Research Topic : Customer loyalty and online shopping ( the case

of Vietnam)

Introduction
The appearance of the Internet has changed the way for the rapid development of e-
commerce industry. Online shopping has become popular with more than 60% of consumers
shopping online in Vietnam as the significant development digital platforms and devices have
been accessible and become an integral part of daily life (Doan, 2019). Due to more suppliers
in all over the world on the Internet, the choice of products and services has increased
significantly and create more intensive competition among electric vendors, especially in
many emerging markets where there are several international giants. Therefore, marketers
must find the ways in order to keep customer intention by increasing customer loyalty mainly
through improve customer satisfaction and trust in online shopping. Based on Baumann et al
(2005), customer loyalty is considered as a topical problem on how to retain existing
customers and develop the new customers as well. The purpose of this literature review is to
investigate the relationship between customer loyalty and its determinants namely customer
satisfaction, trust and switching costs in the case of Vietnam online shopping sector based on
these three hypotheses:

H1: There is a positive relationship between customer satisfaction and customer loyalty

H2: There is a positive relationship between switching costs and customer loyalty;

H3: There is a positive relationship between trust and customer loyalty.

Literature review

1. Customer loyalty concept

According to Gefen (2002), the importance of customer loyalty results from its positive
outcomes regarding customer retention, repurchase and long-term customer relationship and
profitability. There are two dimensions of loyalty, which are behavioral and attitudinal. While
behavior explains repurchasing behavior such as share of wallet and word of mouth, attitude
includes commitment, trust and emotional attachment of consumers to a brand (Hallowell,
1996). Additionally, customer loyalty is defined as the consumers who purchase a brand
repeatedly and consider only that brand without seeking information to other brands (Gefen, ,
2002). Meanwhile, customer loyalty is the most important constructs in word-of-mouth
marketing with its competitive advantage over other types of marketing regardless with
credibility (Dick and Basu, 1994). In general, loyalty which expresses a favorable attitude
toward a brand so the consumers keep repurchasing. Dick and Basu (1994) also explained the
situation in which repurchasing behavior is accompanied by a psychological bond and
repurchase intention and behavior. By this way, loyalty is the sequence of purchase to a given
brand and involves in the consumer’s conscious decision-purchasing process in the
evaluation of alternative brands before a purchase is impacted (Gefen, 2002).

2. Customer satisfaction is closely linked with customer loyalty

Customer satisfaction is widely known as a complicated cognitive process, showing the
attitude of consumers to a brand while it also has a significant importance to company’s
present and future performance (Mai and Tuan, 2012). This is a reason why increasing the
high level of customer satisfaction is one of the top priorities of many companies. There are
many studies empirically indicating the positive link between customer satisfaction and
loyalty. For instance, satisfied customers will become loyal and repurchase at a higher price.
Most customers tend to rely on their experience of satisfaction of previous purchase in order
to make purchasing decision (Doan, 2019). Under this way, customer satisfaction is defined
as a major determinant of future behavior toward company. Hallowell (1996) stated
satisfaction is an important step in loyalty formation before attempting to understand
customer loyalty and has direct impact on loyalty in online shopping sector. At the same
time, Jones and Sasser (1995) added that consumers desire their expectation is most likely to
be satisfied. Hence, there is a positive relationship between customer satisfaction and
customer loyalty (H1).

3. Customer trust is closely linked with customer loyalty

Phong, (2017) explained trust is referred to reliability and integrity of a product or service.
There are two dimensions of trust, regarding the objective credibility of an exchange partner,
for example, an expectancy which word of partner could be based on, whereas benevolence is
a second dimension, where one partner is enjoyed in welfare of other partner and seek joint
gain (Phong, 2017). In other word, trust could result in the product or service provider’s
behavior like fulfilling expectation and quality maintaining to consumers. As Doan (2019)
concluded that trust also links to loyalty and reduces propensity of consumer to leave. For
example, the level of trust is a crucial element impacting consumer behavior and creates more
service usage in online shopping since it provides more commitment and increase higher
customer loyalty, particularly in the case of e-commerce. Moreover, Phong (2017) argued
that to gain loyalty of consumers, companies must gain their trust in advance because trust
has a positive impact on future interaction and relationship continuity. For the online
shopping context, when the customers can get the products as their expectation, the level of
trust in the vendor will enhance (Phong, 2017). Based on the analysis, customer trust is found
to be correlated and positive with customer loyalty (H2).

4. Switching costs is closely linked with customer loyalty

Blut et al (2014) defined that switching is understood as the technical or psychological

element which prevent customer to change brand. In other words, switching cost deters
customers from switching to a competitor’s brand. By this way, e-commerce companies tend
to enhance the perceived complexity of products offering and encouraging customers to
purchase more. At the same time, Caruana (2003) also proposed switching cost is a key
element to achieve competitive advantage in the increasingly networked competitive
industry. As the term was researched by many academic disciplines, primarily in marketing
and economic sector. Compared to trust, which emphasizes on positive emotional attachment
and customer’s willingness to visit repeatedly, switching cost will focus on the loss of brand-
based relational bonds as a consequence of not visiting repeatedly. Stan, Caemmerer and
Cattan-Jallet (2013) also pointed out the higher switching costs, the more loyal customers,
which explains customer satisfaction is closely linked to switching costs. When the switching
cost is high, the customers will remain loyal to the brand due to high risk or expensive cost
involvement in switching, and hence decrease the brand seeking of other alternatives.
Caruana (2003) suggested that switching cost is seen as an attitudinal builder of customer
loyalty so there is a positive relationship between switching cost and customer loyalty (H3).

These three hypotheses were presented in the figure 1

Figure 1. The research models

Customer
satisfaction

Customer
trust

Switching
cost

Conclusion

The outcomes support three hypotheses above showed there is a positively linked between
customer loyalty and trust, satisfaction and switching cost. The literature review also
illustrates the importance of these determinants in repurchase intention of online shopping
sector to customer loyalty. Theoretical and studies above concluded that online consumers
will be perceived generally as honest and credible by e-commerce vendor in order to build
long-term relationship. These major determinants of future business opportunity have direct
impacts on marketers so they should consider increase satisfaction, trust and switching cost in
the customer base in support of customer loyalty strategy.

Reference
Baumann, C., Burton, S., & Elliott, G. (2005). Determinants of customer loyalty and share of
wallet in retail banking. Journal of financial services marketing, 9(3), 231-248.

Mai, N. T. T., & Tuan, N. P. (2012). Trust and customer satisfaction in online shopping: A
study in Vietnam.

Gefen, D. (2002). Customer loyalty in e-commerce. Journal of the association for information

systems, 3(1), 2.

Dick, A. S., & Basu, K. (1994). Customer loyalty: toward an integrated conceptual
framework. Journal of the academy of marketing science, 22(2), 99-113.

Hallowell, R. (1996). The relationships of customer satisfaction, customer loyalty, and

profitability: an empirical study. International journal of service industry management.

Doan, C. (2019). E-WOM, BRAND TRUST, BRAND LOYALTY: A STUDY ON SHOPEE

IN THE E-COMMERCE BUSINESS SECTOR IN VIETNAM.

Jones, T. O., & Sasser, W. E. (1995). Why satisfied customers defect. Harvard business
review, 73(6), 88.

Phong, L. T. (2017). An investigation into customer loyalty in Vietnam retail banking

industry. Business & Entrepreneurship Journal, 6(1).

Blut, M., Beatty, S. E., Evanschitzky, H., & Brock, C. (2014). The impact of service
characteristics on the switching costs–customer loyalty link. Journal of Retailing, 90(2), 275-
290.

Caruana, A. (2003). The impact of switching costs on customer loyalty: A study among
corporate customers of mobile telephony. Journal of Targeting, Measurement and Analysis
for marketing, 12(3), 256-268.

Stan, V., Caemmerer, B., & Cattan-Jallet, R. (2013). Customer loyalty development: The role
of switching costs. Journal of Applied Business Research (JABR), 29(5), 1541-1554.