How Has Alibaba Changed Chinese Consumer Habits? Thesis Paper Example

Introduction

Alibaba Holding Group Limited (Alibaba) began in 1998 based in Hangzhou, China as a message board for companies to post trade leads and is now a group of e-commerce companies comprised of numerous business entities (C. Barczyk, G. Falk and L. Feldman).  Former English teacher Jack Ma and 17 of his colleagues founded the company when less than 1% of the Chinese populace had access to the Internet after Ma had already failed in his attempt to launch an online directory called China Pages (Stone and Larson).

While Alibaba.com is the original parent company of this group, additional virtual businesses include Taobao, Tmall, Alisoft, Alimama, Yahoo! Koubei, and Alipay, which has collectively harnessed as much as 80% of the Chinese e-commerce market under the control of the Alibaba Group (Barboza; C. Barczyk, G. Falk and L. Feldman).  Once Jack Ma and his colleagues launched Alibaba, within just a span of 15 years, the company surpassed e-commerce market leaders Amazon who currently has a net worth of $153.08 billion and eBay whose net worth is assessed at $60 billion (Gupta).

Analysis of consumer behavior is typically the protocol for determining the potential market that establishes value for a company (Carpenter and Fairhurst).  Since so few Chinese were using the Internet when Ma and his partners established the Alibaba message board, this would have proved to be an inaccurate method considering the exponential growth of the company.  Additionally, the Great Firewall of China, which is an Internet filtering tool that blocks or censors websites and virtual private networks (VPNs) that the government deems as inappropriate, proved to be an added hindrance to the growth of e-commerce within the nation since it limits what users can access over the Internet (Dou).

The prominence of Alibaba has led to the launch of the organization on the New York Stock Exchange (NYSE) as an initial public offering (IPO) where the company debuted as the largest U.S. IPO in history, setting the record with the $21.8 billion USD that the company raised through stock sales (Somerville).  Considering the largesse of Alibaba and the explosive growth of the e-commerce markets in China, the influence that Alibaba has had on such progression has developed as a point of interest as experts attempt to predict the future developmental trends of this lucrative industry.

Research Objectives

The objectives of this research are to explore the new development of online retailing marketing through the contextual framework of the growth of Alibaba as an e-commerce leader.  The presence of Alibaba provided consumers with another choice in regards to the method of purchase, which not only provide a new purchasing experiences, but may also affect their perception on the entire retail market in regards to the benefits of shopping in a brick-and-mortar store as opposed to shopping online (Manjoo).

Since online retailing has a totally different mechanism than retailing in a physical location, it is essential to re-examine and re-evaluate the divergence in purchasing trends prior to and following the introduction of Alibaba as an option for e-commerce.  This research paper aims to satisfy the following objectives:

• Examine how consumer shopping patterns have changed due to the availability of Alibaba as an e-commerce option.
• Identify the specific elements, if any, affecting the selection of Alibaba for commercial needs using the relationship between consumer shopping values, satisfaction, and consumer loyalty for web-based retail consumption based on hedonic and utilitarian shopping needs.

To achieve the mentioned objectives, this research will include empirical data to identify the impact of Alibaba on consumer spending and highlight the development of new trends based on the relationship between consumer value, satisfaction, and loyalty in addition to the hedonic and utilitarian values of the shopper.

Research Question

Researchers typically use the significance of utilitarian and hedonic shopping contexts to measure attributes of consumer shopping values, satisfaction, and loyalty since these are characteristically the drivers that predict purchasing patterns (Guido).  Considering the restrictive paradigms of the Great Firewall of China, the exponential growth of Alibaba launched a new industry that has had a significant influence on the overall lifestyle of Chinese consumers.

The intent of this research is to explore the contexts of the changes that have occurred in the consumption habits of the Chinese and whether these changes were facilitated wholly or in part by the growth of Alibaba.  Exploration of these developments is guided by the research questions:

• How has Alibaba changed Chinese consumer habits based on hedonic and utilitarian shopping values?
• What were the consumer trends in China prior to and following the establishment of Alibaba as an e-commerce option?
• To what extent has Alibaba changed consumer habits in China as they relate to the attributes of consumer shopping values, satisfaction, and loyalty?

These questions provide a platform for the development of the conceptual framework that used to design the research instruments and will provide a benchmark that used to measure the veracity of the hypotheses.

Research Hypotheses

The web-based retail market is a relatively new medium for Chinese consumers that have customarily made their purchases through brick-and-mortar stores.  The proliferation of Alibaba created new business models for both retail companies and consumers, which produced the following hypotheses that this research will test using the stated research questions:

• There is no significant relationship between the growth of the Alibaba Group companies and the changes in Chinese consumer habits.
• A significant, positive relationship exists between hedonic and utilitarian shopping values and changes in Chinese consumer shopping habits though the use of the Alibaba e-commerce platform
• A significant, positive relationship exists between the creation and expansion of Alibaba and the exponential growth in Chinese consumer purchasing habits
• A significant, positive correlation exists between Chinese consumer shopping values, satisfaction, and loyalty and the extensive increase in purchasing patterns through the Alibaba e-commerce platform

Examination of the research questions through the contextual framework established based on the objectives will help prove or disprove each hypothesis and help form the final determinations of this research.

Literature Review

The purpose of this literature review is to examine the relationship between the growth of Alibaba and the progression of the e-commerce industry in China.  This literature review first discusses the past and present state of the e-commerce industry in China followed by the factors driving Chinese consumer shopping habits.  The background of the Alibaba Group, penetration of the Internet, increased spending power of Chinese consumers, logistic infrastructure expansion, and the quality control measures are discussed to present a comprehensive picture regarding the development of Alibaba as a premiere e-commerce marketplace.

E-commerce Industry in China

There are over 600 cities in China that are categorized into five tiers based on attributes such as populace, service development, and cosmopolitan nature of the infrastructure where Tier 1 cities represent the most developed areas, while Tier 5 includes small less-developed cities, villages, and rural areas (Gardner).  The tier system does not include the special administrative regions of Hong Kong and Macau (Gardner).  China’s major cities, including the municipalities, are shown in Figure 1 along with the provincial capitals and fastest-growing cities (NZCTA).

Figure 1: China’s Major Cities

Although no official criterion classify city tiers, some specifications identified by the New Zealand China Trade Association (NZCTA) include:

• At least five million inhabitants or more;
• At least China Yuan Renminbi (RMB[¥]) 250 billion ($40,000,000,000 USD) regional GDP or ¥350 billion ($56,000,000,000 USD) in more affluent areas;
• Strong economic growth;
• Geography significance, like Xiamen although the population is only 2.5 million people;
• Progressive transportation infrastructure; and
• Cultural and historic significance like Guilin, which is a popular tourist center(NZCTA)

Cities categorized under the first tier denote the most developed areas of the country with the most prosperous and erudite consumers considered as the focus of key economic activity due to their capacity to draw the interests of both foreign and domestic investors (Mullich).  The first tier cities are typically densely populated large urban cities that have significant economic, cultural, and political influence in China since they have markets already developed in terms of consumer behavior due to larger middle class representation with much higher income levels than the national average (Gardner).  Cities such as Shanghai, Beijing, Guangzhou, Shenzhen, Tianjin, and Chongqing fit this category since they collectively represent as many as 16 million households amounting to ¥1 trillion income value although the Tier 1 status of the last three cities is contested due to their size and government classification (Gardner).

Consumer behavior in second tier cities has become increasingly attractive to investors since they mimic first tier purchasing trends and include some of the fastest growing areas that have become principle growth mechanisms of the Chinese economy (Mullich).  Cities classified in the second tier include provincial capitals, sub-provincial cities, special economic zones (SEZs), and other developed regions with cultural and economic influence, 14 of which account for as much as 54% of total U.S. imports (Gardner; Mullich).  This category includes about 38 million households with ¥2 trillion income value although there is a greater degree of disparity in the economy, populace, and consumer habits of municipalities in this tier (Gardner).

Cities considered as third tier are behind first and second tier classifications in economic growth and development, although tier three areas are quite important due to their fiscal and historic significance, such as open coastal regions, high-income areas, and towns with substantial economic development (Gardner).  Numerous third tier cities provide convenient, inexpensive locations for large industries and big companies to build facilities and account for about 75 million households with ¥3 trillion income value (Gardner).  Fourth and fifth tier regions include small towns and areas that are not well known although these classification include 86 million households with ¥3 trillion collective income value and 169 million households with ¥4 trillion income value, respectively, representing the bulk of China’s urban inhabitants and collective income (Gardner).

Statistics

All of the major Internet applications in China, including Alibaba, Baidu, Tencent, Sina and Sohu, were launched in 1999, meaning that prior to this, there were no Internet applications and the majority of the Chinese did not have public access to the Internet until 2000 (Wei).  When Alibaba was launched in 1999, only about 1% of Chinese were using the Internet, which amounts to about one million people (Ho and Chen; Stone and Larson).  The graph in Figure 2 shows the annual growth in the number of Chinese using the internet (Ho and Chen).

Figure 2: Growth of  Chinese Internet Users

By 2000, this number had grown to 2.1 million Internet users despite the significant restrictions implemented through the Great Firewall of China, which made available the approved version of the World Wide Web (Peterson).

Although the China Internet Network Information Center has since improved the efficacy of the Internet filters provided by the Great Firewall of China, as of 2013, China had nearly 618 million Internet users (Peterson).   The 618 million Internet users amounts to less than half of the Chinese population and is nearly twice the total population of the United States with 500 million of Chinese users accessing the Internet via mobile Web (Peterson).  While the 618 million Chinese users amounts to only about 45% of the populace, about 85% of Americans use the Internet, which  means that China has twice as many people offline as there are total people in the United States (Peterson).

China generated $121 billion in online retail sales in 2013, which is a 66% increase from 2010, and the e-commerce market in China is expected to reach $420 billion by 2015 (Indvik).  Online sales projections for China exceed the U.S. ecommerce market estimates by 20% through the estimated 193 million Chinese online shoppers compared to the 170 million online shoppers in the U.S. (Indvik).  With more online shoppers than any other country, experts estimate that each consumer will spend about $1,000 online per year, which equates to the current consumption rate of American online shoppers and could account for more than 8% of all retail sales in China (Indvik).

Customer Profiles

China’s middle class is predicted to experience exponential growth from 200 million to 800 million people within the next 20 years due in part to the swift dissemination of high-speed Internet access and Internet-connected cellphones subsidized by the Chinese government (Indvik).  This has already increased the network of potential shoppers to the current base of about 45% of China’s populace and Internet access is as low as $10 per month compared to $30 in India and $27 in Brazil per month (Indvik).

Despite the larger numbers of online shoppers in China relative to the U.S., the actual penetration is lower with only 14% of the more than 1.3 billion Chinese residents shopping online compared to about 54% of U.S. shoppers (Indvik).  Additionally, while first tier cities are generally considered more lucrative marketing options, 75% of retail commerce is expected to come from about 200 of the Tier 2 and Tier 3 cities as shoppers gravitate towards lower-priced items (Gardner; Indvik).

Key Players

Numerous Internet applications launched during the same period as Alibaba, but the biggest servers in China are now Alibaba, Baidu, and Tencent, and they dominate the three major market categories of ecommerce, searching, and messaging, respectively (Gardner).  Furthermore, consumer-to-consumer (C2C) transactions comprise the majority of online transactions in China, encompassing 85% of such commerce as of 2009 and 90% of those transactions are fulfilled on Taobao, an Alibaba company (Gardner).

Dubbed the “eBay of China,” Taobao users can buy and sell new or used goods at prices that are negotiated or static as well as through auction-style listings with the majority of products being new and there are no listing or transaction fees (Gardner).  The brunt of the revenue Taobao generates is derived from advertising with proceeds expected to be as much as $716 million USD before taxes, bringing the company’s net worth to $14.3 billion USD (Gardner).

Collectively, Taobao and Tmall managed 81% of online transactions in 2010 based on dollar amount, selling 48,000 products per minute on Taobao, which amounted to more than the top five brick-and-mortar retailers in China combined (Indvik).  Additionally, over 60% of the shoppers using Taobao and Tmall used Alipay, which is a payment system comparable to PayPal, to purchase their goods (Indvik).  As much as 20% of the business-to-consumer (B2C) transactions on other sites such as 360buy.com, the second largest B2C site in China generating around $5 billion in sales in 2011, were paid for using Alipay (Indvik).

Driving Factors for Chinese Consumer Habits

The primary reasons that people in China shop online have been identified as (1) greater product selection of items not available at brick-and-mortar stores, (2) the ability to compare prices across vendors, and (3) convenience (Indvik).  Although there appears to be a link between customer satisfaction and the presence of hedonic/utilitarian attributes within the online shopping forum, there have also been correlations established between enjoyment and entertainment with consumer loyalty (Kiang, Raghu and Shang).  The enjoyment derived from visiting the website was indicated in both hedonic and utilitarian shopping attributes.

Furthermore, the importance of these two attributes has been discovered in the form of multimedia features that can increase the effectiveness of customer interactions (Guido).  Additionally, marketers can divide attributes into positive, negative, indirect, and direct facets that can influence shoppers’ online purchase intentions, with positive attributes linked directly to positive attitudes to purchase from the website (Guido).

The utilitarian shopping value is mainly concern with values gained from behavioral aspect whereas the hedonic shopping value is mainly concern with values gained from psychological aspect during a shopping experience.  These shopping values are suggested to be the basic criteria of consumer satisfaction and have a positive effect on building up consumer loyalty and word of mouth (WOM) communication.

Consumer Shopping Values, Satisfaction, & Loyalty

Significant research has been conducted to investigate the relationship between consumer shopping value, consumer satisfaction, and consumer loyalty (Assael; Carpenter and Fairhurst; Freed; Goel, Hofman and Lahaie).  Consumer loyalty is as one of the most important goals for consumer marketing since it provides a sustainable sales profit to the company but also functions as a channel of advertisement through WOM communication (Freed).

To maintain strong consumer loyalty, the relationship between consumer shopping values, consumer satisfaction, and consumer loyalty must be understood since these elements build upon the satisfaction from the previous shopping experiences (Carpenter, Geletkanycz and Sanders; Freed).  The inertia of shopping habit usually drive consumers back to their frequently shopped supplier if they feel satisfied in their previous purchase, so companies must maintain high quality products or services in order to provide a satisfied shopping experience to their customers, which deliver additional benefits to the buyer throughout the entire shopping experience (Alba, Lynch and Weitz).

The issue of trust in online shopping was prevalent in the infancy stages of Internet commerce in China as credit card fraud and counterfeit goods, some of which are swapped out for genuine articles during shipment, had to be addressed (Chao; Chao and Lee).  The introduction of payment services like Alipay allowed users to make purchases without sharing their credit card details with individual vendors and Alipay only remits payments to vendors after clients have received and expressed satisfaction with their goods (Indvik).

Based on consumer consumption behavior, individual and group buyers’ decision-making process and elements that affect their choice become apparent (Holbrook and Hirschman).  By understanding what the consumers really need and want, it is much easier for the companies to create and provide the right products to the consumers.  Beside the right product, marketing strategies is also very important for attracting the possible consumers.

Utilitarian Shopping Values

The utilitarian shopping benefit refers to how successful that particular purpose or need is satisfied by the shopping experience of the consumer and focuses on the pragmatic perspectives regarding how the product or service meets or exceeds the consumer’s expectation (Guido).  The utilitarian consumer value is based on the assumption that the shopper is an absolute rational agent, so the only criterion of the shopper’s concern is to maximize the utility in every purchase since consumption behavior is usually directed towards buying a certain product or service to fulfill a specific need or purpose (Waller).

The rational utilitarian shopper will use the least sacrifice to get the largest utility in every purchase since their primary benefit is to satisfy the functional and economic need (Guido).  Shopping activities and the purchased products only have instrumental value to the consumer.  In the era of online shopping, the features of e-stores could easily achieve high convenience and efficiency because consumers can purchase the item by a few clicks with the computer mouse, the sense of utilitarian shopping benefits have been very different than conventional shopping (Freed).  In conventional shopping, under the consideration of utilitarian benefits, the location of the store and the efficiency of the whole purchase activities are the first priority of the consumer selection criteria.

However, in online shopping, consumer can access the e-store by any mobile network device, so the consideration will change to contemplate the ease of use of the shopping interface and payment platform (Kierzkowski, Mcquade and Waitman).  If the online consumer could not operate the shopping cart nor could not complete the payment procedure easily, they may look for an alternative website that is more convenient (Kierzkowski, Mcquade and Waitman).

This adds additional importance to a neat, user-friendly website/shopping cart interface and easy payment platform, which enhances the convenience for consumers and is a must-have feature for any successful e-retailer (Holbrook and Hirschman).  Since consumers usually could not get the purchased product/service immediately through online shopping, consumer will change to focus on how easily they could access the specific products’ page or how fast their purchased items are delivered (Liberatore and Miller).

Beside the convenience and efficiency, security of electronic commerce is the new element raised in the consideration of utilitarian benefits (Goel, Hofman and Lahaie).  Online shopping is regarded as full of uncertainty, anonymity, lack of control, and full of potential opportunism (Holbrook and Hirschman).  From time to time, there are so many dishonest practices in online shopping reported, including shops that do not ship products to the consumer, shops selling counterfeit merchandise, received product does not match the description, or even consumer’s credit card or personal information being stolen (Freed).

Such practices harm the trust of consumers towards online shopping and hinder the growth of e-retailing marketing.  Therefore, in online shopping, the reliability and security of the e-commerce platform becomes one of the most important elements, which affect consumers’ selection on choosing the right store.  To maintain online consumers’ trust, secure online payment platform such as PayPal and Alipay have been introduced to many online stores for preventing fraudulent transactions that damage consumer relationships (Chao).

By using these secure online payment platforms, the e-commerce customer only has to provide their personal details to the service provider of payment platforms prevent the leaking of information from purchasing procedure in different online stores (McGeer).  Moreover, some payment platform service providers even provide buyer and seller protection programs to enhance the mutual trust in the transaction.  Therefore, online stores that engaged with secure online payment platform are usually more popular and successful. 

Hedonic Shopping Values

The hedonic shopping benefit refers to the emotional or psychological pleasure gained by the purchase and shopping activities (Guido).  Consumers get the hedonic shopping benefits in the process and not necessarily related to the transaction or function of the product to satisfy wants and needs (Guido).  The hedonic pleasure usually comes from the excitement and enjoyment of the shopping experience intrinsically.  Consumers could even acquire hedonic shopping benefits by only browsing the products without making a purchase.  Some researches claimed that with the longer browsing time from the consumer, the possibility of spending and the amount will also increase (Guido).

The motivations of hedonic shoppers purchases are aroused by experiencing the actual product, shopping environment, and customer service during a consumption activity (Guido).  So, in conventional shopping, stores or shopping malls are usually well decorated to align with the projected image of the brand (Nicholas and Dobrowolski).  Products will also be well displayed in the windows or in the shop to arouse the shoppers buying motivations.  The unique store design attracts consumers to visit the store, which increases the chance of a purchase.  As stated, many other branded retailers are quite willing to spend money for decorating their stores.  However, for online shopping, since there is no actual product or store, the retailer could not provide any tangible experiential activities to the online consumer (Keller and Lehmann).

The inability to physically examine the product has also increased the consumers risk during online shopping which discouraged consumers’ buying motivation.  It is more difficult to provide hedonic shopping benefits to consumers during an online shopping experience.  In response, some scholars suggest to arouse online consumers’ motivation by providing visual-audio experience of the products in the online shopping environment (Kiang, Raghu and Shang).  Visual-audio elements such as views of the product, video demonstration of usage, and virtual try-on are introduced to provide sensory experience to online consumer so as to arouse hedonic motivation (Guido).  These visual-audio elements are regarded as the sensory enabling technology which could encounter the consumers’ want on direct product examination.

The interactive nature of the online store website will help to enhance consumer’s desire to browse, revisit, and demonstrate purchase behavior.  Since the influence of hedonic motivation is very powerful to shopping behavior in online shopping, the aesthetics performance of the website of e-store becomes very important.  These two shopping benefits are believed to be two core consumer values deprived from the shopping experience in an online environment.  With better understanding to both hedonic and utilitarian shopping values, it helps the company to develop marketing strategy for achieving consumer satisfaction.

Background of Alibaba Group

With humble beginnings as a message board initiated in eastern China, Alibaba.com and its subsidiaries now handle imports and exports between over 240 countries featuring nearly a billion products (Gupta).  Companies of the Alibaba Group also handle C2C, B2C, and business-to-business (B2B) transactions that promote smaller enterprises to buy limited quantities of goods at the manufacturer’s rate (Gupta). Alibaba also hosts a website that processes online payments as a third party online money transaction platform with 300 million users, making it the largest in China, processing $623 billion in digital payment in 2014 (Gupta).

Additional affiliate websites include Alibaba cloud computing Aliyun, China Yahoo, and the recently launched U.S. shopping site 11 Main (Gupta).  Alibaba Group went public in September 2014 as the world’s largest e-commerce company that rivals American e-commerce giant eBay by creating a rival Internet marketplace in the subsidiary Taobao (Young).  Alibaba Group also collaborated with Yahoo! China and Google, all while dealing with the Chinese government to overcome obstacles implemented by the Great Firewall (C. Barczyk, G. Falk and L. Feldman).  Within a few years, Alibaba surpassed Amazon and eBay’s sales combined, making it the largest IPO in history, the biggest Internet company in China, as well as the fifth most valuable company in the world (Stone and Larson; Taubman).

Internet/Mobile Penetration

Online shopping is getting popular all over the world and approximately 500 million Chinese e-commerce shoppers access Alibaba using mobile platforms (Peterson).   With the rapid dissemination of mobile technology, such as cell phones, iPods, tablets, and laptop computers, this penetration is expected to increase.  Recent innovations in mobile technology has produced smartphones, which have become a pervasive computing and communications technology that is flexible due to the high rate of compatibility amongst most technological applications (Chaudhri, Brunette and Goel).

Although traditional shopping from physical stores is still indispensable, many consumers are in favor of having physical contact with the actual product before purchasing, but lots of newer generation consumers are attracted by the convenience and efficiency of shopping online.  Additionally, many consumers enjoy the possibilities of retailing their product by establishing their own e-store or by distributing goods through other online merchants including Asos.com, Amazon.com, and Taobao.com (Chao).

It is the market trend to establish online retailing to satisfy the increasing size of online consumers. The new medium of retailing creates a totally different shopping experience to consumers which thus require a new definition and understanding on consumer’s shopping behaviors and their perception on shopping values.

Among all the products, apparel product is one of the most popular categories for online shoppers. Recent online shopping trends indicate that 36% of global consumers choose apparel product as their planned online purchases in the next six months which is the second top ranking of the list (Nielsen). Since apparel items are in relatively low priced and not easy to be damaged during transition, online shoppers feel more secure to purchase clothes and accessories rather than electric applications (Holbrook and Hirschman).

Additionally, the light weight of apparel items has lowered the postage fees which will not drastically affect the total expenditure of a single purchase (Goel, Hofman and Lahaie).  All of these reasons enhanced apparel products to become one of the most popular products for online shopping.  These elements contribute to the increased number of mobile online shoppers.

Increasing Spending Power of Chinese Consumers

Business-to-consumer retail is quickly gaining steam online, with experts estimating that B2C transactions will comprise up to 40% of the market by 2015 (Goel, Hofman and Lahaie).  About half of B2C transactions currently take place on Taobao Mall, or Tmall, which are Alibaba Group subsidiaries (Chao).  There, 50,000 merchants and 200,000 brands, including major western brands like Nike and Gap, that have already set up shop (Indvik).  Unlike Taobao, Tmall charges businesses fees for transactions with an estimated $16 billion in sales generated on Tmall in 2011, an amount which is expected to double (Indvik).  As of 2013, the average disposable income of Chinese urban residents surpassed ¥27,219 ($4,389 USD), with annual growth of 9.7% (Indvik).

Retail branding is becoming one of the most important strategic initiatives in modern retail industry (Young).  Brand is one important asset for a company because establishing a brand helps develop corporate identity and create a sense of loyalty from consumers (Young).

The process of branding helps to create a long term relationship with the consumer that provides an image the customer can gain familiarity with and give a general impression regarding all products or services under the same brand (Nicholas and Dobrowolski).  If consumers obtained satisfied shopping experiences from one particular brand’s products, they will tend to trust the consistency of the quality of the product, making them more willing to try other products under the same brand (Keller and Lehmann).

Rapid Expansion of Logistics Infrastructure

Complex production systems characterised by the setting of Global Value Chains (GVCs) and networks are dependent on efficient logistics. Logistics supports and shapes the coherence of GVCs and networks (Banomyong). The benefits arising from GVC could not be realised without co-developments in modern logistics services underpinned by innovations in containerisation, intermodal transport and the application of Information Technology (IT) in physical distribution and materials management (Banomyong, Sopadang and Ramingwong).

In many sectors of activity, particularly in supply chains of retail, the application of logistics remains one of the few inputs that can be mitigated to cut costs. Those opportunities come from the core of the modern logistics concept, which is time and space management of the flows between material inputs, design, manufacturing, distribution and consumption.  Functional integration is reached through supply-demand relationships involving material flows between suppliers of materials, and parts and components, manufacturers and distributors.

Efficiencies are reached through a flow principle in which demand is synchronised with supply through changes in distribution approach, where coordination between modes and different transport system is required.  Most established online stores use powerful search engines and guarantee short delivery periods using major global logistic companies such as DHL, FedEx, and UPS to provide fast delivery with insurance to cover any monetary loss caused by product damage during transit (Tyworth and Zeng).

Shipping prices and reliability have also been improved, particularly in urban coastal cities so that associated costs to Chinese corporations are about a sixth of what American retailers pay for international shipping (Indvik).  Taobao is China’s major online marketplace, accounting for about half of all packages shipped in China, but inadequate return policies are frustrating growth and many online shoppers complain about the difficulties returning goods to online stores (Indvik).  While the shipping infrastructure in China is improving, outside major cities, many Tier 3 and Tier 4 cities do not have the logistics or supply chains to make products easily available locally (Indvik).

B2C Quality Control Verified Sellers

Despite the explosive growth of electronic commerce and the growing popularity of accessing internet and World Wide Web, shopping online is becoming the best alternative for conventional shopping to consumer with more convenience and time saving. As predicted by several scholars, although there are still a large group of consumers resist shopping online, the number of online shopper is keep on increasing and became the new trend in the whole world. The trend of online shopping has created a new market to companies which could easily be accessed by consumer from all over the world.

Many companies need to identify the characteristic of e-retailing in order to set the optimal marketing strategies for the new battlefield (Assael). In result, many companies have changed their business nature from only B2B to competition of B2C mode, which gets into the more convenient but also more competitive business market.  With the increasing popularity of mobile online device and personal computer, the market size of electronic commerce will keep on increased.

However, online shopping is very different to the conventional shopping in many aspects. Instead of window shopping, browsing and touching the actual product, consumer could only grasp the general idea of the product by looking at the images or videos provided by the e-store. Old marketing model may not totally applicable to the new internet marketing environment which is essentially different to conventional business market. Therefore, further researches are required for understanding this newly established form of shopping.

In the past, shopping is purely an acquisition activity conducted when a consumer needs a certain product for a specific purpose, and they will purely acquire it in the most convenient and efficient way. Consumer was only looking for the specific product or service which serves a specific function without considering any other criteria or purposes. Shopping is usually an activity which only for instrumental purposes. Therefore, traditional researches on shopping motivation are mainly focus on a product-acquisition, task-oriented model.

However, in modern shopping experience, the consumption behavior of consumers is far more complicated. With technological advancement, the function and reliability of the same item can have very big difference. Moreover, consumer nowadays not only aimed at a mere functionality of the product or service during their selection. During shopping, a consumer not only fulfilled the product-acquisition purpose but sometimes also gain certain kind the pleasure from shopping activities itself. These values alter the consumer selection that consumer is seeking for during their shopping experience. Therefore, providing the right value to consumer is in crucial importance for a company to maintain a good sales performance.

Value is even regarded as the basis of all marketing activities. The perceived value which could be defined as “the consumer’s overall assessment of the utility of a product based on perception of what is received and what is given, help to satisfy the consumers’ needs and wants. The academic literatures generally agreed that the traditional product-acquisition model is not adequate to explain the value gained by consumer in modern shopping experience.

With various investigations by different researchers, it is generally believed that during shopping experience, consumer could get two kinds of shopping benefits from a purchase, the utilitarian shopping benefits and the hedonic shopping benefits. Both shopping benefits will motivate the shopping to purchase and at the same time affect the shoppers’ selection criteria. The proportion of the two benefits will varies from time to time in every single purchase.

Research Methodology

This study will employ a non-experimental correlational design to determine if a relationship exists between customer shopping value, satisfaction, and loyalty for online retail apparel brands and hedonic or utilitarian shopping patterns.  Quantitative research methodology uses deductive approaches following a linear path, which emphasizes explicit standardized procedures to measure variables and test hypotheses to form plausible relationships (Graziano and Raulin).  According to Newman ()qualitative research is not based on pre-specified methods and detailed hypotheses.

Examining the use of qualitative research designs such as case studies, historical research, interviews, and ethnography revealed these processes explore a central phenomenon and are characterized with an emerging design, which evolves with the researchers understanding of the situation (Carpenter, Geletkanycz and Sanders).  Both qualitative and quantitative methodology was more suited for the preliminary stages of the study because correlational research examines and quantifies the relationship between variables using a numerical index (Saunders, Lewis and Thornhill).

Survey Method

Reviewing existing instruments for data collection allows researchers to select a current version that meets good validity and reliability scores (Creswell). The questionnaire presented in Table 1 of the Appendix was used to assess the presence of the variables in question. The intent of this study is to explain whether or not relationships exist between Chinese consumer shopping habits and the growth of Alibaba based on elements such as brand loyalty, customer satisfaction, and hedonic or utilitarian shopping values.

Data for this study was collected from a convenience sample of 100 individuals that shop online where the first 100 surveys properly completed and returned.  A web-based 21 question survey was administered through e-mail with some questions using a 5-point Likert scale with descriptors ranging from; Strongly Agree, Agree, Neutral, Disagree, and Strongly Disagree in addition to other demographic and multiple choice questions. Cross-sectional surveys allow researchers to collect data about current attitudes, opinions, beliefs, and practices using a single application (Creswell).

Furthermore, researchers can modify an existing instrument to fit the research design by obtaining approval from the original author (Creswell).  Descriptive statistical analysis will be calculated from the demographic information to describe trends and or make comparisons among the respondents (Graziano and Raulin).  Microsoft Excel was used to organize the aggregate collected data and to generate graphical representations for easy analysis of the inferential data as well as describe possible relationships among the variables (Babbie).

The questionnaire instructions were explicit and additional information was collected through data analysis of correlating studies and the trends observed therein.   However, surveys are more appropriate since they allow the collection of various forms of data through an assortment of questions (Babbie).  The analytical depth of the survey is dependent upon the type and number of questions asked and whether they are open- or closed-ended questions (Creswell).  Since the research question requires the examination of numerous variables and the determination of their impact on each other, the survey allows a critical view to be taken of each variable independently and associatively to determine the variable interactivity (Flick).

The questionnaire assumed a general format and was constructed using easily interpreted coding for the closed-ended questions and matrix questions for the open-ended questions.  The qualitative use of surveys provided an in-depth understanding regarding the perspective of the participants.  Since e-commerce has a totally different mechanism than retailing through a brick-and-mortar store, it is essential for us to re-examine and re-evaluate the result from previous established research findings to determine the universality of the research result mentioned to ascertain whether the same or different outcomes would be obtained when examining the impact of Alibaba on Chinese consumer habits.

Qualitative Method

The study was a qualitative, multi-case study that employed data collected through exhaustive research on the subject of e-commerce before and after the launch of Alibaba Group platforms, consumer shopping trends, shopper loyalty, and customer satisfaction.  A random, blind survey was also conducted to accumulate data concerning the secondary and tertiary research objectives.  The sample group consisted of 100 randomly selected individuals and only demographic data concerning their age, income, and online shopping habits was collected.

The results of the survey, the questions and answers of which are displayed in Table 1 of the Appendix, was collected and analyzed to determine the relevance of the Alibaba Group on consumer shopping habits in China.   It should be noted that the small sample group will place significant limitations on the reliability of the results determined by this portion of the study.  However, the large information pool the balance of the data was collected from makes the determinations of the bulk of the study highly credible.

Numerous quantitative and qualitative studies were examined at length to provide comprehensive view of the relevant aspects of the subject within one comprehensive body of work as opposed to consulting the multitude of studies regarding the subject (Shadish, Cook and Campbell).  The research strategy for this dissertation initially assumed a qualitative approach to determine whether there are correlations between the indicated variables utilizing empirical as well as other methods to gather research data (Saunders, Lewis and Thornhill).

Furthermore, the integration of details accumulated through the extensive literature review of information in this area and, since the research will be primarily empirical, much data will be collected through self-administered questionnaires and examination of previous research. Data will consist of survey results from questionnaires completed in accordance with the instructions provided as well as relevant information associated with the research question acquired from an exhaustive literature review.

This is an appropriate method to answer the research question because the qualitative approach allows the determination of the underlying meanings behind the analysis results.  This method will also reveal the relational patterns that may exist between the trends apparent in the examination and impressions of the respondents.  Since the basic objective of the research is to determine the

Quantitative Method

Performing quantitative and qualitative analyses of the data gives the research additional reliability despite the small sample size through redundancy in the comparisons drawn from my own data and the information gathered from the available literature.  The surveys would be made available so that the respondents could take and return the surveys anonymously and the data collected is distinguished by numbers to maintain this anonymity.

Using empirical methods to conduct this research as well as literary study presents a more complete inquiry regarding the determination of the research question.  Stringent identification of the research variables allows the detection of patterns in the responses of the participants which present a concise picture of the relationships between the variables.  Although an ethnographic study (Babbie) would also be an appropriate method for conducting this analysis, it is more explicitly detailed than is necessary and the focus is rather limited in scope, which would necessitate the elimination of a variable.

The purpose of the analyses of the data will be to find correlations between the research variables.  Responses from the participant’s questionnaires will be coded to represent the primary variables to reach conclusive determinations that will provide coherent answers to the research question.  The specifications of the questions asked through the surveys will give direct indication of the actual perceptions of the participants and will allow for real time relational inferences to be measured.  The measurements ascertained through the case study will be compared to the determinations quantified in similar studies designed to make the same determinations.  Peer reviewed and scholastic studies will be reviewed to extrapolate empirical data that will support or refute the findings of this examination.

The responses of the surveys and interviews will be charted and graphed to easily reveal indicators and dimensions that will indicate correlations between the categorical values (Babbie).  This will also allow the responses to be organized to create conceptual order and establish variable ranges for the factorial examination (Babbie).  Since quantitative analysis deals primarily with statistical analysis, quantitative methods can be employed for the data analysis and these methods will be implemented in the codification of the data to be analyzed.  The key variables will be relative to indicators that denote reduction of turnover rates, the value of supportive training incentives, and perceived benefits of such training.

Data Collection, Reliability, & Validity

Data was collected by distributing a set of self-administered questionnaire to a randomized sample of Internet consumers that purchased goods using Alibaba Group websites. Statistical techniques were used to analyze the collected data.  The collected empirical data from consumers was analyzed to provide directional implication to marketing strategies of the company.  The research made use of both secondary and primary methods of data collection.

The main sources of secondary information for this research were books, journals, and online articles. It was imperative for the researcher to find out the views of other scholars given the limited primary data. These secondary sources were essential in generating strong theory and literature in the study (Flick). The main sources for journal articles in this research were scholastic databases such as ProQuest, Google Scholar, JStor, and other such databanks.

The research also made use of primary sources of data collection. The main objective of these primary sources was to maintain the validity and reliability of the research (Kumar). The term reliability is a measure of consistency that ensures that the test produces similar results repeatedly (Bailey). The researcher used close ended questions in order to enhance the reliability of the survey. On the other hand, validity in research refers to how the test measures the intended objectives accurately (Bailey).

The researcher enhanced the validity of this survey by pre-testing the questionnaires and correcting any inconsistencies within the questions.  Primary data minimizes the possibility of any ambiguous details confusing the research (Polosky and Waller). Primary data also aids in generating the empirical base of the survey (Borg and Mohler).  The respondents were given questionnaires that had both open- and close-ended questions.

Validity is the degree in which measures accurately capture the constructs of which they were design to quantify, and also refers to whether the experimental outcomes are primarily indicating what we perceive them to be representing (Newman; Steckler and McLeroy).  There are two kinds of validities that are significant to experimental designs, which are internal validity and external validity (Newman).  Internal validity is a component that evaluates the degree to which consequences can essentially be ascribed to independent variables while external validity is an indication of how generalizable the results are, meaning will the results apply to any circumstances outside of the experimental conditions (Newman).

Essentially, internal validity expresses to the audience whether the research was conducted in a manner that allows the results to be believable and external validity describes whether the experiment should and does matter because it has or does not have real world applicability (Morse, Barrett and Mayan).  Common threats to internal validity include miscalculations, mistakes, and researcher bias and threats to external validity include narrow study parameters, biased research questions or hypotheses, and other circumstances that nullify the potential for the research to be applied to the general population or any other real-world scenario (Morse, Barrett and Mayan).

Results

In order to examine the hypotheses with empirical evidence, a survey methodology was employed in that research.  Data was collected by distributing a self-administrated questionnaire to a sample of online consumers that conduct e-commerce transactions on the Alibaba Group of websites. Statistical techniques were used to analyze the collected data and are presented in this results section.

Demographic Details

The demography of the study participants, shown in Figure 3, consisted of 71% female and 29% male shoppers with a total of 76% ranging in age from 21-39, as shown in Figure 4.  The monthly earnings of the participants, shown in Figure 5, illustrate that 63% of shoppers reported annual earnings of ¥185,943-¥309,899 ($10,000-$29,999 USD).

The lack of balance in the sexual demography of the participants suggests that users of Alibaba’s e-commerce applications is dominated by female consumers, as opposed to being balanced thought the general population, which indicates the need for a new demographic profiling in consumer behavior.

Influence of Alibaba on Consumer Shopping Habit

Establishing a company websites is beneficial because it allows the company to increase its brand equity with the consumer, convincing the customer that this brand is capable of catering to their specific wants and needs through the creation of presence, relationships, and mutual value.  The remaining questions in the survey were pertaining to the utilitarian and hedonic factors that contribute to consumer shopping values, satisfaction, loyalty, which all drive e-commerce traffic to the Alibaba websites.

The pie chart in Figure 6 illustrates the frequency in which participants engaged in online shopping activities, with 58% indicating that their most recent purchases occurred up to a week ago.  Nineteen percent stated they had shopped online within the past month and the remaining 23% had shopped online within the past three months.

The next question, shown in Figure 7 regards the frequency of the participants’ online shopping specifically on Alibaba websites.  As shown, 47% of participants indicated that they had visited an Alibaba website 16-20 times over the past 3 months while 19% stated a frequency of 11-15 times and 14% said they had visited Alibaba websites 6-10 times within 3 months.

An additional 11% reported a frequency of over 20 visits within 3 months while the remaining 9% indicated five visits or less.

Question six of the survey was regarding the consumer shopping values and the results are illustrated in Figure 8, recording participant responses in regards to perceived benefits of online shopping.  Convenience was the factor that garnered the most responses with 71% indicating that they strongly agreed that this was a factor that motivated their online shopping, closely followed by the ability to compare prices (68%), the time saved (61%), and the constant availability of the online platform (51%).

The increased range of choices and lack of interruptions from sales personnel were tied in quantity of responses at 44% indicating they strongly agreed that this element was a factor in their motivation to shop online.  The high percentages of respondents that indicated either strong agreement or agreement with the indicated quantifiers of consumer shopping value demonstrate that the majority of the surveyed online shoppers correlate significant value in their online activities.

The next question, illustrated in Figure 9, measured hedonic shopping values through assessment of how strongly participants agreed with various statements.  The most participants strongly agreed with the statement that shoppers purchased products from Alibaba websites because they always had what consumers were looking for with a 67% response.

The wide variety of products garnered the next largest response group with 61% stating that they strongly agreed with this hedonic attribute while 57% indicated they easily found what they were looking for on Alibaba websites and 49% found enjoyment from shopping on Alibaba websites.

Once a tangible presence on the internet is established, the next objective is to attract customers to the website.  Relationships are developed and, as interaction increases, relationships become stronger and more sustainable as organizations become acquainted with customers and are able to customize or personalize marketing communications (Chaffey).   The illustration in Figure 10 represents question eight, which measures participants’ utilitarian shopping values.

These interactions also become more personalized as companies may choose to distinguish the quality of available services to ones exclusively accessible to customers that are the most profitable, facilitating a mutual understanding through transactions, customer service interaction, feedback forms on web sites, user registration, and web analytic and cookie data collection (Chaffey).  The respondent’s perceptions of the presence of such utilitarian shopping values are represented by Figure 10, which presents the participants interpretation of such attributes on the target website.

The convenience of Alibaba’s online store garnered the most responses with 77% indicating that they strongly agree while 73% were in strong agreement that shopping in the online store was fast and reliable.  The next largest group, 71%, was in strong agreement that the Alibaba online store was easy to navigate to find desired items and 68% strongly agreed that shopping in the online store was pragmatic and economical.

Considered to be a prominent method of internet communication in the fashion industry, the online catalogue refers to an internet based presentation of a group of products or services that are available for purchase. The online catalogue comprises a description of the product, ordering information, and pricing details, among other descriptive specifications about the online store’s available products and services. Other terminologies used to refer to online catalogues include web catalogues, electronic catalogues, and cyber catalogues.

Online catalogues are cheaper in comparison to print catalogues because they do not require printing fees, postage, or the paper costs, among others.  Another advantage that online catalogues have over traditional print catalogues is that the online catalogue gets to the consumer faster and provides graphic interactions more likely to engage the consumer.  As a result of this, print catalog customers tend to differ in terms of their purchase behavior, and demographics in comparison with online catalog shoppers.

The next illustration in Figure 11 measures the customer satisfaction with the online shopping experience on the Alibaba Group websites.  An additional component associated with customer satisfaction is based on the presence of mutual value.  This can occur as companies and customers interact to create value in ways beneficial to both.

Companies derive benefit and value from the opportunities to create more tailored and relevant communication messages about products and services which are of interest to the customers (Li, Kuo and Russell).  The largest group, 78%, indicates that they had a good feeling after completing their online transactions and 73% felt the choice to shop online through an Alibaba website was a wise decision.

In terms of marketing and communication, personalization is also particularly important in regards to the communications the company sends to its customers (Kiang, Raghu and Shang).  Through the combination of mass media with two-way-dialogue, online communication allows the marketer to woo the customer and eliminate the likelihood that the customer will search elsewhere for their needs (Chaffey).

This personalized relationship has been found to be the cornerstone of customer attraction and retention by allowing consumers the opportunity to learn about the brand and develop the sense of familiarity that has also been found to cement customer loyalty (Chaffey, Chadwick and Mayer).  The personalization develops a preference for the brand with the customer and this leads to positive reception of communications with the company, enhancing the brand attributes through repeated exposure and customer loyalty (Chaffey).

Customer loyalty is examined in question 10, shown in Figure 12, where 81% of participants strongly agree that they would continue to purchase items from Alibaba Group websites and 63% strongly agree that they would visit Alibaba websites more frequently.

The remaining two attributes of loyalty indicated that 59% strongly agree that they seldom consider switching to another online store and 58% strongly agree that Alibaba is the best e-commerce platform.

Questions 11-14, shown in Figure 13, Figure 14, Figure 15, and Figure 16, all assess the use of WOM communication as a facilitator of e-commerce traffic on Alibaba Group websites.  A simplified version of the Internet branding framework can be communicated as a simplified seven step process (Li, Kuo and Russell).  Technological advancements have revolutionized the way the way the world does business and, in order to stay competitive, organizations must make sure that a reliable method is implemented to facilitate transactions, maintain records, provide real time information and simplify planning and control (Brown, Broderick and Lee).

WOM communication can also be inspired through consistent positive interactions with the online store, which influences how people make sense of urban life.  The first of these questions, shown in Figure 13 examined how online shoppers shared their experience with 87% stating that they used a networking site, 86% indicating they mentioned the experience to friends and family, 75% posting Tweets, and 73% writing about it on Facebook.

Additional methods of communicating about their online shopping experience included blogging (39%), posting customer reviews (27%), and none of the above, which was selected by 14% of the respondents.

The next question, shown in Figure 14 queried about how many satisfactory online shopping experiences were required before the participant would recommend the website with 77% indicating that such a recommendation would only require one positive experience.

An additional 18% indicated it would take 2-5 positive experiences and the remaining 5% required more than six positive experiences.

The next question, shown in Figure 15 was regarding participant willingness to recommend the Alibaba website with 83% indicating they strongly agreed that they were very willing to recommend the online store to friends and family while 31% stated they strongly agreed that they would only recommend the website if they consistently received good service.

An additional 76% strongly agreed that the service received would have to be reliable in order for them to recommend others use Alibaba online stores.

Web developers and content writers should ensure that the site has a strong presence on the web within the pages of search engine results. Creation of content is extremely essential when dealing with internet marketing communication within the fashion industry (Brown, Broderick and Lee).  It is necessary to determine the online behavior of the target market before selecting the best channel for internet marketing.

The content should be given time to enhance its online presence by constantly updating information on current product trends to encourage WOM communication amongst users. This can be in the form of organizational blogs and guest blog postings on the brand (Brown, Broderick and Lee).  Online marketing communication should allow users to share their experiences on the new brands in the market.  The internet leads to the realization of postmodern intelligence in market authorities that are independent (Odih). This can be through posts and discussions on blog posts which enhances customer loyalty (Odih).

The last question concerning WOM communication, shown in Figure 16, was regarding how participants research their online purchases before buying.  The most popular method, indicated by 91%, was to read product reviews or blogs online with the next most popular method, selected by 88%, was to search brand or manufacturer websites and 86% stated they would read their friends’ fan pages or reviews.

Of the remaining two options, 74% indicated they would get an online referral from a friend while 55% checked to see what others had purchased.

Question 15, shown in Figure 17, is regarding the online shopping habits of the participants prior to the launch of the Alibaba website.  The majority of participants, 57% stated they never purchased products online while an additional 11% indicated that they did not have Internet access before 1999 and only 9% said that they made online purchases several times per month.  Only 7% stated they made purchases several times per week while 4% indicated they only made purchases about once per week.

The next question, shown in Figure 18, reviewed consumer shopping habits after the launch of Alibaba.  Following the creation of the Alibaba platform, none of the participants indicated that they did not shop online, while 28% made purchases a few times per week, 21% stated they purchased items once or twice per week, 20% sad several times per month, 17% stated they purchased items not available locally, and 14% indicated they made purchases frequently.

Question 17, shown in Figure 19, asked about what other e-commerce platforms the participants were aware of and all participants had knowledge of Alibaba.  The next most popular platform was Baidu, with 91% indicating awareness of this website, followed by Sina at 88%; Sohu at 74%; Tencent at 88%, and other sites garnered 55% of participant responses.

The shopper’s online experience is the focus of the next question, shown in Figure 20, which asks which of the aforementioned websites the participants have used.  again, all participants indicate that they have used the Alibaba websites while 71% state they have used Baidu; 66% indicate experience with Sina; 49% state they have used Sohu; 81% have used Tencent, and 38% state they have tried some other website not mentioned.

In regards to the participants’ preference of websites to use, shown in Figure 21, 86% indicate they prefer Alibaba while 8% state Alibaba is not necessarily their preference and 6% state they have no preference.

The next question, shown in Figure 22, asks participants to indicate their reasons why they prefer the Alibaba Group websites over other platforms.  The most popular answer is that the site makes it easy to locate items participants are looking to purchase, garnering 86% of responses with the wider selection having 87% of responses; the appeal of the website design having 81% of responses; and the safety of the website shopping experience in terms of maintaining the integrity of the shoppers’ personal information having 79% of responses.

The inexpensive prices gained 73% of the responses while 55% stated that they had a bad experience shopping on other websites.

The final question, shown in Figure 23, is regarding changes in consumer shopping habits following the first purchase made on an Alibaba Group website.  Most respondents experienced a change with 69% stating that they check Alibaba first when they need to make a purchase; 40% state that they only shop online through Alibaba and recommend the site to others; 51% makes the majority of purchases online through Alibaba although they still shop at brick-and-mortar stores; 47% gradually decreased making purchases elsewhere so that they exclusively shop on Alibaba; and 43% state they stopped shopping at brick-and-mortar stores immediately after their first experience shopping online through Alibaba.

Based on the responses from the survey, it is apparent that the introduction of the Alibaba online platform has had a strong impact on consumer shopping patterns.

Discussion

The explosion of the Internet into the framework of big business has created numerous challenges for marketing.  Product branding and marketing had previously been done via print ads, television commercials, and visual displays in retail venues and on billboards, but the insurgence of the Internet has created a virtual marketplace where product branding creates a complex challenge due to the absence of sensory interaction between the customer and the product that usually occurs naturally within traditional retail venues (Chaffey).

Companies that engage in Internet commerce need to establish strong Internet brands, or i-Brands, that conveys the corporate identity and instills a sense of familiarity and trust within the consumer that clearly distinguishes the product from that of all competitors and imitators, establishing the product at a premium above all others (Li, Kuo and Russell).  However, the Internet has proven to be a very complex marketing tool to master in which timing is vital to the success of the campaign more so than in traditional venues, leaving many companies with the difficult task of establishing a strong brand image over the Internet.  The communicative power of the internet has essentially replaced much of the traditional tools particularly in the world of traditional advertising in print and broadcast media.

To run a retailing business, consumer satisfaction is one of the most essential achievements for a company’s success (Assael).  It is one important marketing concept which influenced the relative attitude, repurchase and recommendation of the consumer.  It also shows how successful for a company’s product or service and provided shopping environment could meet or excess the consumers’ needs and expectations.

Some scholar even regarded consumer satisfaction as one company’s important asset which should be monitored as other physical assets (Freed).  If a company could achieve good customer satisfaction, it implied that consumers, to a great extent, willing to come back and purchase in the same company which enhanced the possibility of a stable, continuous sales performance for the company (Freed).  It is also generally accepted by scholars that consumer satisfaction is the first step for building up customer loyalty and WOM communication for a company.

According to the research, customer satisfaction consists of three general concepts: a) response b) focus and c) time (Alba, Lynch and Weitz).  The customer satisfaction is generally an emotional or cognitive response from the consumer. These responses pertain to a focus such as purchase experience, expectation, products, so the responses only appear in a particular time in relations with the consumption activities.

The focus of the response is mainly on the product or consumption, although some consumers also focused store, salesperson and purchase decision.  For time, most scholars tend to believe that the satisfaction is a post purchase response (Assael).  Although the research comes up some consensus, what exactly is customer satisfaction is still strongly rely on the context of the shopping activities. Therefore, different market with different product or service will have specific perspective on customer satisfaction.

In conventional retailing, every company aim for gaining profit. By retaining the existing consumer and, at the same time, promoting their product or service to the new consumer is the ultimate goal for increasing profit. Since retaining existing consumer usually require less resource and is easier to achieve, many marketing managers would like to attract the existing consumer to re-purchase. Many scholars believe that customer satisfaction is one important reference to show the possibility of repurchase behavior of the consumer which will directly affect the continuity of profit making of the company. In actual practice, to achieve customer satisfaction the company needed to fulfil the expectations of the consumer on the product or service they consumed. These expectations include both utilitarian and hedonic shopping values that expected by the consumer during shopping.

In order to gain customer satisfaction, retailer need to ensure the consumer to obtain the product with high efficiency and convenience (utilitarian motivation) and also emotional arouse like pleasure, feel good (hedonic motivation) in their shopping activities (Guido). So, quality of the product and service has to be ensured, at the same time, the store location, shopping environment and salesperson should also be considered for achieving customer satisfaction. However the shopping environment of online shopping is totally different to conventional shopping, marketing management has to consider in another perspective.

In online shopping, consumer has the power to access information from all around the world.  Consumer has the power to choose what to purchase and where to purchase from global e-stores.  These have provided consumer a great control over purchase and consumption experience ever.  The increased consumer control has also highly increased the consumer expectations on ease and convenience in entire purchase, consumption and post-purchase sales support process.  These make customer satisfaction more difficult to achieve in online shopping.

However, if actual experience of consumer disconfirm with the expectation, it indicates customer is not satisfaction in that shopping activities. Since consumer’s response is more subject and affective perspective, customer satisfaction is typically measure with consumer survey.  In order to obtain directional information in customer satisfaction, different models of measuring customer satisfaction have been proposed. As stated above, customer satisfaction is the response of shopping behavior of consumer in a particular focus and particular time, the empirical data of actual consumer response has to be collected for further analysis.  After experience the purchase activities, consumer would compare the actual experience with their pre-purchase expectation. If the actual experience of consumer confirm with the expectation, customer satisfaction was obtained which can positively lead to future repurchase.

Customer Loyalty

Most of the Marketing strategies are aiming at securing and improving customer loyalty. With the customer loyalty, customer will tend to choose the same company in their next purchase which maintains a higher possibility of getting a future profit. Therefore, all of the companies want to maintain good customer loyalty.  The success of a brand in the long term is not based on the number of consumers that buy it once, but on the number of consumers who become regular buyer of the brand. Since maintaining regular buyer require less resources than attracting new consumer, customer loyalty become one of the most important task for market strategy. It is also widely accepted that customer loyalty is the goal for achieving customer satisfaction.

For consumer building up loyalty to a brand, the brand requires to be able to provide product or service which could satisfy consumer’s satisfaction. Shopping motivation must be provided through the product or service and the shopping experience to the consumer. Usually loyalty will not be build up upon singe experience of satisfied purchasing activity. Several positive experiences are needed to provide confidence to the consumer for customer loyalty. In conventional retailing, it is essential for a company to sell good products or services, with both utilitarian and hedonic motivations to consumers, so as to maintain customer loyalty.

Customer loyalty refers to a commitment from consumer to constantly purchase product or services from the same brand or shop. Two approaches, the attitudinal loyalty and resulting behavior, have been widely operationalized in researches of customer loyalty.  The first approach suggests that loyalty is the attitudinal commitment that consumer holds towards a particular brand or company.  The attitudinal perspective refers to the psychological or emotional believe from the customer that they believe or confident on the quality of product or service of a company from their experience the product and previous purchase. That is to say loyalty is the commitment of consumer’s psychological state to trust, willing to repurchase in the same brand or company.

Therefore, customer loyalty should be measured by seeking consumer’s feeling on how much they like the brand, will they recommend it to others and how positive the belief and feel on the particular brand in relations with other competitors.  This approach provide information for the market manager to understand the development, formation of loyalty and how it changes which helps to provide a clear direction for setting of marketing strategy.  Marketing Manager could also manipulate different factors in order to achieve customer loyalty.  The loyalty builds upon the previous satisfactory experiences which lead to commitment.

However, it is important for researches to distinguish the loyalty with pure repurchase behavior.  Sometimes, consumers just don’t want to waste the time to seek for alternatives instead of having commitments towards particular brand or company.  If product or service from that particular brand is running out of stock, other brands will be purchased by the consumer. The involvement of psychological commitments of the consumer is the main standard to distinguish loyalty and pure repurchase behavior.  customer loyalty should have different degrees such as hardcore loyalty group, reinforcing loyalty group.  Different group of consumer will have different degree of loyalty towards the particular brand or company.

The other approach argues that customer loyalty should be viewed as a resulting behavior of the consumer. The purchase amount and frequency of the consumer show whether they build up and loyalty to a particular brand or company. For the behavioral perspective, it refers to the actual behavior of the consumer that they repeated purchase from the same company after they had positive experience from the product or service of previous purchase. Since the customer loyalty is not mainly affected by the attitude of the consumer, there are not many things a marketing management can do to maintain better customer loyalty.

Since there is no consensus on what customer loyalty really is, more and more scholars tend to apply both approaches in their researches to analysis the collected empirical data. Such practice consider both attitudinal and behavior perspectives of customer loyalty so that the cognitive, affective and conative antecedents will also be considered.  It helps to provide a more widely accepted result to the research.

Word of Mouth Communication

Many researches show that the satisfied consumer will usually recommend the products or service to others with WOM communication.  Word of mouth communication was first defined as ‘oral person-to-person communication between a receiver and communicator whom the receiver perceives as non-commercial, regarding a brand product and service’ (Brown, Broderick and Lee).  However, with the technology advancement in communication technology, all means of communication include phone SMS, email, message in forum, should all be included in the WOM communication. The WOM communication is usually initiated by customer with positive or negative purchasing experience.

After having a certain purchase experience, consumer will spread their positive or negative attitude toward certain brand and share it to their peer.  Positive WOM communication provides a positive advertising effect which helps to improve a company’s sales performance. Many scholars believe that WOM communication is far more effective than direct advertisement which helps to provide the receiver influence on awareness, expectation, perception, attitude, behavioral intention and behavior.

Since receiver tends to believe that no commercial purpose was involved in WOM communication, the shared information is usually authentic with pure sharing of experience on particular product or service. It is also believed that recommendation from WOM is critical to consumer during the decision making process during purchase of product or service.  At the same time, a negative word of mouth will do serious harm to a certain brand or company.  WOM communication becomes one of the most concerned concepts by market managers when it has positive valence since it will surely spread the positive attitude towards the receiver, which helps to advertise the recommended product or service. But WOM with negative valence will also help a market manager to identify the key problem of their business.

The concept of e-commerce is changing the way consumer distributors handle consumer purchasing activities (Li, Kuo and Russell). Consumers have more clarity with regard to the concept of online advertising and all its benefits. They assert that online marketing reduces the time or carrying out purchases and increases the interest customers have in the acquisition of more information regarding a particular product or service. This argument is also put forward in a study that focuses on online marketing and its benefits (Kiang, Raghu and Shang).  The word of mouth based on online sources also creates a way of increasing sales within organizations.

Online marketing therefore, encourages the utilization of any product or service and also builds people’s interest by directing them to buy a particular product vial the word of mouth (Brown, Broderick and Lee; Godes and Mayzlin).  Concise and accurate communication is a very important aspect in any professional forum.  The internet has become a marketing tool that has pushed the marketing challenge to new levels.

How Alibaba Changed E-Commerce in China

The introduction of Alibaba as an e-commerce platform transformed how Chinese consumers shop.  Many individuals that had not conducted transactions online are now avid Internet shoppers and there are numerous participants that exclusively use the Alibaba Group platforms as their means of purchasing goods.  The positive experiences Alibaba provided has encouraged many repeat customers to recommend Alibaba to others, which has undoubtedly played a major role in the exponential growth of the company over the few years that it has been a contender in the e-commerce markets.

Many consumers that ad bad experiences elsewhere have adopted use of Alibaba as a trusted source for purchasing goods online, which is a substantial accomplishment.  The ability of Alibaba to provide a safe interface for completing transactions through Alipay has undoubtedly contributed to the success of the Alibaba Group companies despite the intrusive restrictions of the Great Firewall of China.  Through diligent anticipation of consumer needs, Alibaba Group has managed to create multiple online applications that service a variety of consumer needs, including C2C, B2C, and B2B transactions such that the company has become a mega conglomerate in the e-commerce industry.

Whereas many consumers were limited to purchasing what they could find at the local brick-and-mortar stores, the introduction of Alibaba as a retail source has made the purchase of diverse goods an option, turning many prudent shoppers into consumers of luxury and other expendable goods.  The Alibaba Group has created a new market of consumers with disposable incomes looking to shop the way Americans do and this had produces a multi-billion dollar industry that Alibaba has cornered the market on as the largest online retailer in China.

Elements such as WOM communication resulting from pleasant shopping experiences that appealed to utilitarian and hedonic shopping values have undoubtedly contributed to the overall success of the Alibaba Group.  These enjoyable purchasing experiences have also developed consumer trust and loyalty, which ensures that Alibaba websites will experience return shoppers that have helped to build the 618 million strong network of online users.  Understanding the drivers of consumer behavior also ensures that the online platform was constructed in a manner that is easy for visitors to navigate, stocked with a diverse array of goods unavailable elsewhere, and permits the secure completion of online transactions.

Since product features and quality can easily be replicated in numerous products online, relationships created through consumer satisfaction from quality customer service is more valuable than a brand and is an important commodity in creating a successful online brand (Chaffey, Chadwick and Mayer).  Superior customer service gives the product an added value greater than that of the competition, achieving one of the main goals of brand establishment.

The traditional strategy of a simple, consistent branding is not translatable to the internet and brand images too sharply focused do not translate well globally or cross-culturally (Chaffey, Chadwick and Mayer).  Brand repositioning entails changing the public image of the product (Kiang, Raghu and Shang) and is frequently required when introducing an established product into the global market of the Internet.

Mastering use of the internet as a branding tool requires inclusion of the four main aspects of successful i-Branding, which are: understanding the target customer, communicating with the customer, interacting with the customer, and customizing messages to reflect the company’s ability to meet their individual needs (Chaffey).  Many of these concepts are reflected in the attributes correlated with the perception of hedonic shopping value and the customer’s perceptions of the presence of these indicators, which illustrates their impressions of hedonic shopping values.

Online advertising is the term commonly used to refer to all forms of key word advertisement used in-game, through e-mails, banners, and platforms such as Twitter, MySpace, and Facebook, which globalization has made increasingly relevant to attracting customers and building relationships (Carpenter and Fairhurst).  Internet marketing describes a form of promotion that utilizes the World Wide Web to deliver marketing information in order to attract an extensive network of customers.

Examples of internet advertising include contextual ads displayed on the result pages when individuals browse by using search engines, online classified advertising, social network advertising, e-mail marketing, advertising networks, and interstitial ads (Mattsson).  An interstitial ad can take many forms online, such as a full-page a prestitial ad that appears before the actual webpage that is more like a TV commercial that is inserted in the normal flow of editorial content structure on a website, providing several kinds of animation for the viewer to watch or interact with (Mattsson).

Although there has been a general trend towards e-commerce, this does not imply that traditional marketing methods are now irrelevant.  The seven Ps of marketing which include promotion, place, product and price are as relevant to internet marketing as they are to offline marketing to promote consumer satisfaction and loyalty (Chaffey, Chadwick and Mayer).  However, e-commerce addresses several issues that have to be considered and may call for a reexamination into the marketing mix decisions.  E-commerce technological strategies provide novel service/product and new options of placing as well as new strategies of pricing, although other research asserts that the primary effects of online marketing has been on the aspect of promotion.

Conclusion

Summarily, the information from consumer value and consumer satisfaction will direct the retail company on product development and business strategy. The buildup of loyalty is basically come from the satisfaction of product or service from that specific company. If the company’s product could not make the consumer feel satisfactory, the consumer will not purchase the same product again from the same company.

At the same time, the consumer will tend to not purchase other product from that company since they may have lost the confidence from the product under the same brand of that company. Therefore, to maintain a high standard of product to satisfy the consumer needs is in crucial importance for a branded apparel retail company. By gaining the customer satisfaction, the company must understand the need of the customer and their reason of purchase.

The product of the company has to at least meet or, in better sense, excess the expectation of the customer. Therefore, product will usually be developed as market oriented or consumer’s need oriented. The more satisfaction gained from the product, the higher incentive of the consumer to purchase from the same company thus higher consumer loyalty. For Online shopping, customer loyalty is even more important than conventional shopping in the business-to-consumer electronic environment. Since Consumer now can easily access global e-stores, consumer will have so many choices and information for comparison and shopping.

If an e-store could not maintain customer loyalty, consumer could easily change to shop in other e-stores without much effort. To achieving customer loyalty in online retailing, company not only needs to ensure the quality of their product or service, but also provide an ease to use website to provide a pleasure experience to online shopper. Online shoppers are usually request for higher efficiency and convenience with less patience.

The value of online shopping for many consumers is to provide faster, easier and less expensive way to do purchasing activities. Some researchers also believe that the more often for consumer to browse the website, the higher possibilities for them to purchase and willing to spend more in that particular website. Therefore, the design of the website has to fulfill both utilitarian and hedonic motivation of consumer which provides efficiency and convenience shopping experience with sensory enabling technology to attract consumer to revisit the website.

The interactive nature of online store website will help to enhance consumer’s desire to browse, revisit, and demonstrate purchase behavior.  Since the influence of hedonic motivation is very powerful to shopping behavior in online shopping, the aesthetics performance of website of e-store becomes very important.  These two shopping benefits are believed to be two core consumer values deprived from the shopping experience.  With better understanding to both hedonic and utilitarian shopping values, it helps the company to develop marketing strategy for achieving consumer satisfaction.

In the vigorous competition of international retail market, every company wants to surpass their competitors and become the leader in that industry.  Companies have to develop their own marketing strategies to maximize the profit and enhance the substantial sales of their products.  Marketing management helps the company to identify the demand of market and provide the direction for developing or modifying their products which fit the consumers’ needs.

With the right marketing strategies, the company not only could maintain a sustainable sales performance but even further grow their business and gain favorable market position. Among all the marketing strategies, product differentiation is one of the most common strategies which adapted by companies all over the world.  Product differentiation could be defined as distinguishing a company’s product from its competitors in the perception of the consumers.

It is a crucial mean to attract customers from thousands of their competitors. The company usually promotes a value added incentive to their products or services which, in consumer perception, added some superior attributes in their products or services. These added value helps to out beaten the competitors and provide a clearer image to the targeted consumer group. And in order to achieve a product differentiation to retain the long term profit from product retailing, branding is an essential step.

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