Antecedebts of customer repurchase intention a study of online group buying in vietnam

Few of studies haveinvestigated the relation between consumer’s acceptance and their purchasing behavior.Hence, this study focuses in measuring relationship between cognitive factors – t

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2013

MASTER OF BUSINESS (Honours)

SUPERVISOR: Prof LE NGUYEN HAU

Ho Chi Minh City – Year 2013

are gratefully acknowledged here.

At the very first, I would like to express my deepest gratitude to my supervisor,Prof Le Nguyen Hau With his guidance, I could have worked out this thesis He hadoffered me valuable suggestions and criticisms with his profound knowledge in richresearch experience

I am grateful to express my sincere to Prof Nguyen Dinh Tho I have learned fromhim a lot not only about research design, but also data analysis technique I am alsoextremely to give thankful to UEH – International School of business (ISB)supported me in all process

I would like to extent my sincere thanks to all my classmate and friends Theirkindness and supports have contributed very much in my working process Mostimportant, I would like to express my most sincere thanks to my father, my motherand my brother for their continuous encouragement and support

work and effort and that is has not been submitted, either in part or whole, anywherefor any award.

Information and ideas taken from other sources as cited as such This work has notbeen published

Signature: Tu Van Anh

Date: 18/02/2013

CHAPTER 1 INTRODUCTION 2

1.1 Research interest 2

1.2 Motivation of the study 4

1.3 Research objectives 6

1.4 Methodology and scope of research 6

1.5 Research structure 7

CHAPTER 2 THEORETICAL BACKGROUND 8

2.1 Introduction 8

2.2 Theoretical background 8

2.2.1 Online group-buying model 8

2.2.2 IS repurchasing behavior model 9

2.2.2.1 Online customer retention 10

2.2.2.2 Online group-buying repurchase model 13

2.2.3 Website quality 14

2.3 Research model 16

2.3.1 Perceived Usefulness 19

2.3.2 Customer satisfaction 20

2.3.3 Customer trust 20

2.3.4 Hypotheses related to website quality 21

2.4 Conclusion 23

CHAPTER 3 RESEARCH METHOD 24

3.1 Introduction 24

3.2 Research design 24

3.3 Instrument construction 26

3.4 Pilot test results 29

3.4.1 Cronbach Alpha 29

3.4.2 EFA for website quality scales 31

4.2 Respondents demographic 33

4.3 Scale validation 34

4.3.1 Preliminary results 34

4.3.2 Confirmatory factor analysis (CFA) 38

4.3.2.1 CFA results 38 4.3.2.2 Saturated model 43 4.4 Modified research model 45

4.5 Model fitness 46

4.6 Bootstrap 47

4.7 Hypotheses testing 48

4.8 Conclusion 49

CHAPTER 5 CONCLUSIONS AND LIMITATIONS 50

5.1 Introduction 50

5.2 Discussion and conclusion 50

5.3 Managerial implications 52

5.4 Limitations and future research 54 REFERENCES

APPENDICES

Figure 2.1 A post-acceptance model of IS continuance 11

Figure 2.2 Research model 19

Figure 3.1 Research process 25

Figure 4.1 CFA model of online group-buying repurchase intention scale 39

Figure 4.2 CFA model of trust scale 40

Figure 4.3 CFA model of satisfaction scale 40

Figure 4.4 CFA model of website quality scale 41

Figure 4.5 Saturated model of main survey 44

Figure 4.6 Modified research model 46

Figure 4.7 SEM result of research model (Standardized) 46

Table 2.1 Some integrated models of customer retention 12

Table 3.1 Sources of questionnaire items 28

Table 3.2 Cronbach alpha result of pilot test 30

Table 3.3 EFA result of pilot test 32

Table 4.1 Respondents demographic 34

Table 4.2 Cronbach alpha result 35

Table 4.3 EFA result of main study 37

Table 4.4 Confirmatory factor analysis of measurement model 42

Table 4.5 Relationship between constructs of research 45

Table 4.6 Relationship between constructs in research model (standardized) 47

Table 4.7 Bootstrap estimate result with N = 1000 47

Table 4.8 Result of hypotheses testing 48

Expectation-Confirmation ModelExpectation-Confirmation Theory

Electronic commerceElectronic commerce – Service qualityInformation System

Maximum LikelihoodOnline group-buyingStructural Equation ModelStatistical software packageTechnology Acceptance ModelTheory of Planned BehaviorTheory of Reasoned Action

Online group-buying has emerged as a new e-commerce model and receivedattention in both academics and practice Prior researches focused on investigatingonline group-buying mainly from the marketing perspective, such as the transactionprocess, price mechanism, and benefits (Li & Liu, 2012) Few of studies haveinvestigated the relation between consumer’s acceptance and their purchasing behavior.Hence, this study focuses in measuring relationship between cognitive factors – trust,satisfaction and perceived usefulness – and online group-buying repurchase intention.Simultaneous, this study also integrates website quality - a direct and indirect variable –

to measure its impact on customer repurchase behavior

To examine research model, information and data is accessed by usingquestionnaire for respondents more than 18 years old and have ever purchased ononline group-buying websites Sample size of this quantitative research is 365respondents Confirmatory factor analysis (CFA) is used to test measurement scale andthe structural equation modeling (SEM) is used as the main method for analyzingresearch model and hypotheses

Results in this study show that individual user’ intention to repurchase in onlinegroup-buying websites is motivated by trust, satisfaction and website quality Amongthree impact factors, website quality has the strongest direct influence, followed bytrust and satisfaction Besides direct influence, website quality also has indirect impact

on customer repurchase intention through both of trust and satisfaction Trust also hasstrong impact on customer satisfaction, thus, affect indirectly to customer retention

With these results, research framework can be seen fitted with data market Studyresults also suggest that in order to increase customer retention should not only considerabout their strategies of increasing trust and satisfaction, they should also takeconsideration of increasing website quality, especially in content quality and technicaladequacy

CHAPTER 1

INTRODUCTION

This chapter is starting point of this study In this chapter, the research interest of thesis

is first introduced Subsequently, the motivation of this research is discussed Researchobjectives are presented in the next section Then, methodology and scope of thisresearch is introduced summarily Final, structure of this study is presented Thischapter aims at specifying the purpose of this research and the research content

1.1 Research interest:

In recent decades, science and technology develops surprisingly Achievements ofthese progresses create more opportunities as well as challenges for development ofeconomies Forms of transactions become more diversified; suppliers have moreapproach ways to interact with customers Traditional markets have not caught up withhigher demands of consumers Buyers become more and more busy and have so manychoices that make their buying decisions more difficult Hence, to satisfy customers,electronic commerce appears and grows extraordinarily with widespread Internet usage

Electronic commerce, commonly known as e-commerce, consists of the buying andselling of products or services over electronic systems such as the Internet and othercomputer networks A form of e-commerce is online shopping which is the processwhereby consumers directly buy goods or services from a seller in real time, without anintermediary service, over the Internet This form of shopping are attracting morebuyers, suppliers and researchers because it offers a lot of benefits such as convenience,speed, time, a 24-hour opening, information on products and reviews To nowadays,online shopping continues their rapid spread and gains many increasing importance inthe lives of a wider range of the population

Group-buying is seen as an effective form of online shopping and a promising fieldfor applying agent technologies Group-buying is a model in which multiple buyerscooperate and buy goods at a discount price (Matsuo, 2009) Innovative group-buyingsites offer bargains on everything from meals to travel packages Customers can make

comparison of product/service prices and choose the supplier with the lowest price(Gounaris et al., as cited in Li & Liu, 2012) when using this new model.

With the tremendous growth, online group-buying attracted more and more attention

of practitioners as well as researchers However, most previous online group-buyingstudies focus mainly on the pricing mechanisms, coalition formation, benefits of biddercooperation, uncertain demand, incentive mechanisms and consumer adoption (Fan etal., 2010) There are not many studies investigated the relationship between customers’acceptance of online group-buying and their purchasing behavior In recent years, thistopic begins become a hot issue, especially, continuance behavior receives moreattention because this issue at an individual level has been regarded as crucial forsustainable web-based services (Premkumar & Bhattacherjee, 2008)

Besides that, many online group-buying websites as well as others online websitesare facing strong competition due to the evolution and proliferation of web-basedservices Moreover, web-based services have low entry barriers by its nature, if oneservice is created, then a number of comparable alternative web-based services follow,resulting in a high switching rate between those services by users (Vatanasombut et al.,

as cited in Lee & Kwon, 2011) Thus, many online group-buying providers arestruggling to find strategies to exist in this difficult period Retaining their existingcustomers becomes a strategic way to ensure the company's success and overallsustainability Exploring and analyzing which factors influence customer retention havesignificant meaning to online providers

Research on continuance intention in both online shopping and online group-buying

is still in its infancy Prior researches on consumer online repurchase placed moreemphasis on the impact of psychological factors such as trust, satisfaction formation,loyalty (Cheung et al., 2003) These researches primarily base on expectation-confirmation theory and information system (IS) continuance intention model Veryfew studies have attempted to investigate the impact of product/service characteristics

as well as website quality on online consumer continuance

Website quality nowadays is assumed to have the potential to influence the futurebehavior of service users and have an impact on the profits of IS investment (Croninand Taylor; Zeithaml, Berry and Parasunaman, as cited in Li, 2010) Several studies onwebsite quality in physical encounters have concluded that some factors of websitequality are responsible for customers’ perception which is likely to lead to behavioralintentions to purchase However, in online group-buying context, according mentionedabove, there are a few of studies attempted to measure the direct and indirect impact ofwebsite quality to repurchase behavior In particular, research on taking an integratedperspective to examine the predictors of website quality and investigate the relationshipbetween website quality and repurchase intention is still lacking This is a promisingtopic for future research in this context of e-commerce.

1.2 Motivation of the study:

In Vietnam, group-buying model was introduced in 2010 and after a short time,group-buying model and daily deal sites increased very quickly With a win-win-winmodel for three parties: enterprises can sell their products, group-on companies profit

from commission and customers can get good deals, group-ons or group vouchers have

become popular among Vietnamese students and white-collar workers due to attractivediscounts and a wide range of services and products1.

To the end of 2011, there are almost 100 group-on sites in Vietnam with more than

6700 deals and 4.2 millions sold out vouchers2 Four leading group-buying websitesinclude: Nhommua, Hotdeal, Cungmua and Muachung Ho Chi Minh City is thestrongest competition market with about 74% transaction deals and many followers2.Other markets such as Da Nang, Binh Duong, Can Tho… begin introduce this newmodel, however, amount of transaction is still limited

Along with development of group-buying market, perceived risk and competitionbetween rivals also increase very strongly The biggest challenge for group-buying

1http://news.smh.com.au/breaking-news-technology/group-buying-sites-boost-ecommerce-in-asia-20110502-1e3l1.html

2http://www.slideshare.net/TaiTran/groupon-clones-in-vietnam-2752011

sites is method of payment and privacy In Vietnam, many people are still not familiarwith online transaction With weak privacy security system, customer beliefs have trend

of reducing when purchasing vouchers by money transfer or cash on delivery method.Besides, there are many partners who do not follow the contract, provide bad service ortreat group-on customers differently Many vouchers are delivered late or lost,customers cannot dictate the time to receive vouchers and have to book in advance touse the service With many problems, online-group buying websites in Vietnam arefacing many difficulties in attracting customers as well as keeping existing customers

Base on operational experiences in vouchers transaction, many group-buyingbusinesses begin selecting other ways to limit their obstacles Firstly, they can becomedistributors, delivery directly products to customers, instead of delivering vouchers.Second, group-buying company can become e-commerce exchange They can buy andmanage deals by themselves They also provide some flexible solutions for supplierssuch as: create own websites, provide orders management system, and providecustomers management system… However, according to many experts the key tosuccess for this kind of business is still to ensure service quality and price to keepcustomer trust Do (2012) – who is interested in Vietnam’s start-up, social media andtechnology scenes – cites that:

An increased skepticism of the online space is low on the list of dangers though With the internet penetration at 34 percent and an increasing portion of them moving into social media, the online market is getting bigger and bigger Although companies and people may not be trusting of web content, they are learning more and more to be dependent on it.

In general, Vietnam is still a promising market for online group-buying model.Companies in this market need to learn and develop more and more to succeed.Customer retention is a necessary topic for helping group-buying businesses increasetheir competitive advantages and maintain their market Simultaneously, online group-buying model is really an interesting research field for practitioners and researchers indeveloping way of e-commerce in Vietnam

1.3 Research objectives:

As discussion in section 1.1, information system (IS) retention has been one of themost recently explored topics in the IS research field Many theoretical perspectives, tonowadays, have been advanced in order to understand what motivates individuals torepurchase in online group-buying websites Thus, based on literature covering theconcept of IS continuance model and circumstance of online group-buying market inVietnam, this paper aims:

To propose a model predicting customers’ repurchase intention in online group-buying context in Vietnam

To investigate impact of website quality on customers’ repurchase intention

in online group-buying context

To examine impact of cognitive factors (trust, satisfaction and perceived usefulness) on online group-buying repurchase intention

This study is necessary for development of group-buying market in Vietnam It alsodemonstrates that website quality is a noteworthy factor affect repurchase intention ofcustomers in using online group-buying

1.4 Methodology and scope of research:

Collecting data process of this study is designed into two stages First is a pilot test,second is main survey to collect data for examining research model Pilot test isquantitative research with sample 57 respondents to examine reliability and validity ofobserved variables Main study is also quantitative research with sample size 365respondents

Author accesses information and collect data by using questionnaire Respondentsare more than 18 years old and have ever purchased on online group-buying websites.Sample is selected by using non-probability sampling method – convenience sample.Research is studied from September 2012 to December 2012

Purpose of this research is to confirm and examine conceptual model Themeasurement scales are estimated using confirmatory factor analysis (CFA) to test

reliability and validity The structural equation modeling (SEM) is used as the mainmethod for analyzing the research model and hypotheses.

1.5 Research structure:

This thesis is organized into five chapters It begins with introduction chapter whichpresents an outline of this research, including the motivation, objectives and scope ofthis research The next chapter describes online group buying model, literature of ISrepurchase behavior model and website quality concept This chapter also describesresearch model and hypotheses The third chapter is research methodology used toempirically test the research model The fourth chapter presents the results of dataanalysis The final chapter discusses summarizes the study’s core findings, itscontributions and its limitations

2.2 Theoretical background:

2.2.1 Online group-buying model:

Group-buying, also known as collective buying, introduced in 1999 by a few ofcompanies After introducing time, this model have been facilitated by the internet andthe easy, fast group coalition process brought by social networks (Xiong & Hu, as cited

in Erdogmus & Cicek, 2011) It is seen as a part of an innovative wave of onlinemarket-based pricing mechanisms, includes traditional auctions, non-traditionalauctions, price-reduction models and group-buying models

There are mainly two different types of online group-buying systems (Fei et al., ascited in Erdogmus & Cicek, 2011) First type of this system is structured based on adynamic pricing mechanism In this first type, masses of consumers are aggregated,and perform collective buying to enjoy price discounts online In the second type of theonline group-buying, the group-buying company offers a certain product or service at astatic large discount price This price required the total number of the buyers must begreater than the predetermined limit of the minimum required number of buyers

Today, many online websites are using group-buying models and have got greatsuccess These websites usually offers a large of products and services at significantly

reduced prices These websites claim they can negotiate low prices with manufacturersand suppliers, and then pass these savings on to their customers (Kauffman & Wang,2001).

However, group-buying websites, like other online shopping websites, are facing theproblem of obtaining market attention With group-buying models, online group-buyingwebsites need not only a critical mass of consumer patronage and interest, but also asignificant amount of transaction volume so as to be able to profitably deliver on theirlow price guarantee Thus, if they cannot reach a critical mass of users and salesvolume, then it will be difficult for the group-buying business model to bring thecustomers of the firms that adopt it the savings they expect (Kauffman & Wang, 2001).Moreover, Cook (as cited in Kauffman & Wang, 2001) points out that the group-buyingbusiness model is too difficult for the general consumer to understand The author alsoargues that the mechanics of group-buying on the Internet also prevent impulse buying,due to the lengthy periods consumers have to wait until the end of auction cycles Withthese problems, amount of customers of online group-buying websites begin increasingslower; in some markets, there are reducing signs of customers as well as transactions

In order to overcome obstacles, some online group-buying websites focus websitequality and service quality For instance, Mobshop – a San Francisco, California-basedgroup-buying service provider- increased from 37.00 to 132.000 registered users in athree month period from January to April 2000 (as cited in Kauffman & Wang, 2001).Its early success attributed by its careful design, increasing technical adequacy andsaving delivery time Focusing on quality is a good strategy for online group-buyingwebsites in highly competition market at current time and in the future

2.2.2 IS repurchasing behavior model:

Online buying behavior can be understood in two stages: the first stage is primarilyconcerned with the encouraging people to purchase online and the second is toencourage them to repurchase, which is critical if the e-commerce vendor is to succeed(Zang et al., 2011) In these two stages, second stage is an important subject

of study because customer retention is often seen as a means to gaining competitiveadvantage.

Researchers have studied online customer retention in different contexts, such as

“online repurchase intention”, “continue to shop online”, “customer intention toreturn”, “web site stickiness”, and “continued information systems/IT intention” (Wen

et al., 2011)

2.2.2.1 Online customer retention:

Online customer retention in recent years, become a hot issue in both the IT andmarketing areas Studies of this topic have been mainly divided into two streamsconsisted of studies based on static-type models and process-type models (Lin & Ong,2010)

(1) Static-type researches are derivation from concepts such as theory of plannedbehavior (TPB), Fishbein and Ajzen's theory of reasoned action (TRA) ortechnology acceptance model (TAM) The theory of Reasoned Action assumesthat if people view a behavior as positive (attitude), and if they believe thatothers would prefer them to perform the behavior (subjective norm), there will

be a greater intention (motivation) to behave in that manner and they are thusmore likely to do so (Udo et al., 2010) TPB adds one major predictor –perceived behavioral control – “to account for times when people have intention

of carrying out a behavior, but the actual behavior is thwarted because they lackconfident or control over behavior” (Miller, as cited in Udo et al., 2010) Alongwith these theories, TAM has been confirmed as the most popular parsimoniousframework used to explain customers’ behavioral intention TAM is model thatexplains user intention and behavior based on forward-looking or prospectiveexpectations about IT usage This model found perceived usefulness andperceived ease of use as salient beliefs influencing IS acceptance behaviorsacross a broad range of end-user computing technologies and user populations(Davis et al.; Mathieson; Taylor and Todd, as cited in Bhattacherjee, 2001).However, many empirical studies also comparing the

relative effects of perceived usefulness and ease of use during pre-acceptanceand post-acceptance stages of IS use report that: perceived usefulness impactsattitude substantively and consistently during both stages of IS use, and ease ofuse has an inconsistent effect on attitude in the initial stages, which seems tofurther subside and become non-significant in later stages (Davis et al.;Karahanna et al., as cited in Bhattacherjee, 2001) Hence, studies base on TAM

to nowadays, perceived usefulness is usually used as direct variable influencing

on customer behavioral intention

(2) Second stream is process-type models, mainly based on confirmation theory (ECT) or expectation-confirmation model (ECM) Thisstream had been developed from some limitations of TAM It also usesindividual cognitive factors for predicting IS continued use However, they based

expectation-on their backward-looking or retrospective perceptiexpectation-ons grounded in actual usageexperience, such as performance, disconfirmation, and satisfaction, in addition toinitial expectations (Premkumar, Bhattacherjee, 2008)

Perceived

Usefulness

Satisfaction IS continuance

IntentionConfirmation

Source: Bhattacherjee, 2001

Figure 2.1: A post-acceptance model of IS continuance

In this model, consumers’ intention to repurchase a product or continue serviceuse is determined primarily by their satisfaction with prior use of that product orservice (Anderson and Sullivan 1993; Oliver 1980, 1993, as cited inBhattacherjee, 2001) Satisfaction is viewed as the key to building and retaining aloyal base of long-term consumers and confirmed in many studies Until today,this stream develops widely in the consumer behavior literature to studyconsumer satisfaction, post-purchase behavior and service marketing in general

(Anderson and Sullivan; Dabholkar et al.; Oliver; Patterson et al.; Tse and Wilton,

as cited in Bhattacherjee, 2001) Many researches try to add new construct, andintegrate studies that combine these models and another theory or model

In addition to the mainstream researches, there is a recent focus on affective factors.According to Lee & Kwon (2011), the factors suggested classified into two categories:cognitive and affective Cognitive factors are those related to the mental process ofknowing, including aspects such as perception, reasoning and judgment Representativecognitive factors are: perceived usefulness, satisfaction, trust, perceived ease of use,security, confirmation and disconfirmation, perceived risk, perceived switching cost…

In contrast, affective factors are related to specific emotions or states of feeling Someaffective factors are studied in recent years such as perceived playfulness (enjoyment),pleasure, arousal, familiarity and intimacy Lee

& Kwon (2011) also suggested that customer retention research has shifted its focusfrom cognition-oriented factors to affective factors to explore more factors influencing

on customer behavior

Table 2.1: Some integrated models of customer retention

Lin et al (2005) Based on ECM: introduced perceived playfulness as Web-portal

new factor Thong et al (2006) Based on ECM: introduce post-adoption beliefs an Internet service

perceived enjoyment as new factors Limayen and Cheung Based on ECM: adds IS habit as a new factor Internet-based

Roca et al.(2006) An integrated study that combines EDT model and TAM E- learning

model, adds perceived quality and perceived usability a new factor

Liao et al (2007) An integrated study that combines EDT model and th E-service

theory of Planning Behavior, adds subjective norm as new factor

Chiu and Wang (2008) An integrated study that combines United theory o Web–based learnin

Acceptance and Use of Technology, adds subjective tas value as a new factor

Source: Lee & Kwon (2011)

In general, researchers have integrated many other factors to create new frameworkthat will improve the explanatory and predictive power for explaining online customerretention.

2.2.2.2 Online group-buying repurchase model:

Few studies have tested online repurchase intention in online group-buying context

In 2010, Fan et al has used model of Bhattacherjee adapted expectation-confirmationtheory (ECT) and integrates the technology acceptance model (TAM) to theorize apost-acceptance model of IS continuance In this study, relationship between customersatisfaction, perceived usefulness and online group-buying repurchase intention areconfirmed Simultaneously, role of price expectation is also measured

In 2012, Tien et al also do research about repurchase intention in online buying context They examine repurchase intention through relationship quality andexpectation – confirmation theory views though relationship quality is regarded as animportant factor in the relationship marketing literature This study emphasizesatisfaction is a particularly important foundation for a successful long-termrelationship between customers and group-buying websites Hand in hand withsatisfaction is trust of the second factor Just like previous researches, satisfaction andtrust continue being the important of two influence factors Satisfaction is a strongerpredictor of repeat purchase intention than trust; this is consistent with the study in e-commerce (Deng et al., as cited in Tien et al., 2012) Trust has direct and significanteffect on satisfaction and repeat purchase intention Moreover, the results of thisresearch also show that trust, perceived value and perceived quality are importantantecedents of satisfaction Among these factors, perceived quality is highly influentialdeterminant of perceived value and indirectly affecting repeat purchase intentionthrough satisfaction

group-In the same year, Liu and Wu also study relationship between service quality,

word-of mouth, customer satisfaction, promotional incentive, and customer

satisfaction This study show that service quality has strong effect on customersatisfaction, thus, indirectly influence to customer loyalty.

In summary, very little studies in online group-buying context focus on customerbuying behavior, especially, customer retention While the online market is growingand profitable, the competition for market share is also increasing To remaincompetitive, it is imperative for online providers to invest time and money to find outstrategy to keep existed customers Studies of customer retention are really necessaryfor development of online group-buying model in the future

2.2.3 Website quality:

Quality is not a new concept in information systems management and research.Information systems practitioners have always been aware of the need to improve theinformation systems function so it can react to external and internal pressures and facethe critical challenges to its growth and survivability (Aladwani & Palvia, 2002).However, to nowadays, both the conceptualization and the measurement of websitequality have been two debated topics

In study of Éthier et al (2006), research on the concept of website quality can be

classified broadly into four complementary research categories (1) The first focuses onfunctionalities and/or content of website The dimensions identified have generallybeen: functional issues, navigation, content, technical issues and contact information(2) The second category includes researches affected by technology acceptance modelTAM, relationship between perceived ease of use and perceived usefulness can be seen

as a relation of quality Information quality, system quality and service quality ofwebsites are the essential components of website quality (3) The third categoryincludes studies that highlight service quality as a fundamental aspect of the overallquality of a website E-service quality and website quality sometimes are useexchangeable Many researchers try to make conceptualization of service quality ofwebsite, for instance, Zeithaml (as cited in Li, 2010) defines e-service quality as theextent to which a website facilitates efficient and effective shopping, purchasing anddelivery of goods and services; Santos (as cited in Udo et al., 2010) defines e-service

quality is the overall customer perceptions, judgments and evaluations of the quality ofservice obtained from a virtual marketplace These concepts are used popular anddeveloped from time to time However, this category still faces many debates (4) Thefourth category is composed of authors who believed that the principal criterion forwebsite quality was defined by customers' perceptions of quality For example, Huang(as cited in Éthier et al., 2006) describes website quality as whether the website meetand/or exceeded expectations in terms of information and enjoyment position; Wan (ascited in Éthier et al., 2006) states that the quality of a website was based on:information, friendliness, responsiveness and reliability.

Like concepts of website quality, many instruments that combine the diverse aspects

of website quality have also been proposed (see in appendix A) Some instrumentscombine traditional service quality dimensions and web interface quality dimensions asthe point of departure For instance, in 2000, Loiacono et al proposed WEBQUAL,includes: ease of understanding, intuitive operation, informational fit-to-task, tailoredcommunication, trust, response time, visual appeal, innovativeness, emotional appeal,online completeness, relative advantage, and consistent image After that, Yoo &Donthu (2001) measures website quality by SITEQUAL scale with 12 dimension:aesthetic design, competitive value, ease of use, clarity of ordering, corporate and brandequity, security, processing speed, product uniqueness, and product assurance quality.Aladwani and Palvia's (2002) instrument focuses on website design and content It usedfour dimensions: specific content, content quality, appearance, and technical adequacy

With the growth of recognition of different variability in the outcome of measuringwebsite quality, many studies show more different dimensions in website quality, forexamples: Madu &Madu (2002, as cited in Li & Suomi, 2009) develop a 15 dimensionsscale of website quality, which is built on better understanding of customers andproviding services to meet the needs and expectations of customer; Field et al (2004,

as cited in Li & Suomi, 2009) develop process model for assessing and improvingwebsite quality by identifying e-service system entities and

transactions between those entities and mapping key quality dimensions onto them.Most recently years, Sohn & Tadisina (as cited in Li, 2010) proposed six dimensions tomeasure website quality, include: trust, speed of delivery, reliability, ease of use,customized communication, website content and functionality.

Among studies of website quality instruments, most researchers develop adaptedwebsite quality scales based on the modification of the SERVQUAL instrument.SERVQUAL scale is measurement scale had been used widely to measure servicequality with five dimensions: tangibles, reliability, responsiveness, assurance, andempathy (Iwaarden, Wiele, as cited in Li, 2010) When adapting to e-commercecontext, Zeithaml (2000, as cited in Li & Suomi, 2009) proposed a 7-dimension websitequality scale Later, Panasuraman et al (2005, as cited in Liu & Wu, 2012) developed itinto seven constructs divided into two groups, includes: core e-SQ: efficiency,fulfillment, availability, privacy; recovery e-SQ: responsiveness, compensation andcontact To nowadays, these instruments is used popular in many studies because itoffers the surface dimensions of e-service quality based on customers’ experience andevaluation perspective, which are viewed also as the antecedents to the adoption of e-service (Rowley, as cited in Li & Suomi, 2009)

In general, website quality concept remains underdeveloped and is a vastlyundefined concept This is a complex concept which has multiple dimensions Althoughrecently, research on website quality has adopted a much broader scope on websitequality compared to its past focus on usability and interactivity However, to nowadays,there is no consensus on a definition on it This topic is still a promising field forresearchers

2.3 Research model:

This study adapted literature reviews of customer retention in online shopping andonline group-buying context However, the advancement of many preliminary model ofhuman behavior required additional theoretical refinement and empirical testing inorder to improve its robustness and predictive ability across a wider range of contexts(Li, 2010) Hence, some modifications and extensions to the original model were

proposed in this study.

Firstly, online group-buying repurchase intention was designed as dependentvariables Intention was considered the best immediate factor in the relationshipbetween attitude and behavior, and is appropriate to test consumers’ behavior (Wen etal., 2011) Online repurchase intention was one of context of customer retention Inmany prior researches, online repurchase intention and IS continuance intention wereused exchangeable In this study, repurchase intention was used instead of continuanceintention because these concepts were still different (Wen et al., 2011) although inonline environment, both continuance intention and repurchase intention are influenced

by the initial use/purchase experience and sometimes used as the same Continuanceintention emphasizes the continued usage of e-commercial websites to shop instead ofthe use of physical stores while online repurchase intention is a construct combininginformation system theory and marketing theory (Wen et al., 2011) In online group-buying model, customer purchased products or service through online group-buyingwebsites, not directly from providers, so, both on customers’ IS use and purchasingbehavior needed to investigate “Online group-buying repurchase intention” constructwas acceptable with this study

Secondly, two cognitive factors in expectation-confirmation model (ECM) –satisfaction and perceived usefulness - were chosen for this study because theycommanded a majority of factors found to affect customer retention in prior studies.Simultaneously, it ensures that the nomological structure of the research model isconsistent with the traditional belief-attitude-intention linkages in IS literature (Davis,Bagozzi & Warshaw; Venkatesh et al., Ajzen, as cited in Li, 2010) In these linkages,satisfaction is typically viewed as user attitude towards IS, which is primarily measured

by various beliefs about IS and posited to have strong saliency in predictingcontinuance intention Perceived usefulness in this study represents as IS user beliefsand is a salient determinant of behavioral intention regarding IS use in TAM

Thirdly, trust was added to the model due its role in influencing both satisfactionand online repurchases intention Trust in sellers is a vital key to maintaining

continuity in the buyer relationship An individual level of trust may increase graduallybased on positive outcomes from repeated behavior, although its important indetermining repeat purchase intention may decrease over time (Chiu et al., 2012).Especially, in Viet Nam market, when some online group-buying websites faced manyproblems make customer trust decrease, studies of the impact of this factor on customerbehavior become necessary for practitioners in improving and developing theirbusiness.

Finally, website quality in this proposed model was also incorporated as a factorleading and influencing to customer behavior through three constructs: perceivedusefulness, customer satisfaction and customer trust

A review of the literature evaluation reflected that there were many instruments tomeasure website quality In this study, instrument from study of Aladwani & Palvia(2002) was used due to its concept base on website functionalities and contents Thisinstrument included four constructs: content quality, appearance, specific content andtechnical adequacy Appearance referred to the visual attractiveness of a website,included colors, fonts, and multimedia features as well as an appropriate overall layout.Specific content referred to finding specific details about products or services, customersupport, privacy policies and other important information (Aladwani & Palvia, 2002).Content quality dealt with attributed such as information usefulness, completeness,accuracy, and so forth, and was similar to the “information quality” concept (Liao etal., 2006) Technical adequacy, according to Liao et al (2006), was also similar to the

“system quality” concept It meant that appropriate technologies had been adopted bythe web retailer It could improve the security of online transactions and contribute toconvenience of usage for IS users

With above discussions, the proposed research framework and hypotheses arepresented in figure 2.2

Perceived Usefulness

H1a

Content quality H4b Satisfaction H2

Figure 2.2: Research model 2.3.1 Perceived usefulness:

Drawing from TAM, post-consumption expectation is represented as ex-post perceivedusefulness in the proposed IS continuance model (Bhattacherjee, 2001) Davis (1989)defines perceived usefulness as “the degree to which a person believes that using aparticular system would enhance his or her job performance According to Burk (ascited in Al-maghrabi et al., 2010) perceived usefulness is the primary prerequisite formass market technology acceptance, which depend on consumers’ expectations abouthow technology can improve and simplify their lives (Peterson et al., as cited in Al-maghrabi et al., 2010) Numerous empirical investigations have established strongempirical support for direct impact of perceived usefulness on intention So, in thisstudy, perceived usefulness is proposed factor captures the instrumentality of IS use,and influences subsequent continuance decisions

Hypothesis 1a: Customer perceived usefulness is positively associated with online

group-buying repurchase intention.

Besides an important predictor of initial intention to use information system (Davis;Davis et al., cited in Liao et al., 2006) and of intentions for continued use(Bhattacherjee, 2001), perceived usefulness also influences indirectly to customer

intention through customer satisfaction Some studies also examine and confirm thisrelationship such as Bhattacherjee, (2001), Li (2010), Wen et al (2011) Thus, it isassumed that:

Hypothesis 1b: Customer perceived usefulness is positively associated with

customer satisfaction.

2.3.2 Customer satisfaction:

Satisfaction is initially defined by Locke (1976, as cited in Bhattacherjee, 2001) in thecontext of job performance as “a pleasurable or positive emotional state resulting fromthe appraisal of one’s job.” This definition is extended by Oliver (as cited inBhattacherjee, 2001) to the consumption context as “the summary psychological stateresulting when the emotion surrounding disconfirmed expectations is coupled with theconsumer’s prior feelings about the consumption experience.” In many researches,customer satisfaction has usually been applied to measure e-commerce success orconsumer repurchase behavior Oliver (as cited in Fan et al., 2010) shows thatsatisfaction has both direct and indirect connections with future intention through itsimpact on attitude Hence, proposed hypothesis of this study is:

Hypothesis 2: Customer satisfaction is positively associated with online

group-buying repurchase intention.

is more important compared to traditional business as increasing uncertainties will because by the distance and other impersonal factors Many previous researchers showthat the violation of trust in e-commerce will lead to negative repurchase intention andnegative word of mouth communication Lack of trust prevents buyers

from engaging in online shopping because they are unlikely to carry out transactionswith sellers who fail to convey a sense of their trustworthiness, mainly because of fears

of sellers’ opportunism (Hoffman et al., as cited in Wen et al., 2011) So, trust plays animportant role on driving repeat purchase intention Following hypothesis is proposed:

Hypothesis 3a: Customer trust is positively associated with online group-buying

repurchase intention.

Beside directly impact on customer repurchase intention, users’ trust also influencescustomer behavior through satisfaction In some previous researches, trust’s impact hasnot high significance on customer repurchase intention (Tien et al., 2012), and in study

of Wen et al., (2011), this significant is very low However, in the other hand, somestudies confirm that trust is still a factor influencing customer repurchase intentionbecause lack of trust could be the main reason customers decide not to shop online orwhy they have negative concerns related to shopping online So, this study is proposedthat:

Hypothesis 3b: Customer trust is positively associated with customer satisfaction

2.3.4 Hypotheses related to website quality:

Several elements of website quality, such as information quality, response time, andvisual attractiveness have been verified to be related to perceived usefulness (Liao etal., 2006) Saeed and Abdinnour-Helm (as cited in Li, 2010) also assert that servicequality has impact on users’ extended usage and the exploratory usage of a website viathe perceived usefulness of a website Thus, website quality is expected to have aninfluence on user perception of the usefulness of online group-buying context It isassumed that:

Hypothesis 4a: Website quality is positively associated with customer perceived

usefulness

Website quality is referred to “the consumers’ judgment about a product’s overallexcellent or superiority” (Zeithaml, as cited in Tien et al., 2012) Consumer satisfaction

is a transient and experience – specific attitude, which is based on a consumer’s specificservice encounter (Li, 2010) Numerous studies have been conducted to clearlydemonstrate the relationship between service quality and satisfaction Fornell (as cited

in Tien et al., 2012) proposed that website quality positively affect overall customersatisfaction Hence, this study proposed:

Hypothesis 4b: Website quality is positively associated with customer satisfaction

In study of Mcknight et al (as cited in Liao et al., 2006), authors showed that ifconsumers perceive that website quality is of high quality, they are likely to have hightrusting beliefs about the web retailer’s competence, integrity, and benevolence; andwill develop a willingness to depend on the web retailer Zhou et al (as cited in Li,2010) also found that service quality had a stronger impact on consumer trust andsatisfaction So, it is suggested that:

Hypothesis 4c: Website quality is positively associated with customer trust

Service quality usually was demonstrated to be an antecedent to satisfaction and asserts

a direct influence on consumer satisfaction (Anderson & Fornell; Sweeney & Soutar, ascited in Li, 2010) However, some prior marketing literature also had evidence showingthat service quality affects the purchasing intention Study of Liang &Lai (as cited inLiao et al., 2006) showed that a high quality website not only affects the customer’spurchase decision, but also is one of the main reasons for consumers to determinewhether they will purchase online or not (Gehrke & Turban, as cited in Liao et al.,2006) Poor quality can result many loss in completion such as loss of customers,reduction in profits, increasing costs… Therefore, website quality turn leads tobehavioral intention to use and reuse of customer So, hypothesis is proposed that:

Hypothesis 4d: Website quality is positively associated with online-group-buying

repurchase intention

2.4 Conclusion:

This chapter presented theoretical background of IS repurchase models and websitequality concepts and instruments Base on discussion of literature review, online group-buying had emerged a new e-commerce model Customer retention of online group-buying context was an interesting topic and necessary for development of this model inthe future Hence, in this study, a research model was proposed with nine hypotheses.Three cognitive factors – trust, satisfaction and perceived usefulness - was chosen forthis study because they commanded a majority of factors found to affect customerretention in prior studies Website quality was also incorporated to research model Thenext chapter will discuss about research method used to test this research model

CHAPTER 3

RESEARCH METHOD 3.1 Introduction:

This chapter presents a detailed account of a research methodology of this study.First, it discusses data collection method and research process Then, measurementscales are presented to develop questionnaire Finally, results of pilot test are discussed

to contribute for measurement scales This chapter aims at explicating the researchapproach choice and presenting the reasons for its use

3.2 Research design:

Collecting data process of this study was designed into two stages First was a pilottest, second was main survey This study was conducted in Ho Chi Minh City, theprincipal business center in Vietnam Sample of this study is selected by using non-probability sampling method – convenience sample Most of respondents of this studywas full-time and part-time students who were studying at University of Economics HoChi Minh City They also were individuals who had experience in group-buying andstill had repurchase intention

The pilot test of this study was conducted to assess the validity and reliability of theinstrument before the questionnaire was distributed The initial data was collected from

a sample 70 randomly; however, only 57 questionnaires were collected The pilot studyhelped ensure that the final questions would be well understood and attempted topredict an appropriate sample size and improve upon the study design prior toperformance of a full-scale research project Simultaneously, cronbach alpha andexploratory factor analysis (EFA) was used to test measurement scales

Main survey was also quantitative research to collect data for examining researchmodel The sample for this survey was also individuals who had experience in group-buying but with a large amount Based on rule of five observations per parameterestimated, the minimum sample size needed for testing overall model was 205 (therewere 41 free parameters), hence, for the survey, 600 questionnaires were distributeddirectly and email to respondents After the data collection, total 550 responses were

collected, 185 responses were eliminated because respondents indicated that they hadnever use online group-buying before or they had no intention to repurchase Finally,

365 responses were used as a valid data for this research In this main study,exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) were used toassess measurement scales The structural equation model (SEM) had been used as themain method for analyzing the research model by testing the assumed causation among

a set of dependent and independent variables Bootstrapping with N = 1000 re-sampleswas also used to assess the path significance

Final Scale

Cronbach Alpha

research

(n=365)

CFA - Confirmatory factor analysis

(Examine discriminant and convergent

validity)

Composite reliability and Average

variance extracted

(Examine reliability validity)

SEM – Structural Equation Model

(Examine research model)

Figure 3.1: Research process

3.3 Instrument construction:

A paper-based questionnaire was developed to collect data to validate the constructsand theory pointed in the research framework (see in appendix F) This questionnairewas firstly developed in English, and was translated into Vietnamese later It wasdivided into three parts

- The first part of the survey instrument was designed to get information about the respondents’ experience and online group-buying habit

- The second part of this survey instrument contained questionnaire items thatmeasure five constructs in the proposed model These questionnaire items weremeasured using a seven-point Likert scale (from 1- strongly disagree to 7-strongly agree) These items were selected from many previous relatedresearches and subsequently modified to fit the online group-buying experience.(Figure 3.2 listed the items for each measure and provided the sources ofmeasures)

- The third part of the survey included questions regarding demographic and socialeconomic status

In this questionnaire, five main constructs were measured in this study, included:online group-buying repurchase intention, satisfaction, perceived usefulness, trust andwebsite quality Among these constructs, website quality was a multi-dimensionalconstruct with four constructs: content quality, technical adequacy, appearance andspecific content

- Perceived usefulness items were adapted from Fan et al (2010) These itemswere modified from Davis et al.'s (1989) four-item perceived usefulness scale Thefirst three items of this scale measured the performance productivity, andeffectiveness dimensions of online group-buying usefulness, while the fourth itemassessed overall usefulness

- Satisfaction was measured by items modified from Wen et al (2011) and Li(2010) Three items used originally from Spreng et al.'s (1996) overall satisfactionscale, designed to assess users' satisfaction with camcorder use According to

Ajzen and Fishbein (as cited in Bhattacherjee, 2001), this scale was appropriatebecause affect such as satisfaction was best measured along bipolar evaluativedimensions The last item of this scale was taken from Li (2010) to confirm moreclearly customer satisfaction.

- Trust measured by items modified from Wen et al (2011), original from Gefen

et al (2003) and Enrique et al (2008) These items measured trustworthy base onability of protecting customer privacy and providing good service of website

- Online group-buying repurchase intention was measured using five itemsadapted from Kim et al (2012) These items were modified from Khalifa and Liu(2007) and Zhou et al (2009) The four initial items measured respondents' intention

to continue purchase on the same online group-buying website The fifth itemassessed respondents' overall continuance intention to control for potential

- Website quality was taken from Aladwani & Palvia (2002) This measurementscale mostly targeted the web users, so it measured website quality focus onfunctionality and content of website It included 25 observed variables to measurefour constructs: content quality, specific content, appearance and technicaladequacy However, in this study, two items – finding firm general information andpersonalization or customization - were removed when modifying scale for onlinegroup-buying context

Table 3.1: Sources of questionnaire items

Perceived PU1 Using website X improves my performance in finding out group-buying Fan et al.

(PU) PU2 Using website X increases my productivity in group-buying.

PU3 Using website X provides me with more diverse channels to enhance my

effectiveness in group-buying products.

PU4 As for overall platform design, I find website X useful.

Satisfaction SAT5 I was very satisfied with my experience to website X. Wen et al (SAT) SAT6 I was very pleased with my experience to website X. (2011), Li

SAT7 I was absolutely delighted with my experience to website X. (2010)

SAT8 I think I made a right decision when using website X.

Trust (TR) TR9 I feel safe on my transaction with website X. Wen et

TR11 I select website X, which I believe are honest.

TR12 I feel that website X would provide me with good service.

TR13 I feel that website X is trustworthy.

repurchase INT15 I intend to acquire product information from website X (2012) intention INT16 I intend to recommend website X to people around me.

(INT) INT17 I intend to use website X as the priority online store for future

CQ21.The content of website X is clear.

CQ22.The content of website X is current.

CQ23.The content of website X is concise.

CQ24.The content of website X is accurate.

SC25 In website X, one can find contact information.

SC26 In website X, one can find details about products and/or services.

SC27 In website X, one can find information related to customers’ policies.

SC28 In website X, one can find information related to customer service.

AP29 Website X looks attractive.

AP30 Website X looks organized.

AP31 Website X uses fonts properly.

AP32 Website X uses colors properly.

AP33 Website X uses multimedia features properly.

TA34 Website X looks secured for carrying out transactions.

TA35 Website X looks easy to navigate through.

TA36 Website X has adequate search facilities.

TA37 Website X is always up and available.

TA38 Website X has valid links.

TA39 Website X loads fast.

TA40 Website X has many interactive features.

TA41 Website X is easy to access.

Note: Website X is online group-buying website which respondent most regularly used

3.4 Pilot test results:

Measurement scales of pilot test were tested by quantitative research with samplen= 57 These scales were modified by using two methods: (1) cronbach alpha and (2)exploratory factor analysis (EFA) (used only for perceived website quality scale).Observed variables had cronbach alpha less than 0.6, item-total correlation under 0.3

(Nunally and Berstein, as cited in Nguyen & Nguyen, 2008) and factor loading less

than 0.4 in EFA (Gerberg &Anderson, as cited in Nguyen & Nguyen, 2008) would beremoved After modifying scales, remaining observed variables would be used for mainsurvey

3.4.1 Cronbach Alpha:

Reliability is one of the most critical elements in assessing the quality of theconstruct measures (Churchchill, as cited in Fan et al., 2010) A statically reliable scaleprovides consistent and stable measures of a construct This study used Cronbach’scoefficient alpha to evaluate the construct reliability for both pilot test and main survey

The reliability coefficients of seven constructs in pilot test - perceived usefulness,repurchase intention, trust, perceived quality with four constructs (content quality,specific content, appearance, technical adequacy) - were greater than 0.6 (see in Table5.1) and were consider acceptable Item-total correlation of observed variables of theseconstructs also satisfied greater than 0.3.Only satisfaction construct was not acceptedbecause Cronbach alpha was 0.34, less than threshold 0.6; item-total correlation ofSAT8 was low with value 0.21; and Cronbach alpha if item deleted was very high,more than 0.9 Thus, this item needed to remove out of measurement scale However,this item was used as a suitable scale in many prior researches of customer satisfaction;hence, author did not remove this item and would test reliability of this scale again inmain study

Table 3.2: Cronbach alpha result of pilot test

Perceived usefulness (PU): alpha = 0.728