1 0.74

RTN2 0.77
RTN 0.818 0.531
RTN3 0.75

RTN4 0.65

ECS1 0.80

ECS2 0.82

ECS ECS3 0.82 0.908 0.663

ECS4 0.81

ECS5 0.81

SEL1 0.85
SEL 0.809 0.681
SEL2 0.80
 Table 5 - Correlations for Discriminate Validity

Constructs CON ENT EOU ECL PC PQ PU RTN ECS SEL

CON 0.727
ENT 0.338 0.774
EOU 0.563 0.483 0.802
ECL 0.353 0.428 0.487 0.748
PC 0.232 0.124 0.208 0.180 0.829
PQ 0.253 0.328 0.341 0.556 0.181 0.843
PU 0.429 0.406 0.557 0.499 0.049 0.376 0.714
RTN 0.211 0.287 0.205 0.323 0.207 0.164 0.140 0.729
ECS 0.391 0.475 0.519 0.724 0.218 0.707 0.506 0.266 0.814
SEL 0.434 0.495 0.438 0.413 0.181 0.362 0.402 0.291 0.476 0.825

Table 6 - Heterotrait-Monotrait Ratio (HTMT) Results

Constructs CON ENT EOU ECL PC PQ PU RTN ECS SEL

CON
ENT 0.438
EOU 0.736 0.587
ECL 0.45 0.516 0.586
PC 0.311 0.156 0.263 0.231
PQ 0.32 0.391 0.403 0.653 0.223
PU 0.561 0.526 0.712 0.628 0.172 0.469
RTN 0.29 0.371 0.261 0.413 0.303 0.215 0.224
ECS 0.491 0.562 0.606 0.845 0.262 0.806 0.63 0.336
SEL 0.685 0.771 0.653 0.613 0.284 0.535 0.638 0.461 0.691

Table 7 (A) – Formative constructs for CHQ

Formative indicators for Standard P
Loadings T Value
CHQ Error Value
PU -> CHQ 0.241 0.019 12.383 ***
EOU -> CHQ 0.342 0.020 17.266 ***
CON -> CHQ 0.231 0.023 10.087 ***
 ENT -> CHQ 0.283 0.024 11.565 ***
SEL -> CHQ 0.153 0.014 11.156 ***
RTN -> CHQ 0.141 0.029 4.880 ***
Note: ***p<0.01

Table 7 (B) - formative constructs for PV

Standard P
Formative indicators for PV Loadings T Value
Error Value
PQ -> PV 0.916 0.046 19.718 ***
PC -> PV 0.267 0.072 3.703 ***
Note: ***p<0.01

Table 8 – Predictive power of construct

Estimate R-Square Q-Square
ECS 0.621 0.396
ECL 0.524 0.288

Table 9 - Hypothesis Testing Results

T-
No Hypothesis Estimate S.E. Decision
Values
H1 CHQ -> ECS 0.391*** 0.054 7.257 Supported
H2 PV ->ECS 0.526*** 0.056 9.378 Supported
H3 ECS -> ECL 0.724*** 0.036 20.271 Supported
Note: ***p<0.01

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