Understanding the Customer Satisfaction of Online Fashion Retailer Zalora Indonesia

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Understanding the Customer Satisfaction of Online Fashion Retailer Zalora Indonesia

Annisa Anggreany, Mia T.D. Indriani, S.Si, M.Sc and Nurrani Kusumawati, SE, MM

Bandung Institute of Technology, Indonesia

Abstract

With the rapid global growth in massive business activities, many marketers are beginning to

develop online product marketing. These online products are mostly selling about fashion.

According to the news and daily social, Zalora is now an Asia‟s leading online fashion

destination with the largest revenue and fastest growing fashion focused e-commerce site in

Southeast Asia. An understanding of factors impacting online customer satisfaction is a great

importance to online fashion retailer Zalora Indonesia in doing e-commerce. The purpose of this

research is to identify what factors that gives impact to customer satisfaction of online fashion

retailer in Zalora Indonesia and also measure the customer satisfaction level based on the rank of

different variables. The research used the combination of variables that related to the customer

satisfaction of online fashion store. The main factors are taken from the previous research

(Momtaz et al., 2011; Alam, Yasin, 2010; Omar et al., 2011; Hung et al., 2014; Goswami et al.,

2013) to get the complete description. It leads to 5 dimension variables, which are product, price,

website, payment, and delivery. The result of this research will be able to describe the important

considerations factors to improve the website of fashion online. 200 customers of online fashion

retailer Zalora Indonesia were sampled of this research. The structured question provided in

form of Likert scale with a range of 1 to 5. Validity/reliability test and multiple regression

analysis were done to analyze the data. The findings show that brand names, reliability system,

and price cut are the most affected factors customer satisfaction to online shoppers Zalora

Indonesia. The research also finds that, the customer satisfaction level are Security, Method of

Payment, and Ease of Website. This research is conducted to online fashion retailer in ZALORA

Indonesia only who has experienced buying product in their website in small population.

Keywords: Customer Satisfaction, Customer Importance, Fashion, Online Retailer, ZALORA

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2 1. Introduction

Nowadays, many entrepreneurs are beginning to develop online product marketing.

This online facility will make the customers able to communicate and shops without any

physical distance and time constrain. Moreover, with the rapid global growth in electronic

commerce (commerce), businesses are attempting to gain a competitive advantage by using

e-commerce to interact with customers (Demangeot and Broderick, 2007). An understanding of

factors impacting online customer satisfaction is a great importance to online store in doing

e-commerce. There are many attributes that marketers must be pay attention on when open an

online store.

Online stores itself are mostly selling about fashion. Zalora is Asia‟s leading online

fashion destination. Zalora is the largest and fastest growing fashion focused e-commerce site in

Southeast Asia. Zalora was found in early 2012, they present in Singapore, Indonesia, Malaysia

& Brunei, Philippines, Thailand, Vietnam, and Hong Kong.

This paper aims to focus on customer satisfaction of online fashion retailer Zalora in

Indonesia. Customer satisfaction is the experiences during various purchasing stages in: needing

something, gathering information, evaluating purchasing alternatives, actual purchasing

decision, and post purchasing behaviour (Kotler & Keller, 2006).Findings should determine the

most influence factor towards customer satisfaction. An analysed the customer satisfaction levels

that give significant affect to online fashion retailer ZALORA Indonesia. The factors of

customer satisfaction of online retailer have been conducted from the previous journals.

2. Literature Review

2.1 Fashion Online Retailer

The Internet represents a highly dynamic shopping medium and it is creating a new set

of rules and expectations between the online shopper and the fashion retailer (Management

Horizons, 1997). In evaluating the Internet as a retail channel, a number of advantages have been

identified. These include access to a wider audience, cost savings, direct communication,

increased personalization with the consumer and the Web sites will be available to consumers on

a 24-hour basis seven days a week (Jones and Biasiotto, 1999; Goldsmith, 1999; Hunter, 1999;

McBride, 1997; Rowley, 1996). Online retailers should therefore focus on leveraging the brand,

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3 and online sales channels (BCG, 2001).

2.2 Customer Satisfaction

Westbrook & Reilly (1983), quoted in Giese & Cote (2002) revealed that satisfaction is

an emotional response to the experience with the product (or service) that have been purchased,

retail outlets, or even patterns of behaviour such as shopping and buying behaviour. If the

performance matches the customer‟s expectation, they are satisfied and if, performance exceeds

the customer's expectation then customers are highly satisfied or delighted. In the following

section customer satisfaction is discussed in relation to its importance with various perspectives.

Although satisfaction has been defined as the difference between expectation and performance,

but there are differences between quality and satisfaction.

2.3 The Factors of Online Stores towards Customer Satisfaction

Online stores success depends on customer satisfaction [Devaraj, Fan, and Kohli,

2002]. If customers are happy with their purchase, there will be commitment, loyalty,

cross-selling and up-cross-selling opportunities. Therefore, based on a synthesis from the literature on

components of customer value of Internet shopping, five dimensions can be considered crucial in

the formation of customer satisfaction: product, website, payment, delivery, and price. Each

dimension has some of variables. Product dimension consists of brand names (Momtaz et al.,

2011), product variety (Alam and Yasin, 2010), and product quality (Momtaz et al., 2011).

Website dimension consists of design (Omar et al., 2011), information quality, system quality,

and service quality (Hung et al., 2014). Payment dimension consists of security (Omar et al.,

2011) and method of payment (Goswami et al., 2013). Delivery dimension consists of safe, fast

(Omar et al., 2011), and packaging (Goswami et al., 2013). And the last one is price dimension,

which is consists only price cut (Goswami et al., 2013).

 Brand Names. Brand building takes consistency, and commitment, to ensure that the brands communicate the desired message to the consumer. Branding is a

relationship that is built on understanding and satisfaction (Higgins, 1999).

 Product Variety. Product varieties can differ from each other in terms either of quality or of other characteristics unrelated to quality. Studies like Ahn et al.

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product variety to be important factor influencing e-satisfaction.

 Product Quality. Quality and customer satisfaction has provided some insights into determining the levels of satisfaction for product experience. Product quality is

customers‟ overall evaluation of the excellence of the performance of the good or

service (John, Mowen& Michael 1997).

 Website Design. Alam et al. (2008) found that website design is one of the unique features affecting online shopping environment.

 Information Quality. Information quality is the measure of information system outputs, including information accuracy, timeliness, relevance, aggregation and

format (Ahituv, 1980). Customers provided with quality information are more

likely to be satisfied with their purchase decisions.

 System Quality. System quality is a measure of all engineering-oriented performance attributes (DeLone and McLean, 2003). Customers are more likely to

have satisfying online shopping experiences when a merchant's website reaches its

maximum performance.

 Service Quality. Service quality predicts become the important variable of customer satisfaction of e-store. Service quality is the confirmation or

disconfirmation experience between customer expectations and the actual services

received (Zeithaml, Parasuraman, and Malhotra, 2002).

 Security of Payment. People could feel reluctant to transact and pay online, fearing that their financial account information may fall into the wrong hands. Security is

important variable in online store.

 Method of Payment. One of the more prominent points of discussion related to online purchases and payment has been the issue of trust.

 Safe and Fast Delivery Performance. Time and cost saving are the main advantages of online shopping. According to Devaraj et al. (2002) time efficiency

and store efficiency are reflected in time cost and price savings respectively. These

are the determinants of satisfaction. Lee and Joshi (2007); Ahn et al. (2004); Ho

(2004); Grewal et al (2004) and Shih (2004) studies found that delivery

performance has significant influence on customer satisfaction.

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previous research, packaging has played an important role. There were 96%

respondents are satisfied with the packaging of products.

 Price Cut. Price is a factor that is playing neither an important role in affecting the distribution of newly product nor services in the market. Hence, setting a price for

a new product in the market is difficult (Foxall, 1984).

3. Research Method

The methodology that used in this research is questionnaire and it was distributed via

online. A sample of 200 respondents from customer Zalora Indonesia was selected. Customers

were chosen by using non-probability sampling method (convenience sampling) to fill in the

questionnaire. The design of questionnaire consisted of respondent profile (gender, age, job,

education, expense in fashion product monthly) and structured questions in form of Likert scale

with a range 1 (strongly disagree) to 5 (strongly agree). The Table 1.below shows all five

variables that were represented with each sub-variables and different indicators in the

questionnaire. The data was analyzed by using SPSS Software to test the validity, reliability, and

multiple regressions.

Table 1: Variables and Indicators of Questionnaire

Variable Sub variable Indicator Question

Number Code

Product

Brand names

[HasinaMomtaz, Md. Aminul Islam, Ku

Halim Ku Arifin, AnayetKarim (2011)]

1 BQ

Product variety

[Syed Shah Alam and NorjayaMohd.

Yasin (2010)]

2 PV

Product quality

[HasinaMomtaz, Md. Aminul Islam, Ku

Halim Ku Arifin, AnayetKarim (2011)]

According to

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6 Website

Design

[Maktoba Omar, Bathgate, Ian,

Nwankwo, Sonny (2011)]

Easy to operate 4 EW

Information quality

[Shin yuan hung, charlicchen, Ning-Hung

Huang (2014)]

Accuracy 5 AI

Aggregation 6 CI

Relevance 7 RI

Format 8 FI

Timeliness 9 UI

System quality

Huang (2014)]

System

flexibility 10 FS

System

reliability 11 RS

System response

time 12 RES

Service quality

Huang (2014)]

Responsiveness 13 RSE

Payment

Security

14 SC

Method of payment

[AdritaGoswami, PallaviBaruah, and

Sarat Borah (2013)]

15 MP

Delivery

Safe

16 SF

Fast [Maktoba

Omar, Bathgate, Ian, Nwankwo, Sonny

(2011)]

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Packaging

18 PG

Price

Price cut

19 PC

4. Findings and Conclusions

4.1 Demographic Data

The questionnaire results of demographic data are shown in the Table 2. The results

show most of respondents were 73% female and the rest were male (27%). It shows those

females are likely to shop more than males. The majority of respondents „ages were 16 until 22

years old (72%). The percentage followed with respondents in age between 23 until 30 years old

(20%). Then, 3% for the age in 31 - 40 years old and 5% was more than 40 years old. In

education level, the result shows 1% of respondents still in high school. The highest percentage

was 74% as college students. There were 18% as employee, 6% as entrepreneur, and 1% was

other.

In terms of domicile, most of respondents were live in Bandung city (46%). 29% were

live in Jakarta. And others were live in Bekasi, Tangerang, Yogyakarta, and Surabaya (25%).

The last item was determining respondent‟s expense for shopping monthly. There was 55% were

spent less than IDR 500,000 for shopping per month. Then it followed by 30% spent between

IDR 500,000 – IDR 1,000,000. 12% has expense between IDR 1,000,001 until IDR 3,000,000.

And the rest spent more than IDR 3,000,001.

Table 2: Demographic Profile of Respondents

Demographic Variables Categories Frequency Percentage

Gender Male 55 27%

Female 145 73%

Age

<15 years old 0 0%

16 - 22 years old 144 72%

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31 - 40 years old 6 3%

>40 years old 10 5%

Education

High School Students 2 1%

College Students 149 74%

Employee 36 18%

Entrepreneur 11 6%

Other 2 1%

City

Jakarta 58 29%

Bandung 93 46%

Other 49 25%

Monthly Expense for Shopping

< IDR 500,000 111 55%

IDR 500,001 - IDR 1,000,000 59 30%

IDR 1,000,001 - IDR 3,000,000 24 12%

> IDR 3,000,001 6 3%

IDR 500,001 - IDR 1,000,000 59 30%

IDR 1,000,001 - IDR 3,000,000 24 12%

> IDR 3,000,001 6 3%

Besides, there are some questions about customer behavior and customer satisfaction

towards Zalora Indonesia. Below is the table of the results:

Table 3: Respondents‟ Result of Relationship with Zalora

Questions Categories Frequency Percentage

Accessing the Zalora Website

Never 0 0%

1- 5 times/week 37 18%

1 - 5 times/month 50 25%

Occasionally 113 57%

Frequent of Buying Product Never 0 0%

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<5 times 95 47%

5 - 10 times 34 17%

>10 times 7 4%

Satisfaction to the Product of Zalora

Strongly Unsatisfied 8 4%

Unsatisfied 14 7%

Neutral 81 40%

Satisfied 85 43%

Strongly Satisfied 12 6%

Satisfaction to Online Shopping of Zalora's Website

Strongly Unsatisfied 6 3%

Unsatisfied 19 9%

Neutral 76 38%

Satisfied 83 42%

Strongly Satisfied 16 8%

4.2 Validity and Reliability Test

The variables were tested using reliability and validity test in SPSS 21 to ensure that the

questionnaire results are applicable. Cronbach‟s alpha reliability coefficient normally ranges

between 0 and 1. However, there is actually no lower limit to the coefficient. The closer

Cronbach‟s alpha coefficient is to 1.0 the greater the internal consistency of the items in the

scale. A variable can be said to be reliable if the Cronbach‟s Alpha value > 0.60 (Nunnally,

1967). From the test results, it is known that the value of Cronbach‟s Alpha for both satisfaction‟s and importance‟s variables are more than 0.6, which means the entire items are

reliable.

Table 4: Reliability Statistic Cronbach’s

Alpha

Cronbach's Alpha Based on

Standardized Items N of Items

0.947 0.947 19

Table 5: Reliability Statistic Cronbach’s

Alpha

Cronbach's Alpha Based on

Standardized Items N of Items

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Table 4 and 5.shows the output of SPSS of Cronbach‟s Alpha for all the satisfaction

and importance variables with the number of items are 19 in the questionnaires 94.7% and

97.3%. According to the criteria of Nunnally (1967), it could be concluded that the variables are

reliable. It means that if the instruments are used to test the variable of customer satisfaction and

importance then we will get results relatively equally.

Validity is arguably the most important criteria for the quality of a test. The term

validity refers to whether or not the test measures what it claims to measure. Validity is tested

through internal correlation of all the variables in the questionnaire. To examine the bivariate

relationships among the variables, a Pearson‟s correlation analysis was carried out. The output of

SPSS tells the correlation between each indicator of satisfaction towards the total score of the

satisfaction showed a significant result. Therefore, it can be concluded that each indicator of

satisfaction in the questionnaire is valid.

4.2 Multiple Regression Analysis

In this study, multiple regressions are used to find out the results of which variables that

influence the customer satisfaction to the online shopping in Zalora Indonesia.

The Coefficient of Determination

The analysis was done between the Satisfaction of online shopping Zalora Indonesia

and nineteen independent variables. The dependent variable was satisfaction with online

shopping in Zalora Indonesia and the independent variables were brand names, product variety,

product expectation, ease of website, accuracy information, format information, up-to-date

information, flexibility system, reliability system, response time system, responsiveness,

security, method of payment, safe, fast, packaging, and price cut. Below are showing the results

of SPSS.

Table 6: The Coefficient of Determination

Model Summary

b

Model R R Square Adjusted R

Square

Std. Error of the Estimate

Durbin-Watson

1 .539a 0.291 0.216 0.781 1.715

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EXPECTATION, EASE OF WEBSITE, ACCURACY INFORMATION, CATEGORY

INFORMATION, RELEVANCE INFORMATION, FORMAT INFORMATION,

UPTODATE INFORMATION, FLEXIBILITY SYSTEM, RELIABILITY SYSTEM,

RESPONSE TIME SYSTEM, RESPONSIVENESS, SECURITY, METHOD OF

PAYMENT, SAFE, FAST, PACKAGING, and PRICE CUT.

b. Dependent Variable: SATISFACTION IN ONLINE SHOPPING

The output SPSS in Model Summary shows the value of Adjusted R Square is 0.291,

this means that 29.1% variation in customer satisfaction towards Zalora‟s website can be

explained by the variation of nineteen independent variables. While, the rest will be explain by

the other factors outside the models. The value of Standard Error Estimate (SEE) is 0.781. The

smaller the value of SEE will make increasingly precise regression value in predicting the

dependent variable. It is according to business research methods of Dr. Sugiono.

Table 7: Simultaneous Significant Test (F-Test)

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1

Regression 44.999 19 2.368 3.885 .000b

Residual 109.721 180 .610

Total 154.720 199

a. Dependent Variable: SATISFACTION IN ONLINE SHOPPING

b. Predictors: (Constant), BRAND NAMES, PRODUCT VARIETY, PRODUCT

EXPECTATION, EASE OF WEBSITE, ACCURACY INFORMATION, CATEGORY

INFORMATION, RELEVANCE INFORMATION, FORMAT INFORMATION,

UPTODATE INFORMATION, FLEXIBILITY SYSTEM, RELIABILITY SYSTEM,

RESPONSE TIME SYSTEM, RESPONSIVENESS, SECURITY, METHOD OF

PAYMENT, SAFE, FAST, PACKAGING, and PRICE CUT.

ANOVA test or F test shows the value of F is 3.885, with a probability of 0.000. Because

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in Online Shopping of Zalora Indonesia. It can be concluded that brand names, product variety,

product expectation, ease of website, accuracy information, format information, up-to-date

information, flexibility system, reliability system, response time system, responsiveness,

security, method of payment, safe, fast, packaging, and price cut simultaneously affect the

Customer Satisfaction of Zalora Indonesia.

Individual Parameter Significance Test

The tables below shows there are three variables, which can be said they are significant.

Those three variables are Brand Names, Flexibility System, and Price Cut. The value of Brand

Name is 0.000, the value of Flexibility System is 0.004, and the value of Price Cut is 0.002.

Those three variables have values that are lower than 0.05. It indicates that Brand Names,

Flexibility System and Price Cut have affected the Customer Satisfaction in online shoppers

Zalora Indonesia.

a. Dependent variable: WEBSITE SATSIFACTION

Brand names play the important role when customer purchase online to satisfy them.

Different brand will give insight to customer in different performance. Customer buys their

product depends on which brand they are more likely to buy.

Flexibility System in Zalora website has satisfied customer highly. The website of

Zalora is very flexible to access in any gadgets. Moreover, Zalora also has their own apps to

make customers easier in online shopping in Zalora Indonesia.

Table 8: Individual Parameter Significant Test

Coefficientsa

Model Unstandardized

Coefficients

Stand.

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 1.610 .338 4.757 .000

BRAND NAMES .331 .093 .325 3.549 .000

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13 PRODUCT EXPECTATION

EASE OF WEBSITE

ACCURACY INFORMATION CATEGORY INFORMATION RELEVANCE INFORMATION FORMAT INFORMATION UP-TO-DATE INFORMATION FLEXIBILITY SYSTEM RELIABILITY SYSTEM

RESPONSE TIME SYSTEM

RESPONSIVENESS

SECURITY

METHOD OF PAYMENT

SAFETY FAST PACKAGING PRICE CUT .065 -.080 -.053 .015 -.077 .150 -.081 .250 -.085 -.009 -.025 .137 -.162 .105 -.021 -.172 .277 .093 .105 .101 .112 .100 .127 .105 .085 .092 .091 .093 .108 .104 .122 .088 .099 .086 .064 -.081 -.049 .015 -.078 .142 -.079 .271 -.081 -.009 -.025 .139 -.164 .108 -.023 -.174 .296 .699 -.765 -.521 .134 -.776 1.185 -.773 2.959 -.929 -.094 -.269 1.272 -1.555 .856 -.236 -1.743 3.232 .485 .446 .603 .893 .439 .238 .440 .004 .354 .925 .788 .205 .122 .393 .814 .083 .001

Therefore, Price Cut also becomes one of the variables that affect the customer

satisfaction. Price also plays an important role between customer and retailer. Zalora offers

different price cut for customer in form of voucher and discount. This price cut makes the

customer feel satisfied to go online shopping in Zalora Indonesia.

WEBSITE SATISFACTION= 1.610 + 0.331 BRAND NAMES - 0.060 PRODUCT VARIETY

+ 0.065 PRODUCT EXPECTATION – 0.080 EASE OF WEBSITE – 0.053 ACCURACY

INFORMATION – 0.015 CATEGORY INFORMATION – 0.077 RELEVANCE

INFORMATION + 0.150 FORMAT INFORMATION – 0.081 UP-TO-DATE INFORMATION

+ 0.250 FLEXIBILITY SYSTEM – 0.085 RELIABILITY SYSTEM – 0.009 RESPONSE TIME

SYSTEM – 0.025 RESPONSIVENESS + 0.137 SECURITY – 0.162 METHOD OF PAYMENT

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14 4.3 Mean Factor

To find what is the most affecting factor of customer satisfaction level to the Zalora

website, the mean of each items must be found. The table of 9 and 10 show means score of each

variable. The highest mean score in satisfaction column is Security (3.92). It followed by

Method of Payment (3.91) and Ease of Website (3.90). It indicates that customers of Zalora are

feeling the most satisfied with those three variables.

Table 9: Satisfaction Score

Satisfaction Area Satisfaction Importance

Mean Mean

Brand Names 3.55 3.86

Product Variety 3.73 3.95

Product Expectation 3.59 3.88

Ease of Website 3.9 3.89

Accuracy Information 3.58 3.89

Category Information 3.7 3.95

Relevance Information 3.61 3.92

Format Information 3.72 3.87

Timeliness 3.68 3.83

Flexibility System 3.45 3.75

Reliability System 3.35 3.66

Response Time System 3.41 3.79

Responsiveness 3.76 3.97

Security 3.92 4.06

Method of Payment 3.91 4.05

Safety 3.84 4.01

Fast 3.53 3.95

Packaging 3.75 3.87

Price Cut 3.79 4.02

Moreover, the highest mean score in importance column is Security (3.92). Then

followed by Method of Payment (3.91) and Price Cut (3.90). It explains that Security and

Method of Payment are very important variable to customer when they go online for shopping.

And Zalora has successfully reached their customer satisfaction in the Payment variable.

Therefore, the Price Cut also becomes one of the most important variables in online shopping

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By comparing the two mean‟s score of satisfaction and importance variables, the Security and Method of Payment have met the customer‟s need exactly. Security has the highest mean‟s score

as the most important one, the e-service quality of Zalora Indonesia has successfully make

customer satisfied after online shopping in Zalora‟s website. As well as Method of Payment, that

has ranked as the 2nd important variable. Customers of Zalora Indonesia are satisfied with the

payment method that offers by Zalora Indonesia.

5. Conclusion

Online customer satisfaction is the fundamental to the marketing concept. This study

was conducted with the purpose of measuring the customer satisfaction. The first objective was

to analyse the most affected factor online customer satisfaction. And the second objective was to

examine the customer satisfaction level that gives effects towards online fashion retailer Zalora

Indonesia.

To answer the research objectives, then the researcher have to conclude as follows:

1. According to the calculation in SPSS, the most affected factor online customer

satisfactions are brand names (0.000), flexibility system (0.004), price cut (0.002).

Those factors came from three different dimensions. All of three variables factors

have a significant value. Therefore, they are the most influenced factors toward

customer satisfaction online fashion Zalora Indonesia.

2. Based on the mean factor calculation, the customer satisfaction levels are Security

(3.92), Method of Payment (3.91), and Ease of Website (3.90).

6. Limitation

Due to the restriction of time, this research only involves 200 respondents as sample

online fashion retailer Zalora Indonesia. The research was conducted by distributed

questionnaire randomly in Jakarta, Bandung, and other big cities in Indonesia. These might

cause the data is not representable enough for the whole population of customer Zalora

Indonesia. There were also problems in delivering the questions of „satisfaction‟ and „importance‟ to the respondents since the questions were offered exactly the same in both of

them. Future research should distributed the questionnaire fairly according to their living and

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16 satisfaction.

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