Why is CRM So Important To Your Business Now?

CRM is more important now than ever to businesses because it can help you to gain new customers and retain existing ones.

In today’s highly competitive environment and with so many products and services to choose from, customers are picky and customer loyalty seems to be a thing of the past .  The moment  a new product is introduced into the market,  it takes only a few months  before that product or service  suddenly becomes a commodity .


And let’s not forget the introduction of the Buyer 2.0.

Thirty years  ago, when PC’s were a little known thing,

our behavior as consumers was different. We were more

used to receiving  information .  This came  in the form

of TV and magazine ads, we had to talk to many sales

representatives to get information, we gathered brochures and sales  materials  and then we tried to make sense of it all .


Then, when Web 2.0 and social media  arrived, they changed everything .  Forums, chats,  blogs, discussion groups,  price comparisons, scorings, rankings,  social networks, professional communities, wikis, and even business web pages offered  a lot of information to buyers .  Today’s buyers  are informed and quite immune to traditional and obvious  marketing tactics .

Customers dont need  you to tell them what they need  or want anymore. They already know. What they want is to be treated as individuals.

They want to feel like their business matters to you and that you care.

The chart shows

The chart below shows  a well-cited study by The Rockefeller  Corporation studying precisely why customers leave .  Everyone  thinks that people leave  because of lower priced competitors. If not that, then it’s because of a killer competitive offer. That’s not the case.

68% leaves because

This study showed that 68% of customers leave

because they feel like you don’t care  about  them .

Why do customers leave a company?

Customer believes you don’t care  about  them Customer is dissatisfied with your service Customer is pursuaded to go to a competitor Customer gets  a friend to provide  a service Customer moves  away

68% , 14 % , 9% , 5% ,3%

He who cares wins

Think back to a time when you, yourself, needed customer support from a company .  If you called the company and they had no previous information about  you, kept trans- ferring you from department to department and you had

to keep repeating your information over and over again

– you’d probably  feel like the company didn’t care  about you and didn’t value your business .


Now think about  the kind of service  you get from your favorite airline .  For example, when you call that airline, the phone system recognizes you and welcomes you by name .  You have  the chance to get routed to a live

customer representative and when that person picks up the phone, he/she addresses you by name  and already knows all your preferences, your upcoming flight information and any other  issues you may be having .

By providing you this kind of service,  the airline is giving you a reason to continue doing business with them .

Similarly,  if you are investigating a new product,  you probably  are more likely to buy from the sales  person who shows  you that he has noted,  understood and taken  into account your needs and concerns .  This shows  up in the way he follows up with you, in the direction  of the sales calls and in the offer that he makes you.

Happy customer

Needs and concerns

Direction of the sales

A CRM system can make all the difference

in whether or not you gain a new customer or retain an existing one . Customers who feel valued  are happy  customers and happy  customers mean  repeat business – not to mention,  improved  bottom  lines .

How does CRM work?

Although some people think of CRM as just a technology, it is so much more than that.

No technology, no matter  how sophisticated – can be successful without a strategy to guide  its implementation and use .  Business strategy and technology must work together in order  to bring a customer-centric plan to life.

Supports a customer-centric strategy

A CRM system supports a strategy which says that the customer is at the center of everything that you do .  This customer-centric strategy must be based on clear goals and a vision of what a meaningful  customer experience looks like .


A valuable  customer experience is an integral part of CRM . According  to Gartner’s report, “Improving the Customer Experience: Expectations, Delivery and Feedback”:

Every time a customer comes in contact with an organization, through any of its channels, the customer has an opportunity to form an opinion – be it good,  bad or indifferent.

Through time, this collective set of customer experiences forms a picture in the customer’s mind, which forms the image of the brand

its values.

Organizations which are serious about CRM are serious about designing and maintaining a quality customer  experience.

They recognize that a poor customer  experience is a step toward customer defection, whereas a good  experience encourages loyalty.”

What factors encourage loyalty? In a study done by Customer think corporation, “Customer experience management: The value of the moments of truth”,

there are 4 main factors which contribute to customer loyalty:

Factors in earning loyalty

How important  is the quality of each  of these activities in earning  your loyalty?

Product  or service Sales  interactions Purchasing process

Service  and support

84% , 66% , 62% , 58

Of course, the quality of the actual product or service  being  purchased is still important,  but as you can see in the chart, the quality of sales,  purchasing, and service  and support activities received a significant percentage (ranging from 58 to 66 percent) of high importance ratings .

The following three examples give you a taste of how a really good  customer experience can be:

1   United Airlines saves your seat, books a flight

New York Times best-selling author  Steven Levitt wrote an article about  how United Airlines turned him into a customer for life in a couple  ways .  Steven was running late, and unlike other  airlines, they actually saved his seat  until the last second . On another occasion, United Airlines called him and informed him that his flight was delayed by a few hours, and they saw that he was in the airport .  The call went like this:

“I see that you’re at the airport and your flight is delayed a few hours. A seat  opened up on an earlier flight, so I grabbed it for you in case you wanted it. It leaves in 40 minutes,  so you’ll have  to hurry.”

These two events, Levitt explains,  turned him into a life-long customer of United Airlines. / Source: Open Forum

2   Zappos believes in the personal touch

Martha A .  ordered a pair from the Zappos site, but had PayPal issues .  Instead of telling her that it wasn’t a Zappos problem, the Zappos customer service  representative (Brandi H .) helped her resolve the credit card issue .  When Martha told Brandi that the shoes were for her daughter who was graduating in a week, not only did Brandi wish her daughter “congratulations”, but sent  a flower arrangement with a note  from Zappos.

Martha says,” I have  never  had a business be so personal in their dealings with me .  I am totally impressed and just wanted to send you a sincere ‘thank you!’ for brightening my day and my daughter’s .” / Source: Zappos

3   Cisco helps customer  to help themselves

Cisco tries to make working with their company as easy  as possible .  Their customer experience program analyzes insights from surveys,  social media, and a core  employee listening post to identify opportunities to simplify processes and remove customer, partner,  and employee pain points .  For example, the online customer support website needed some  help, so the company streamlined processes and improved  navigation  to enable customers to solve their problems quickly .  The result

is that 81% of issues are now resolved online, which avoids 356,000 cases per month. / Source: Forrester

A part of the value in a specific product or service  is the experience that it creates. Once  the vision of a valuable  customer experience is defined,  the CRM software is what will bring it to life. With CRM, you will get to know your customers, to understand their needs and be able to respond to those needs faster  and easier .

Introduction CRM

Why should you read “The CRM buyer’s guide”?

Good customer relationships are essential if a company wants to achieve higher revenue and faster  growth . Unfortunately,  good  customer relationships are not always a result of just pure hard work .  Companies also need enabling technologies and tools to help them to maximize the value of their customer relationships .  This is where CRM comes in .


CRM (Customer  Relationship  Management) is a philosophy and strategy that centers around building better customer relationships .  CRM software enables your business to

scale  up the process of creating those relationships .

On a broad  level, CRM software gives your business the best  possible understanding of your customer and your customer’s experience with your business from sales  to marketing to customer service .  Ultimately, with CRM, it is possible to make very smart decisions about  how to improve your business, as well as your customer relationships .

In greater detail, CRM software helps  your business to manage contact information in an organized way making it easy  to follow up on your customers and activities .

All of this information is stored in a single location which makes it easy  for the whole company to have  access to a common  view of the customer at the same time and even when on the move .


So how do you get started with CRM? This guide  is designed to answer all the questions that you have  about this topic .  It will show you what CRM is and how it can help your company .  It will show you how to select the

right system,  what to think about  when considering a CRM

vendor  and how you can measure the success of CRM .



With regards to reading this guide,  you can either  read

this from front to back or you can go straight  to the section that interests you .  Included  throughout this guide  are

some  best  practices and check  lists we have  provided

to help you to decide whether your business in ready  for CRM and how it will help you to attain your business goals . We’re sure you will find plenty of information to get you on the road to finding the best  CRM system for your needs.


What is CRM?


CRM (customer relationship management) is a company-wide business strategy designed to improve revenues and profitability, reduce costs  and increase customer loyalty.


The CRM philosophy is simple: put the customer first. When your business looks at every transaction through the eyes of the customer, you can’t help but to deliver

a better experience to your customers, which in turn, increases loyalty to your company .


True CRM software brings together all information from diffe-rent departments throughout the company to give one, holistic view of each  customer in real time .  This allows customer facing employees in areas such as sales,  marketing and customer support to make quick and informed decisions on everything from upselling and cross-selling, to improving the quality of customer communication and responsiveness to coordinating the management of sales  and marketing campaigns, just to name  a few .

Imagine that you are a sporting  goods supplier  and you want to quickly sell off this season’s size large bike shorts. Your CRM system can help you to find all customers

who have  recently  purchased large-sized clothing. You send them an email offe-ring them a 30% discount off the regular  price of the bike shorts .  You sell the shorts, the customer feels like he got a deal and that you cared enough to get in contact .


Or, let’s say that you’re a salesman for a car dealership . Your dealership has just received next year’s high end models on the showroom floor. Using your CRM system, you could find all your premium customers who have


CRM is the engine that drives customer trust and builds the customer relationship.


When implemented properly, CRM gives companies

not only insight into the opportunities to grow business with each  customer, but a way of measuring their value . Despite what you might think, not all customers are created equal .  Some  are a drain on customer service

resources despite spending very little .  Other customers do business frequently,  often buy new products and services and may even  be strong  influencers in their market.  CRM helps  to prioritize sales  and marketing efforts to this group. It also gives companies a better way of understanding customer needs and wants in order  to improve the way

the product portfolio is offered  to them.

indicated an interest in your brand’s high end  model cars in the last three  years  and invite them to a wine-tasting and a chance to see the car .


With enough information, the CRM helps  a company to know when to send customer information about  a new product or service  offering. The more you know about your customers, their buying preferences and behavior, the more likely your offer will be on target.






In the field of information systems (IS) the idea of considering the customer as an asset and a source of value is not a new one. Ives and Learmonth (1984) proposed the customer resource life cycle for use in IS, and later Ives and Mason (1990) described how information technology (IT) can be used to revital- ize a firm’s customer service. These early forays into the realm of customer relationship management (CRM) were not immediately followed by a large volume of published articles on the topic, let alone by practice in the IS field. As is often the case, somewhat visionary articles preceded mainstream research on the topic by several years. Although articles on CRM may have been published in other disciplines, particularly marketing, before or at the same time as these two seminal IS articles, these were the first we found in an extensive literature review of IS-CRM (Romano and Fjermestad 2001– 2002). We have not replicated that extensive study, primarily because the continued and accelerated growth of literature into CRM in IS makes it impractical, but also because many of the suggestions we made there can be readily observed to have been implemented in the literature.

When we performed that study of IS-CRM, we recommended six lines of development that would promote and indicate the maturation of CRM as an MIS subfield of study: One, develop- ment of empirically testable CRM theories; Two, conducting of lab and field experiments to test

hypotheses based on theory; Three, development and use of valid instruments; Four, develop- ment of a cumulative tradition of research and replication, extension of theories, models, and instruments, and development of standard constructs and metrics; Five, additional publication of IS-CRM research in top MIS journals; and Six, development of new classification schemes for rapidly changing terminology. Four years later, we believe it is meaningful to revisit the literature and see whether our suggestions have been accepted or ignored.

In the remainder of this introduction we address, first, the state of IS-CRM research in terms of each of our earlier recommendations for future research. Next we overview and introduce the chapters in this volume on CRM advances and issues. Finally we suggest additional issues and challenges that researchers and practitioners in CRM still face in terms of IS.




CRM has changed over the years from a customer service business unit loosely linked to market- ing to an electronic dynamo attempting to maximize the value of existing customer relationships. Dyché (2002) in her CRM Handbook suggests that CRM is the infrastructure that enables the delineation of an increase in customer value, and the correct means by which to motivate valuable customers to remain loyal—to buy again. The key words are infrastructure and enables. The infrastructure consists of the people and processes that an organization has at its disposal to un- derstand, motivate, and attract its customers. It is the technology that enables the organization to improve customer service, differentiate customers, and deliver unique customer interactions.

For one company, Wal-Mart (Swift 2001), the infrastructure is an enterprise data warehouse. This eCRM system enables the company to collect massive amounts of data to manage the ever- changing needs of customers and the marketplace. Coupled with people and process, it permits the integration of operational data with analytics, modeling, historical data, and predictive knowl- edge management to give its customers what they need and want at the right time.

CRM and eCRM are about firms capturing and keeping customers through the Internet in real time (Greenberg 2002). CRM is about customers interacting with employees, employees collaborating with suppliers, and every interaction’s being an opportunity to maintain and improve a relationship.




In keeping with methodological literature (Keen 1980; Vogel and Wetherbe 1984; Alavi and Carlson 1992; Pervan 1998), implementation of our six recommendations (Romano and Fjermestad 2001– 2002) would indicate that IS-CRM research is maturing as a subfield of MIS. Here we discuss the current status of each of these areas to determine whether the subfield is growing and maturing or waning and failing to bear fruit.


Theory Development


In our study of IS-CRM (Romano and Fjermestad 2001–2002) we found only three theoretically ori- ented articles out of 369. Clearly one indicator that the IS-CRM subfield is beginning to mature would be the development of meaningful theories or the use of relevant theories from reference disciplines that logically lead to testable hypotheses. Specifically we put forth the following recommendation:


“First, there is clearly a need for empirically testable theories. While conceptual models, frameworks, and overviews all provide an excellent start, testable theories can lead to mean-



ingful hypotheses that can be experimentally tested in the lab and the field to move research forward.” (Romano and Fjermestad 2001–2002, p. 85)


Since 2001, a number of IS-CRM papers that specifically address employing useful theory have been published. We briefly review here some of the papers that have developed IS-CRM theoretical models. Susarla, Barua, and Whinston (2002) developed a theoretical framework that can be em- pirically tested. Madeja and Schoder (2003) investigated how eight concepts derived from the me- dia characteristics of the World Wide Web (Web) impact corporate success in e-business if implemented as features of companies’ Web sites, and they constructed a path model for testing their research hypotheses. Chen, Gillenson, and Sherrell (2004) expanded on the technology accep- tance model (TAM) (Davis 1989) and innovation diffusion theory (Rogers 2003) to provide impor- tant theoretical contributions to the area of business-to-consumer (B2C) e-commerce. Komiak and Benbasat (2004) proposed a new theoretical trust model that differentiated between cognitive trust and emotional trust and defined customer trust in each type of commerce as cognitive trust and emotional trust in the various entities. They developed eight propositions and hypotheses for future researchers to test. These four excellent papers, among many similar ones we found, clearly illus- trate that IS-CRM research is maturing in terms of theory development. We therefore believe that our first recommendation is being implemented by IS researchers within the literature.

In our study of IS-CRM (Romano and Fjermestad 2001–2002) we observed that few studies were based on existing theories, from either IS or its reference disciplines. Here we review a few of many studies that, while they have not extended existing theory or developed new theory, are theory based and employ existing theory. Chai and Pavlou (2002) apply the theory of planned behavior (TPB) (Ajzen 1991) to study behavioral intentions to transact in two dissimilar countries and de- velop a cross-cultural e-commerce adoption model. Levina and Ross (2003) analyze and interpret data from the case of vendor strategy and practices in one long-term successful applications- management outsourcing engagement using the economic theory of complementarity in organiza- tional design (Milgrom and Roberts 1995), and from the standpoint of client-vendor relationship factors. They explain the IT vendors’ value proposition and how vendors can offer benefits that client firms cannot readily replicate internally. These and many similar papers now being published further demonstrate that IS-CRM research is maturing in terms of its use of theory.

Strategy Evaluation for the Best Practice and Sector Profile (Switzerland)


situated in the “maintain strategy” zone, but they are slightly below the diagonal. This implies that there are still opportunities for an average improvement of Swiss Web sites in the grocery sector.

Looking at the details of the study, the results show that the more important phases are better realized than the less important ones in all shops. This is an indication that Swiss online mer- chants have a pretty good idea of what is important for their clientele. The position in regard to the diagonal varies highly among the different shops. The further away from the diagonal the values are, the greater the disproportion between the target value (importance rating) and the conceived situation (assessment rating). This is most noticeable for Spar, where almost all elements are in the lower right quadrant.

In summary, based on the results of the Web evaluation of the Swiss sites, the study reveals that the majority of the Web sites do meet user expectations up to a certain point. The best- practice company does not stand out as far as in the Australian sample.




Using the EWAM tool, this study indicates that online grocers in Australia and Switzerland have not fully met the expectations of consumers. The study further shows that the performance of Swiss online grocers in various transaction phases has been more consistent across the sample sites compared to the Australian case. In Australia, the best-practice site was rated much higher than other sites in almost all transaction phases.

Although Australia and Switzerland differ in many respects, the results of the study demon- strate that consumers’ expectations in online grocery shopping are consistent in both regions. The study shows the importance of having a pleasant, easy-to-use user interface with no information overload on the pages. Furthermore, the availability of the images of products was found to be important in the information phase. Both studies also indicate the importance of having a good position in search engines, particularly for pure online players.

However, the studies indicate that in general, online grocers in Australia and Switzerland have not met the expectations of consumers. All the Web sites assessed, except Colesonline, were rated



below 0.5 by the assessors. The structure of the contents, the quantity and quality of information of most Web sites in the studies are still far below consumers’ expectations. In particular, most Web sites are unable to pass price benefits on to consumers.

The analysis of the importance ratings also indicates that the importance varies among the different phases and components of the transaction process. Other studies showed that these rat- ings also vary between different industries (Schubert and Dettling 2001). In order to improve the design of a Web site, it could be useful to analyze the importance rating in the relevant sector and concentrate design activities on the most important phases or on specific criteria.

For the agreement phase, the studies demonstrate the importance of having a transparent or- dering procedure and a clear status of the purchase process at any time. The majority of Web sites assessed have a reasonable performance in this phase.

For the settlement phase, the choice of preferred payment method is crucial. Credit card, cus- tomer account, cash or check upon delivery should be accepted. The ability to track and trace orders is considered a ‘nice-to-have’ feature but may not be necessary, as demonstrated by the Swiss study. However, precise selection of the delivery date and time is important in both cases. The importance of the settlement phase was rated higher in Australia than in Switzerland. Since Australia is a big continent and everything is spread over a relatively larger geographic location than in Switzerland, it would be more important for consumers in Australia to be able to track their orders as well as to be informed about the exact delivery time, so that they can plan their activities accordingly. It would be more troublesome for Australian than for Swiss customers to return products, for example, because of the geographical factor.

For the after-sales phase, both studies show the importance of having an online Customer Care Center (as in the case of Colesonline) with a contact number as well as the details of the hours of operation. Most of the Web sites assessed have a reasonable performance in this phase.

For the final section, this study shows that trustworthiness of the sites plays a crucial role. Colesonline, which is operated by one of the largest retail chains in Australia, and Coop and Migros, which have a high name recognition because they are established Swiss vendors, re- ceived high rating in general. The study further shows that customers appreciate the integration of brick-and-mortar payback programs (“SuperCard” and “Cumulus” demonstrated in the Switzer- land study) into the online shop. Last but not least, the ability for consumers to recall their per- sonal shopping list for consecutive sessions was found to be an attractive and useful feature.

Most online grocers evaluated in this study still need to better understand and be aware of all of the above expectations of consumers in order to improve their Web sites in the various phases of the buying process.




Below are several lessons learned from assessing the various aspects of transactional support of Australian and Swiss shopping environments. They are discussed based on the framework pro- posed by Allen and Fjermestad (2001).




Product is concerned with the content of a market space—that is, what is being sold (Allen and Fjermestad 2001). In the context of online shopping, products are now replaced with information about products. Internet technology has lowered the cost of collecting and disseminating product information to a larger customer base. Likewise, customers’ searching costs have been signifi-



cantly decreased. Customers can now perform product evaluation and price comparison across many online sellers quickly and easily before deciding to purchase (Rayport and Sviokla 1994). However, some grocery products, particularly highly perishable ones such as fruit and veg- etables, are considered as sensory products. These products have some attributes that can be discovered only through our senses such as touch, taste, and smell (Cho et al., 2003). Such prod- ucts require sophisticated information to assist buyers to make a sound decision. Therefore Web interface and design is a paramount in the online grocery shopping. Image-based systems and highly interactive communication tools may be necessary as part of decision support systems to achieve customer satisfaction and to manage customer relationships (Cho et al. 2003; Romano and Fjermestad 2003). Through an online system that enables a dialog between customers and

online grocers, uncertainty about products can be reduced and customer satisfaction increased.

None of the online grocers in this study have offered any interactive tools to enhance customer relationship and maintain customer loyalty. Such tools may increase the convenience experi- enced by customers while shopping online and, therefore, the possibility that they will return to the same site for the next purchase (Rayport and Sviokla 1994). Thus, online grocers should consider implementing interactive tools in order to improve customer satisfaction.

Strategy Evaluation for the Best Practice and Sector Profile (Australia)

system (1.45) and trustworthiness of the Web site (1.40). The community component of Colesonline, however, has a reasonably good performance, although this component is not con- sidered as important. Therefore, this item lies on the ‘strategic overkill’ zone in Figure 10.4. These findings are consistent with the qualitative analysis.

In regard to the sector profile, all items except for the community component are situated in the ‘maintain strategy’ zone, but they are quite far below the diagonal. This implies that there are still opportunities to improve most of the Australian Web sites in the grocery sector, although the sites have a reasonable performance. The community component lies on the diagonal and is situated in the ‘immediate improvement not necessary” zone. This means that, although the com- munity component of the sector profile does not have a high score, it was not rated as important either. Therefore, no immediate improvement is required for this.

In summary, based on the results of the Web evaluation of the Australian sites, the study reveals that the majority of the Web sites still require some improvements in many areas, as they still lag behind the performance of the best-practice company. The lack of maturity of Web sites in this sector could be a factor contributing to the slow acceptance of online grocery shopping in Australia. Therefore, by improving the Web sites, particularly in the specific areas identified in this study, the acceptance of online grocery shopping by Australian consumers could likely be improved.


Swiss Results


Four Swiss Web sites were assessed: http://www.shop.coop.ch, http://www.leshop.ch, http:// www.migros-shop.ch, and http://www.spar.ch.

Figure 10.5 summarizes the overall evaluation of the Web sites included in the Swiss grocery sector. Migros appears to be the best site in the sector and Spar the worst. Other Web sites require significant improvements in order to achieve a quality comparable to that of Migros, which is the best-practice Web site in this sector. The two large-scale companies Migros and Coop reached


nearly the same overall result. The customer choice between them likely depends on personal preferences toward the real-world brand (the vendor), product range, and price level. In Switzer- land, a kind of “religious war” between Migros and Coop followers can be observed which seems to translate also to the online realm.

Figure 10.6 summarizes the company profile for all Web sites evaluated in this study, indicat- ing the score obtained in each phase. It shows that in Switzerland, the best-practice company does not stand out as much as it does in Australia. The companies were more evenly rated.

Overall, the Swiss results are better than the Australian results. Most participants seem to be satisfied with the sites in general. These observations were confirmed by the subsequent qualita- tive analyses conducted by the authors as well as the qualitative remarks supplied by the Swiss assessors.

In the information phase the analyzed Web sites show varying results. Important criteria in this phase are the possibility of finding and locating the Web site, the presentation of products, infor- mation about special offers, and the quality and quantity of the information provided. All four Swiss Web sites can be found easily on the Web. The assessors criticized that the two leaders in the retail sector, Migros and Coop, do not point out the existence of an online shop on their general company Web site. They recommended that LeShop as a pure online player should work harder to move to a higher place in search engines, because as a pure online shop it has not got the same name recognition as the other three retailers.

In the shops of Coop, Migros, and LeShop, the range is presented very “originally and clearly.” Products are arranged with reference to product categories or in the same order as in the physical stores. Migros and Coop give detailed descriptions of the products, which was positively empha- sized by the assessors. Nearly all products are illustrated with graphics, which facilitates their recognition by inexperienced shoppers. Spar, on the other hand, does not offer pictures; this fact was often mentioned as missing and “rather boring.” Information about delivery time is given by all Web shops. Navigation within the Web sites of Coop, Migros, and LeShop is easy, clear, and logically built. The Spar Web site is confusing; one of the assessors even called it “malicious.”


After-Sales Phase 5. Community Component 6. Final Section


For the agreement phase the shops of Migros, Coop, and LeShop received a good evaluation. The ordering process is transparent and interactive. LeShop offers the possibility of payment by invoice and bank transfer, while Coop even offers the possibility of cash payment. The assessors welcome the choice among these three payment methods. The results for Spar differ: Some asses- sors praise the “clear and simple” structure of the payment process, while others describe “the navigation and subnavigation [as] not well designed.” Moreover, some of the virtual sections did not contain any products.

In the Migros shop, customers are able to define a personal shopping list which is very helpful in selecting everyday items. Coop additionally makes the customers shopping proposals based on the transaction profiles. Furthermore, it must be mentioned that buying grocery products online does not lead to direct price advantages for the customer. The shipping costs are reduced or dropped if a purchase reaches a certain amount, which saves the customer from walking to the store and fetching his purchase personally.

For the settlement phase, in all shops—except Coop, where cash payment is possible—pay- ment has to be made in advance by credit card or bank transfer or later by invoice. Payment by credit card is the most widely used method in Swiss online shopping in general. The assessors do not criticize it, nor do they praise it as a particularly beneficial payment method. Coop allows for a very precise selection of the delivery time (+/–30 minutes). In contrast, Migros indicates a large-scale delivery period, which the assessors criticized. On the other hand, they appreciate the


short delivery time provided by Migros: depending on the delivery region, orders can be placed until 10.00 in the morning and the goods will be delivered shortly after 4.00 on the same day. LeShop offers a longer delivery period, because delivery is limited by the Swiss postal service (LeShop’s fulfillment partner). Spar delivers within a period of three hours by courier but only within very limited delivery areas. The charge for delivery (between 10 and 15 Swiss Francs) was acceptable to the assessors. Migros is the only vendor that offers order tracking. Since this func- tion is not considered very important, the assessors do not criticize its lack in the other shops. In the grocery sector, purchase order tracking seems to be a so-called nice-to-have feature which does not lead to a real advantage for the customer.

For the after-sales phase only few comments were made. This is a positive result, because the assessors had to use the customer service very rarely. In those cases where calling the customer service was necessary, assessors praised the “friendly and competent telephone support” (pro- vided by LeShop). One example was a question for LeShop customer support regarding the han- dling and return of delivery boxes, for which a deposit had to be paid. In the case of Coop and Migros, customers appreciated the integration of the payback programs (“SuperCard” and “Cu- mulus”) into the online shop. This makes it possible to collect shopping points no matter which channel (electronic or brick-and-mortar) a customer is using. For low-quality products and for products that do not meet customer expectations completely, LeShop offers a money-back strat- egy. This offer is very helpful to ensure that only high-quality and fresh products are delivered. Calling customer service by phone or e-mail will be unavoidable if the customer forgets his password. It is found a nuisance that in all evaluated shops customer service is available only during (extended) business hours. For the customer who wants to shop late in the evening this is not very helpful.

Looking at the importance of the EWAM criteria, it becomes obvious that the community component is not very important in the grocery sector. Accordingly, there were few comments about it. The assessors did not expect community functions.

For the final section, Migros once again received the highest rating. User guidance is intuitive und well structured in all evaluated shops. The graphical design of the user interface is a matter of taste. The assessors repeatedly praised the facility to overview purchase orders at the end of the shopping process on the LeShop Web site. In the case of Coop and Migros some assessors felt insecure during the payment process because the payment module does not have the same look and feel as the other pages of the shop. All vendors make little use of the possibilities for hyperlinks. The presentation of suitable recipes, the offer of a nutrition consultation or of search possibilities for further information do exist, but they appear to be copied from a paper version of the product catalog.

In the shops of Coop and Migros, the trisection of the screen into range, product, and shopping cart was rated as good. The permanent display of the shopping cart as well as the opportunities to change its contents in the shops of Coop, LeShop, and Migros were positively noted. In these three shops it is also possible to save a personal shopping cart and to open it again if required and generate a new purchase order from it. The assessors rate this personalization method as very useful. Further differences between the analyzed online shops can be observed in the area of trustworthiness of the shops. The high trustworthiness of Coop and Migros is based on their high name recognition, since they have been established vendors for decades. Le Shop, on the other hand, as a young and pure online grocer, first had to stand the test on the market for grocery products.

Summary of the Company Profile (Australia)

ated varied across all categories. For these Web sites, the highest score was obtained for the agreement phase and the final section, but it was scored less than one by the participants. Thus, most participants were not satisfied with these sites in general. These observations were confirmed by the subsequent qualitative analyses conducted by the authors, as dis- cussed below.

First, from the qualitative analysis, it was found that Colesonline, as the best-practice, has a pleasant user interface with information about various aspects (for example items on spe- cials, clearance aisle, information and support, payment and pricing policy) organized in a logical way. Furthermore, the use of hypermedia to describe products is consistent and ap- propriate. In addition, the site enables consumers to make use of their experience in shopping at the physical supermarket by organizing products by aisles. Therefore, most assessors gave a relatively high rating for most of the criteria in the information phase of Colesonline. Groceries4U, on the other hand, contains too much information on its main page, not all of which is needed by consumers before they start to  shop online. Moreover, the  arrangement of the information on the site is inconsistent and confusing. Besides, many pictures that describe the products are not available. Furthermore, the use of flashing images to indicate new items can be irritating to some consumers. All this further explains why most of the assessors were unsatisfied with Groceries4U in  the  information phase.

For the settlement phase, the subsequent qualitative analysis discovered that the ordering procedure actually highlights the strength of Colesonline. The Web site provides consumers with a very clear procedure. The ‘Buy’ button is located next to each item and the ‘Shopping Basket’ is always apparent to consumers, so that they can fill in or modify the quantity of each product as required in case of a change of mind during the process. This provides additional explanation why Colesonline received the highest rating for the settlement phase. At the other extreme, the analysis discovered that Groceries4U’s unclear ordering procedure particularly frustrates consumers. One way to put items in the shopping basket is to enter the quantity ones


wishes to buy from the list of products and then click the ‘Buy’ button. This button, however, may not be apparent to consumers if the list is long, since it is located far at the bottom of the list. Likewise, the ‘Shopping Basket’ is not readily viewable to consumers, since they need to click on the ‘Go to Shopping Cart’ button that is also located at the bottom of the list of prod- ucts. Finally, in this way of selecting products, the shopping trolley is not updated instantly, which is likely to confuse the consumers. This suggests that Groceries4U needs to undertake major improvements in the agreement phase.

In the settlement phase, the results of the assessment demonstrate that Colesonline is no longer in the lead. The qualitative analysis discovered that all Web sites actually allow custom- ers to pay using mobile EFTPOS and online payment with credit cards or customer account. AussieShopper also allows customers to pay with cash or check upon delivery. Besides, unlike other Web sites, it enables customers to track and trace their orders by providing the driver’s contact number. This explains why AussieShopper was rated favorably for the ‘integration of generic service’ and ‘tracking and tracing’ criteria in this phase compared to other Web sites. However, the analysis could explain why Colesonline received the lowest rating for the ‘track- ing and tracing’  criterion.

For the after-sales phase, the qualitative analysis revealed that while other Web sites simply provide the company contact details for customer inquiries, Colesonline offers a ‘Customer Care Center.’ This is intended to help customers with any queries regarding Colesonline, offering the best technical and nontechnical assistance possible through a trained staff. A contact number and the operating hours of the Customer Care Center are provided. This increases consumers’ confi- dence in the accessibility and performance of customer support provided by Colesonline. There- fore, Colesonline was rated high in the after-sale phase. Groceries4U was rated lowest in this phase. The possible explanation emerging from the subsequent analysis was that Groceries4U has various contact persons and numbers to deal with general enquiries, customer service, and technical assistance and provides no information on their availability. This may reduce the con- sumers’ confidence in terms of the accessibility and performance of the customer support, which does not seem to be well integrated. Other Web sites have a stable performance in this phase as they provide reasonable customer support details.

For the final section, Colesonline once again received the highest rating. Many of the issues discussed in the information and agreement phases are related to the last phase. The analysis also discovered that the performance of Colesonline and Shopfast in this section is very comparable, and therefore some assessors may favor Colesonline while some prefer Shopfast. Due to its pro- vision of the Customer Care Center and the fact that it is operated by one of the largest retail chains in Australia, Colesonline was rated very high for the ‘trustworthiness of the Web site’ criterion. In addition, Colesonline offers a personal shopping list to consumers and therefore received the highest rating for the personalization function.

Figure 10.4 compares the assessment figures with the perceived user expectations for both the best-practice and sector profiles. The ideal situation is achieved when all the categories lie on or above the diagonal, as shown on the figure. Consistent with the above findings, the figure depicts that for Colesonline, three phases—the agreement phase, after-sales phase, and final section—lie exactly on the diagonal and are within the ‘maintain strategy’ zone. This indicates that these three categories have a good performance, as the users’ expectations meet the actual assessment. Two other items—the information and settlement phases—are below the diagonal but still within the ‘maintain strategy’ zone. A further analysis indicates that Colesonline particularly has a high performance for accessibility of the Web site and products (scored at 1.73), quality of the content (1.26), models and method of pricing (1.16), access to customer support (1.16), availability of the


The participants in this study were students enrolled in electronic commerce classes at the Uni- versity of Melbourne, Australia, and the University of Applied Sciences in Basel, Switzerland, in the years 2003 and 2002 respectively. In Australia, each Web site to be evaluated was assigned to four tutorial classes. A tutorial class consisted of 20 students on average. In Switzerland, there was only one class of 25 students, where each student evaluated all four Web sites. Although the participation was voluntary, the students were encouraged to perform the evaluation, since the participation meant extra practice in preparation for a subsequent assignment. The number of responses for the Web sites varied from 5 to 56. Although for a few Web sites the number of participants was quite low, a subsequent qualitative evaluation by the authors revealed the plausi- bility and usefulness of the results.

In Australia, six operational Web sites were identified at the beginning of this study and all were included in this study. Two of the Web sites belong to the two major Australian retailers (Coles and Woolworths), while the other four are pure online players without physical stores. At present, Woolworths offer the online grocery shopping service to approximately 200 suburbs in Sydney, under the name ‘Woolworths (Safeway) HomeShop.’ Coles supermarkets offer the online service to consumers in 25 suburbs in Melbourne and 41 in Sydney under the banner ‘Colesonline’ (Colesonline 2003). The online retailers, including ShopFast, Groceries4U, AussieShopper, and GreenGrocer, have been established to serve more specific regions of Australia. ShopFast, for example, delivers to Sydney, Central Coast, and Wollongong, while AussieShopper focuses on the Brisbane area, GreenGrocer operates in both Sydney and Melbourne, and Groceries4U serves consumers in the Adelaide metropolitan area.

The Swiss study included the two large Swiss retailers (Coop and Migros), the shop of the Spar-Group Switzerland, and the shop of a Swiss grocery group called Bon appétit Groupe AG (LeShop). Coop, Migros, and Spar operate a close-meshed grid of physical stores and offer online shopping as an additional customer service. In contrast, LeShop is a pure online player and was the first company offering grocery products online in Switzerland. Since spring of 2002, when data were collected for the Swiss grocery stores, the Swiss online market has seen some important changes. First, Spar shut down its online shop in August 2002 for a lack of demand, while LeShop was sold to private investors at the end of 2002. Then, at the beginning of 2004, LeShop almost had to shut down its operations but was rescued by a group of investors. A couple of months later,



Table 10.1


The Importance of Each Category Used in the Study


Importance Grocery (Range: –2/+2)

Phase/Component Australia Switzerland
1. Information Phase 0.97 0.84
2. Agreement Phase 1.44 1.50
3. Settlement Phase 0.99 0.59
4. After-Sales Phase 1.02 1.38
5. Community Component –0.44 –0.88
6. Final Section 1.23 1.13


LeShop and Migros merged into one joint online store, which at the time of writing this chapter was run by the former LeShop crew.

For the evaluation of the Web sites, the students used the EWAM tool, as described in the previous section. Before the evaluation process started, the students were thoroughly instructed in the use of the tool. The training of the assessors is an important learning process that confronts them with the basics of high-quality e-commerce services. Data were submitted by the students online and analyzed centrally by the authors. For each Web site, a personal Web assessment report was produced. Specific sector assessments compare companies in the same sector against one another.




In this section, we first examine the importance of categories for the grocery sector as rated by the participants in Australia and Switzerland (Table 10.1). Six Web sites for the grocery sector were assessed in Australia and four in Switzerland. Details of these sites are provided in the next sub- section. The rating is based on a four-point scale: from unimportant (–2) to very important (+2). The results show that the perceived importance of criteria for both countries is very similar and that all phases except for the community component were perceived to be important. A closer look at the results reveals that the accessibility of the Web site, structure of the contents, quality of information, and price benefits are important criteria which the participants emphasized for the information phase. Other items, including ordering procedure, tracking and tracing, and access to customer support, were found to be crucial in the agreement, settlement and after-sales phases, respectively. In addition, the availability of the system, the design of the user interface, and the

trustworthiness were also cited as important by most participants.

The above findings suggest that customers or users in general have a high quality expectation toward the Web sites in the grocery sector. The main reason might be the novelty of buying groceries online which results into a perceived uncertainty that is still high (Barnett and Alexander 2003; Kinsey and Senauer 1996; Slonae 2000). Consumers are very sensitive to ordering grocer- ies online, since there is a high chance of not getting the grocery items in the expected quality, especially for perishable products such as fruit and vegetables (Barnett and Alexander 2003). This is consistent with the findings of previous studies exploring the slow uptake in online gro- cery shopping adoption in a number of regions (Schuster and Sporn 1998; Kutz 1998; Kurnia and Chen 2003, Kurnia 2003). Consequently, items such as trustworthiness were rated paramount and significantly more important than, for example, in a different study of the book retail indus- try. A number of online grocers, however, believe that with their training qualification and in-


Summary of the Overall Web Evaluation (Australia)


frastructure (such as refrigerated delivery truck) they are better at picking and transporting products than customers (MSNBC 2004). Therefore, with an improved trust level of con- sumers, the number of consumers who are willing to purchase groceries online can be ex- pected  to increase.

Furthermore, the agreement phase is perceived to be more important in the grocery than in other sectors, with the order procedure being especially important. Grocery shopping in- volves searching and selecting a comparatively large number of products. A smart and easy- to-use order procedure that supports the customer in making selections and filling the shopping cart is thus crucial for a satisfactory shopping experience. On the other hand, our study shows that the availability of recommendation systems is more important for other than grocery items, which is not surprising, given that groceries are everyday items with a rather stable need. In the same way, the community component is perceived to be not so important for the grocery sector.


Figure 10.2 depicts the summary of the overall evaluation of the six Web sites. The score is based on a four-point scale from –2: very bad to +2: very good. As shown in the figure, Colesonline appears to be the best site in the sector, whereas Groceries4U Web site has the worst evaluation result. Other Web sites require significant improvements in order to achieve a quality comparable to that of Colesonline, which is the best-practice Web site in this sector.

Figure 10.3 summarizes the company profile for all Web sites evaluated in this study, indicat- ing the score obtained in each phase. It shows that the best-practice company was rated much higher than other companies in most of the categories involved in this study, particularly in the agreement phase, after-sales phase, and the final section. The performance of other sites evalu-




The advance of the Internet technology has enabled businesses to easily reach consumers in dis- persed geographical locations. Despite some concerns with security issues, the use of online shop- ping has been increasing in the last few years (Australian Retailers Association 2000, Park et al. 1998, Morgan 1998). An Internet business application that has received much attention in the last few years is online grocery shopping (Morganosky and Cude 2000; MSNBC News 2004). Con- sumers can purchase grocery products anywhere, any time, and the products can then be deliv- ered to or picked up by the purchasers (Ellis 2003). Despite the failure of the first few online grocers around the world—Webvan, Publix Super Markets, and ShopLink, to name a few—online grocery shopping is projected to experience a significant growth in the next few years (Allen and Fjermestad 2001, MSNBC News 2004, Anonymous 2001).

Online grocery shopping has many potential benefits to consumers, particularly in terms of convenience and time saving (Park et al. 1998, Anderson et al. 2000, Barnett and Alexander 2003). Convenience and time saving have become important issues for consumers in grocery shopping, since there have been more women participating in the labor force, more dual-in- come and thus higher-income households, and more single-parent and elderly households with


various resource constraints (Park et al. 1998; Turner 2001). Thus, online grocery shopping enables consumers to avoid typical problems of traditional shopping such as searching for a parking space, looking for products on frequently changing store shelves, failing to obtain assistance from the staff, particularly in specialty departments, and standing in a long checkout line (Anderston 2001; Pastore 2001). Retailers will also reap significant benefits, since online grocery shopping will lead to more efficient use of personnel, simplification of building infra- structure, lower costs, and more rapid gain in profitability (Pastore 2001; Australia Retailers Association 2000; Slonae 2000). In addition, through the establishment of long-term relation- ships with customers, there is an opportunity for online retailers to enjoy a stable cash flow (Allen and Fjermestad 2001). Therefore, online grocery shopping has been an attractive retail channel in many regions, notably the United States, United Kingdom, Europe, and Australia (Schuster and Sporn 1998; Morgan 2000; Morganosky and Cude 2000; Ellis 2003; MSNBC

News 2004).

While it may look easy for supermarkets or other grocers to offer online grocery shopping service facilitated by the Internet, many factors need to be addressed carefully for successful operation of an online business (Anderson et al. 2000; Van der Heijden 2000). Besides issues related to business models, value proposition, and organizational set-up, one of the most impor- tant factors is the overall design of the Web site as the primary interface with the consumer in online shopping. Consumers need to feel comfortable and confident with the online systems, from getting the information about the products, ordering, paying, tracking to receiving the prod- ucts (Barnett and Alexander 2003; Freeman 2003). Nevertheless, in general, few Internet mer- chants have ever tried to assess their Web sites from a consumer perspective to reveal weaknesses and initiate improvements. This may contribute to some failures reported in the literature (see, for example, Mahajan and Srinivasan 2002; Helft 2001; and Bulkeley 2004). It is therefore crucial for supermarkets or any grocers wishing to offer a successful online service to recognize the importance of the overall design of Web sites that facilitate online grocery shopping. Poorly designed Web sites may help account for the slow uptake of online grocery shopping in many regions (Schuster and Sporn 1998; Kutz 1998; Kurnia and Chen 2003; Kurnia 2003). Given the fact that grocery products, particularly fresh items such as fruit and vegetables, have attributes that can be discovered only through the senses, online grocers face many challenges in achieving a desirable level of customer satisfaction (Cho et al. 2003).

Despite the failures of early online grocers in the late 1990s, there has been a significant growth in the online grocery industry, particularly in the last two years. Various online retailers have been established around the world, including Australia and Switzerland. Although only six online grocers were assessed in this study, Alexander and Barnett (2004) identified 40 online grocers across Australia. In the United States, many online retailers such as Safeway Inc., Albertsons Inc., Peapod LLC (Chicago and the East Coast), and Freshdirect.com (New York) have experi- enced a tremendous growth in their online business with an increasing number of customers and are expanding their business coverage (MSNBC 2004). This indicates that the market for online grocery shopping exists and that it has the potential to grow.

Although it is believed that online grocery shopping will not take over the overall market, as it will make up only a very small percentage of the overall business, the annual growth expected from online shopping is significant for retailers (MSNBC 2004). In order to survive and grow, it is crucial for online grocers to increase customer satisfaction with online grocery shopping, since customer satisfaction will lead to increased customer loyalty and the ability to attract new cus- tomers (Cho et al. 2002). This is consistent with the view that the commercial environment has shifted from a transaction-based to a relationship-based economy (Romano and Fjermestad 2003).


Therefore, online grocers also need to manage their relationships with customers, which they can do in each phase of the business transaction.

In this chapter, we demonstrate the usefulness of evaluating online grocers’ Web sites based on the perception of consumers in order to identify their strengths and weaknesses. Various online grocers’ Web sites in Australia and Switzerland were assessed using the Extended Web Assess- ment Method (EWAM) tool. The current tool was developed at the University of Applied Sci- ences Basel in Switzerland and is now widely used in research, teaching, and consulting (Schubert 2003). Since the assessment was based on consumers’ expectations, and on strengths and weak- nesses identified in each phase of the market transaction, it can be used by online grocers to design strategies that can improve customer relationship management. Our objective is to assist practitioners to develop better online shops in the grocery sector in order to promote the growth of online grocery shopping through increased customer satisfaction (Cho et al. 2002). Using the framework proposed by Allen and Fjermestad (2001), we systematically discuss some lessons learned from this study in terms of product, place, price, and promotion.

In the next section, we provide a basic description of the EWAM tool, including the theoretical background and data collection and analysis procedures. We then describe the Web assessment conducted in this study and present selected findings. Finally, we present a comparative analysis, discuss some lessons learned, and draw conclusions.

Affective reactions to online shopping phenomenon

Traditionally, affective reaction consists of three dimensions: arousal, pleasure, and dominance (Russell and Pratt 1980; Mehrabian and Russell 1974; Huang 2003). In this collection of studies, all three are studied to some extent, yet few studies cover all three at the same time except Huang (2003). Pleasure received more attention than the other two dimensions. It has been called per- ceived entertainment value (Chau et al. 2002; O’Keefe et al. 2000) and shopping enjoyment (Koufaris et al. 2001–2002; Koufaris 2002). Empirical studies confirmed that it is associated with personal characteristics (e.g., purpose of Internet use and product involvement) and beliefs about e-stores (e.g., perceived information load and positive challenges of the website) (Chau et al. 2002; O’Keefe et al. 2000; Koufaris et al. 2001–2002; Koufaris 2002; Huang 2003). Huang (2003) observed that arousal (measured as stimulated-relaxed, excited-calm, frenzied-sluggish) experi- enced in a virtual shopping environment is associated with an individual’s arousal-seeking ten- dency (i.e., liking arousal by change or by new stimuli). He also demonstrated that dominance (controlling-controlled, dominant-submissive, autonomous-guided) is significantly related to per- ceived information load of an e-store’s website.



Attitudes Toward Online Shopping Behavior. Three studies discovered antecedents of customers’ attitudes toward using or purchasing at a specific e-store (Chen et al. 2002; Lu and Lin 2002; Suh and Han 2003). All these antecedents fall into the subcategory of beliefs about an e-store/online shopping experience. Chen et al. (2002) observed that perceived usefulness and ease of use of an e-store and the compatibility of its use with existing values, beliefs, and needs positively influ- ence a potential customer’s attitude toward using this store. Lu and Lin (2002) found that a user’s beliefs about the content (referring to the product/service offered by an e-store), context (i.e., effectiveness of the Web site’s interface), and infrastructure (i.e., efficiency of a collection of assets) of an electronic newspaper site positively impact one’s attitude toward using this site. Suh and Han (2003) validated that a customer’s trust in an e-store would predict positive attitude toward using this store.


A Refined Model


The findings of this study support the research framework depicted in Figure 9.1. The foregoing examination of the existing studies provides more details for the research model. A refined model is shown in Figure 9.2.

As discussed in the preceding section, external environment, demographics, personal charac- teristics, and e-store characteristics have been examined as independent variables in most studies. Significant impacts of these factors on individual’s online shopping intentions, behaviors, and satisfaction are confirmed by these studies. These influences are either direct or mediated by (potential) customers’ beliefs, affective reactions, and attitudes. Some studies explore only the impacts of beliefs, affective reactions, and attitudes on intention, behavior, and satisfaction with- out touching those variables in the left box (e.g., Khalifa and Liu 2002–2003). However, this does not deny the external factors’ input roles. In the other direction, outcome variables in the right box, such as satisfaction, could have fundamental impacts on a customer’s beliefs about online



shopping. In addition, significant associations exist between variables within the same box. For example, intention to shop online is a good predictor of shopping at a specific e-store.




Before we discuss the implications of this study and the future directions of this research area, it is important to acknowledge the study’s limitations.

The first limitation is the source of the selected papers, which may introduce bias into the study results. Due to the nature of B2C e-commerce research, relevant studies are published across various journals in multiple disciplines, such as information systems, marketing, manage- ment, advertising, etc. Including all the studies in this area is close to infeasible. To focus on the information systems perspective and still have a good set of representative studies, we used a journal basket approach and did an exhaustive search of nine primary IS journals for publications in most recent years, yielding a total of 44 quantitative empirical papers. Selection of this basket of papers might introduce bias into analysis due to its limited coverage and disciplinary perspec- tives. The second limitation of the current study is the omission of moderating variables and relationships in the analysis. As a first attempt to draw an overview of the research area and to control the scope of the study, we tried to focus on the main factors and their relationships. Moderators are important and give the picture richness that warrants future investigation.

Despite the limitations, we believe that the findings presented in this chapter, representing one of the few studies that synthesize existing work on consumer online shopping behavior, do offer interesting insight into the state of the art of this research stream and have several important implications that may guide future research in this area.


Moderating Effects


A few studies in the collection explored moderating effects. All significant moderators belong to “external factors” that fall into the left box in Figures 9.1 and 9.2 (Liang and Huang 1998; Luo and Seyedian 2003–2004; Koufaris et al. 2001–2002; Lee and Turban 2001). Shopping experi- ence, online customer tenure (i.e., new vs. repeat), and trust propensity are good examples of such moderators. For example, Koufaris et al. (2001–2002) discovered that customer tenure moderates the positive impact of the perceived control one has experienced in an e-store on his/her intention to return to this e-store. Lee and Turban (2001) revealed that one’s trust propensity positively moderates the relationship between one’s perceived integrity of Internet merchants and his/her trust in online shopping. Though not included in analysis of the current study, moderators serve an important role in understanding the dynamics of online customer behaviors. Therefore we call for future examination in this direction.


Theoretical Models


The collected studies took different perspectives and utilized different theoretical models. There is little consensus on consistent theoretical models to describe and predict online shopping inten- tion, behavior, satisfaction, and other relevant constructs. This lack of a common theoretical frame- work suggests the need to develop an integrative model of the phenomenon in order to promote systematic investigation of its components and the online shopping process. By identifying com- mon elements and developing our model based on IS literature, we hope to have taken a step toward promoting this type of integration and synthesis of relevant literature.




Business-to-consumer (B2C) electronic commerce has emerged in recent years as an important way of doing business. According to ePayments Resource Center (2004), the total B2C e-com- merce revenues for the United States increased from $75 million in 1999 to $750 million in 2003. Similarly, Europe’s B2C revenues grew from U.S. $25 to $60 million and Japan’s from $25 to

$250 million between 1999 and 2003. However, online shopping is far from being a popular act, even among people who are experienced Internet users and spend long hours online. For ex- ample, according to the USC Annenberg School Center for the Digital Future, 75.9 percent of


Americans were Internet users in 2003. They spent an average of 12.5 hours/week online. And

96.7 percent of them had more than one year of Internet experience (USC Annenberg School Center for the Digital Future 2004). However, only 43 percent of American adults purchased online in 2003, spending an average of $95.14 per month (USC Annenberg School Center for the Digital Future 2004). While B2C e-commerce has not been widely accepted in the broad sense, there is significant room for its growth, once the B2C shareholders find effective ways to attract and sustain more customers to conduct more transactions online. The question is: What factors lead customers to shop online?

This is a key question to be answered in the e-commerce customer relationship management (e- CRM) area. Abundant studies have been conducted in recent years to investigate customers’ online shopping behaviors. Most of them have attempted to reveal factors influencing or contributing to online shopping beliefs, attitudes, intentions, and behaviors. Romano and Fjermestad (2003) have identified five major perspectives that researchers may adopt to approach various issues surround- ing e-CRM. These include e-CRM markets, e-CRM business models, e-CRM knowledge manage- ment, e-CRM technology, and e-CRM human factors. These areas are not mutually exclusive and may influence one another directly or indirectly. Generally each study of customers’ online shop- ping behaviors takes one or more of the five perspectives. As a result, these studies investigate various factors in diverse ways and reveal different aspects of the phenomenon. For example, Case, Burns, and Dick (2001, p. 873) suggested that “Internet knowledge, income, and education level are especially powerful predictors of Internet purchases among university students” according to an online survey of 425 U.S. undergraduate and MBA students. Ho and Wu (1999) discovered positive relationships between online shopping behavior and five categories of factors: e-stores’ logistical support, product characteristics, Web sites’ technological features, information characters, and home page presentation. Jarvenpaa et al. (2000) empirically revealed positive associations between con- sumer trust in Internet stores and perceived store reputation and size. Higher consumer trust reduces perceived risks associated with Internet shopping and generates more favorable attitudes toward shopping at a particular store, which in turn increases one’s willingness to patronize that store.

These studies have all made important contributions to our understanding of the dynamics of the online shopping phenomenon. However, there is a lack of coherent understanding of the impact of most, if not all, possible factors related to online shopping behaviors. This makes com- parisons of different studies difficult, applications of research findings limited, and the prospect of synthesizing and integrating the empirical literature elusive.

This chapter synthesizes the representative studies of consumer online shopping behavior based on an analytical literature review. To be consistent with the theme of advances in MIS, we focus on the IS literature. To draw validated results, we emphasize empirical studies, especially those using quantita- tive methods. In doing so, we attempt to provide a comprehensive picture of the state of the art of this area and point out limitations and directions for future research. We approach the research question mainly from the e-CRM human factors perspective, since what interests us here is human behavior. Variables related to e-CRM markets, business models, and technology are also investigated, because they influence (potential) customers’ perceptions, attitudes, and behaviors in various ways.