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Determinant Factors Affecting Customer Satisfaction among Filipinos in Lazada

Online Shopping during COVID-19 Pandemic: A Structural Equation Modeling
Approach

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DOI: 10.1109/ICFIE50845.2020.9266734

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 2020 7th International Conference on Frontiers of Industrial Engineering
Determinant Factors Affecting Customer Satisfaction among Filipinos in Lazada
Online Shopping during COVID-19 Pandemic: A Structural Equation Modeling
Approach
Yogi Tri Prasetyo
School of Industrial Engineering and Engineering
Management Mapúa University
658 Muralla St., Intramuros, Manila 1002, Philippines
e-mail: ytprasetyo@mapua.edu.ph
Abstract—With the rise of online shopping during COVID-19
pandemic in the Philippines, it is important to understand the
buying decision among Filipinos. The purpose of this study was
to determine the factors affecting customer satisfaction in
online shopping. A valid response of 251 Filipinos participated
in the empirical study. Structural Equation Modeling (SEM)
was used to validate the measurement model and to test the
causal relationship in the model. The result revealed that
products/services, pricing, consumer, and technological were
significantly influenced the consumer buying decision which
also affect customer satisfaction. Surprisingly, operational was
found not significant as a predictor for buying decisions and
customer satisfaction. The SEM derived from the study could
be beneficial to e-commerce platforms and businesses which
can contribute to a better understanding of the determinants
that affect buying decision and customer satisfaction.
Keywords-online shopping; e-commerce; lazada; consumer
buying decision; customer satisfaction; structural equation
modeling
I. INTRODUCTION
Online shopping is booming in the Philippines due to the
strong improvement of the internet, mobile applications, and
various web developments. It is an easy solution for the
busy life and COVID-19 pandemic that the world is facing
today. Based on a study conducted by Statista, the
Philippines ranks third place in the world’s fastest-growing
e-commerce markets outlasting its neighbor country in
Southeast Asia [1]. In addition, a study conducted found that
Filipinos shopped online for the convenience of not having
to go to and line up at brick-and-mortar stores (58%), better
prices (47%), and deals (46%) [2].
Analyzing the consumer buying decision is a main part
of e- commerce success. A study argued that without
knowing the factors encouraging online shopping it is
difficult to develop e-commerce [3]. E-commerce needs to
identify the factors needed to achieve and what criteria they
should be consistent with. On a conducted research where it
sought to identify features of people making online
purchases shows that knowledge exploration was defined as
an individual’s actions in shopping online [4]. A study
conducted examining online shopping shows that shopping
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Darlene Gayle D. Dela Fuente
School of Industrial Engineering and Engineering
Management Mapúa University
658 Muralla St., Intramuros, Manila 1002, Philippines
e-mail: delafuentederlenegayle@gmail.com
experience and motivations lead to high purchase intention
[5].
Another research showed that factors of online shopping
include attitude and a change in customers’ attitudes
towards making online purchases [6-7]. On the contrary, a
study shows that online shopping is significantly influenced
by the perception of risk, enjoyment, social influence, and
online advertisement [8]. Furthermore, customer feedback,
trust, perceived usefulness, and information quality are
factors that most influence consumers [9-10]. A study
revealed that another factor includes the word-of-mouth,
loyalty, and post-recovery satisfaction [3]. Another study
suggests that the price, availability, scarcity, product details,
conditions, and social media affect buying decisions [11].
In an empirical examination conducted in online shopping
towards customer satisfaction, the result revealed that
loyalty, price insensitivity, quality, time, and information
availability significantly affect satisfaction. [12-13].
This research study is intended to determine the factors
affecting customer satisfaction in online shopping among
Filipinos during COVID-19 pandemic. With the growing
craze in online shopping, the study aims to bridge the gap
by determining the relationship between the factors, buying
decisions, and customer satisfaction.
Lazada is the most talked e-commerce site on the
Philippine social media [2]. To make it more logical,
identification of the factors that significantly influence the
consumer when buying online and their satisfaction can
help Lazada to overcome obstacles and strive to provide a
convenient service to consumers, which represents a key
driving force in enhancing competitiveness and advantages.
II. METHODOLOGY
This study discussed the consumer buying decision in
online shopping. Lazada App was chosen platform. Lazada
is the most frequently used e-commerce app among
Filipinos when shopping online [2]. Specifically, this study
focused on enhancing the Customer Satisfaction among
Filipinos in online shopping during COVID-19 pandemic.
Other e-commerce platforms were not included in this study.
A. Instrument Design
The instrument contains 2 parts, the first part using a
nominal scale that collects the basic information about
48
 consumer characteristics to guarantee its eligibility including Unemployed 5 2.0
Monthly Income below 10,000 18 7.2
gender, age, marital status, employment status, monthly
(Php) 10,0001 to 25,000 69 27.5
income, and frequency of online shopping in a month. The 25,001 to 35,000 104 41.4
second part introduced the factors influencing consumer 35,001 to 45,000 33 13.1
buying decisions [3]. above 45,000 27 10.8
Frequency of Online 1 time 63 25.1
B. Data Collection Shopping purchase 2 to 3 times 94 37.5
The study focuses on a sample of Filipinos who shops in a month More than 3 times 35 13.9
online using the Lazada App. To obtain responses, an online Rarely 59 23.5
survey was deemed the most appropriate collection method
to reach a wider range of Filipino online shoppers who are D. Structural Equation Modeling
using Lazada. Moreover, a snowball technique was also This study uses Structural Equation Modeling (SEM) to
used. This sampling technique was used to recruit assess the measurement model. SEM is a multivariate
participants as it gives access to an interconnected network technique increasingly found in scientific researches to test
of people and is known to be economical, efficient, and and evaluate causal relationships that combine factorial and
effective [5, 14]. regression analysis [20-22]. SEM is composed of two
Out of the 260 responses received from the online elements: (1) the relationship between the endogenous and
survey, 9 were invalid due to lack of experience in online exogenous latent variables to evaluate the causal effects; (2)
shopping on Lazada, resulting in a valid sample size of 251. the relationship between latent variables and observed
111 male and 140 female range from below 18 years old to variables [23].
above 50 years old took part. The survey was voluntarily To assess the fit of the research model, the SEM was
undertaken by all participants. Table I shows the descriptive derived using SPSS 26 and AMOS 20 with the Maximum
statistics of the respondents. Likelihood (ML) estimation approach [22]. The following
statistics were used to evaluate the hypothesized model and
C. Questionnaire observed data: the full model test and a goodness of fit test
Table II shows the factors influencing the consumer [24-25]. The criteria for full model test, normed Chi-Square
buying decision [3]. The first factor consisted of questions (χ²/df) of less than 2.0 (p-value >0.05) indicated no
regarding knowledge exploration and being an advanced significant difference between the observed sample and
user in technology defined as Technological Factor (T) [4]. SEM estimated covariances matrices [22]. The Goodness of
The second factor is Operational (O) which focuses on fit was measured by Incremental Fit Index (IFI), Tucker-
security, trust, and informative online shopping experience Lewis Index (TLI), and Comparative Fit Index (CFI),
[15, 16]. The third factor focuses on ease of use, usefulness, values greater than .90 indicated good fit [19]. Root Mean
shopping experience, and consumer reviews identified as Square Error of Approximation (RMSEA) was derived,
Consumer Factors (C) [3, 12, 16]. The fourth factor consists lesser than
of the availability of product information, product types, and 0.07 value indicated a good fit. [22]. Finally, Goodness
services identified as Products/Services (P/S) [10]. The fifth of Fit (GFI), and Adjusted Goodness of Fit (AGFI) was
factor focuses on discounts, promotions, and sales identified derived to verify the reliability and validity of the
as Pricing Factor [3, 5, 17-18]. Buying Decisions (BD) hypothesized model, the threshold value is 0.90 [25].
which focuses on continuance use intentions and decisions
[13, 19]. And lastly, the Customer Satisfaction (CS) towards III. RESULTS
online shopping in Lazada among Filipinos. The items were
TABLE II. LIST OF FACTORS, QUESTIONS, AND FACTOR LOADINGS
measured on a 5-point Likert Scale where 1 is “strongly
disagree” and 5 is “strongly agree.” Loading
Factor Item (>0.7)
TABLE I. DESCRIPTIVE STATISTICS OF THE RESPONDENTS (N=251) I shop in Lazada to know more knowledge about the
0.78
product I want to purchase.
Characteristics Category N % I feel confident in online shopping as it makes me an
0.48
Gender Male 111 44.2 advanced user in technology.
Female 140 55.8 (T) Using Lazada App in Online shopping, enable me to access
0.76
Age below 18 years old 1 0.4 a rich product information for my comparison
18 to 27 years old 149 59.4 It was easy to navigate the website. 0.51
28 to 37 years old 63 25.1 I shop online to keep up with the trends. 0.65
38 to 49 years old 28 11.2 I save a lot of time and enhanced my effectiveness in
0.60
shopping online.
50 years old and above 10 4.0 I find that payment process is convenient. 0.63
Marital Status Single 186 74.1
I feel secure about the electronic payment system of
Married 60 23.9 Lazada.
0.38
Others 5 2.0 I am able to find relevant information about items I want to
Employment Status Student 7 2.8 0.75
(O) purchase without much effort compared to other sites.
Employed full-time 204 81.3 Lazada provides sufficient information when I try to make
0.69
Employed part-time 7 2.8 transaction.
Freelance/Contractor 7 2.8 When online shopping, the store's reputation concerns me. 0.50
Self-employed 21 8.4

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 I am concerned with the privacy of my information
0.46
continuance use (0.80), the possibility of using the e-
provided when online shopping. commerce site in Online Shopping (0.79), and continuance
I'm satisfied with the delivery time. 0.51
of online shopping (0.87).
I find the opinions and reviews of other users helpful in my
purchase decision-making.
0.55 Interestingly, all indicators in Customer Satisfaction
The feedback for my queries provided by Lazada is faster
0.58
were found significant. Those were satisfaction in previous
than what I expected. online shopping (0.79), use of e-commerce site more often
(C) My experience for navigating e-stores is better than what I
expected.
0.70 (0.89), satisfaction with the site which leads to the
I shop online because a family member/friend/colleague
0.42
continuation of buying (0.89), recommendation (0.83),
recommended it. satisfaction in browsing and product comparison (0.89), and
I find enjoyment in browsing of products. 0.63 meeting or exceeding the customers' expectation in online
I like e-commerce sites for the useful information they
0.77 shopping using the e-commerce site (0.82).
provide about items in their stock.
I can easily find and buy various products that suits my
Fig. 1 shows the initial model of factors affecting
0.75 customer satisfaction which shows that the Operational
specifications.
I am concerned with the quality of the products delivered
0.49 Factor found not significant as a latent variable or a
(P/S) when ordering.
The delivery time defined is attractive.
predictor in consumer buying decision (β=-0.01). The
0.56
derived value is extremely lower compared to the other
The means of delivery of the product is satisfying. 0.56
latent variables.
The shipping (when) charged by the delivery of the product
0.39
is fair.
I prefer to buy online as price is lower than traditional shop 0.71
It helps me to keep up with deal notifications (e.g., sales) is
0.66
better than expected.
For the most part, I shop online in social commerce when
0.70
(P) there are sales.
I like the promotions and discounts offer online rather than
traditional shop 0.80
Online vendors can provide me with more relevant
promotional information tailored to my preferences or 0.72
personal interests.
The site help me to make purchase decisions better than I
0.80
expected.
I intend to continue to use this site rather than discontinue
0.80
its use.
(BD) Whenever possible, I intend to use this site for Online
0.79 Figure 1. Initial model of factors affecting customer satisfaction.
Shopping.
I will buy since after-purchase problems I experience are
0.48
quickly resolved by the retailer. Fig. 2 shows the final model of factors affecting
I will continue to shop online at this site. 0.87
customer satisfaction. Technological Factor (β=-0.17),
I am satisfied with my previous online shopping experience. 0.79
Consumer Factors (β=-0.65), Products/Services (β=1.00),
I will use this retailer website more often for online
purchases.
0.78 Pricing (β=0.71), and Buying Decision (β=0.94).
I will continue to buy as I am satisfied with the site. 0.89
(CS) I recommended this company. 0.83
I am satisfied to browse interesting products and compare
0.89
them.
Overall, most of my experiences from using this site were
better than expected. 0.82

There were two significant items to represent the

Technological Factor since the factor loadings are greater
than 0.70. Those were knowledge exploration (0.78) and
product information for comparison (0.76). Meanwhile, one
indicator under Operational was found significant which is
the relevant information provided by the site (0.78).
Regarding Products/Services, two items found significant
those were useful information about items (0.77) and easily
find product specifications (0.75). One indicator to represent
Consumer Factor was found significant which is a better
experience in navigating the store (0.70). For Pricing, four
among five indicators were found significant. Those were
lower price (0.71), shopping online during a sale (0.70),
promotions and discounts (0.80), and promotional
information tailored to preferences (0.79). Same with Buying
Decision, four among five indicators were found significant.
Those were better purchase decisions (0.80), the intention of
Figure 2. Final model of factors affecting customer satisfaction.
As presented in Table III, the normed Chi-Square (χ²/df)
is 2.1 which is a little bit higher than the accepted value.
The Incremental Fit Index (IFI), Tucker-Lewis Index (TLI),
and Comparative Fit Index (CFI) all reveal acceptable
results as they present values above 0.90 which indicates
that the hypothesized model was a good presentation of the
observed data. Regarding the badness of fit index, the
current model revealed an RMSEA of 0.067 which
indicates a good result.

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 TABLE III. PARAMETER ESTIMATES AND GOODNESS OF FIT of Filipinos are still prioritized rather than the influence of
Parameter
sales promotion [9]. When online shopping, the study
Fit indices revealed that online shopping experience relatively affect
Estimates
their buying decision. Online shopping experience and
Normed chi-square (χ2/df) 2.114
online shopping motivations can lead to purchase intention
Incremental Fit Index (IFI) 0.942 [5]. Moreover, knowledge exploration affects buying
Tucker-Lewis Index (TLI) 0.929 decisions. It means that the limited applicability of the e-
Comparative Fit Index (CFI) 0.941 commerce browser might affect the ability of Filipinos to
Root Mean Square Error of Approximation 0.067 fulfill their needs in online shopping. Product comparison
(RMSEA) application in an online store allows consumers to compare
Goodness of Fit Index (GFI) 0.872
the wide range of products from one place with ease [11].
Adjusted Goodness of Fit Index (AGFI) 0.831
Surprisingly, the study could not reveal any statistically
significant effect of Operational Factors in buying decisions
Table IV shows the direct, indirect, and total effects and satisfaction. This result is contradicting with the most
among selected latent. The result of SEM indicate that studies conducted [3, 8-9, 16]. However, one study shows
Products/Services had the highest effect on consumer buying that security has a weak relation to customer satisfaction
decision (β=1.000, p=0.010), followed by Pricing (β=0.719, [13]. This might be due to the fact, the longer period the
p=0.010), Consumer (β=-0.651, p=0.082), and Technological consumer shop online they might have acquired trust in
(β=-0.167, p=0.333). Interestingly, Consumer buying transactions. Furthermore, buying decision significantly
decisions had a high effect on Customer Satisfaction influenced customer satisfaction. There is a relationship
(β=0.940, p=0.001). Furthermore, Products/Services has the between continuance use intentions and satisfaction [15].
highest indirect effect in Customer Satisfaction (β=0.999, Filipinos are most likely to continuously shop online if they
p=0.010), followed by Pricing (β=0.676, p=0.010), are satisfied with the previous transactions.
Consumer (β=-0.612, p=0.084), and Technological which In general, the study revealed that four out of five
has least indirect effect (β=0.157, p=0.335). identified factors significantly influenced the consumer
TABLE IV. DIRECT, INDIRECT, AND TOTAL EFFECTS buying decision which affects the Customer Satisfaction.
By determining what interests the Filipino consumers,
Model Direct p- Indirect p- Total p- Lazada can prioritize these items that should be improved.
Path effect value effect value effect value Therefore, knowing what customer seeks, Lazada can focus
P→ BD 0.719 0.010 No path - 0.719 0.010 on strategy they can implement to stay ahead as a leading e-
P/S → BD 1.000 0.010 No path - 1.000 0.010 commerce in the Philippines.
C→ BD -0.651 0.082 No path - -0.651 0.082 This study contributes to both theory and practical
T→ BD -0.167 0.333 No path - -0.167 0.333 application of e-commerce sites, but has limitations that can
BD → CS 0.940 0.001 No path - 0.940 0.001 be addressed in future research. First, future study should
P→ CS No path - 0.676 0.010 0.676 0.010 significantly explore more between factors which might
P/S → CS No path - 0.999 0.010 0.999 0.010 affect the buying decision. To make the study more relevant,
C→ CS No path - -0.612 0.084 -0.612 0.084 Customer Loyalty might be added. Second, the number of
T → CS No path - 0.157 0.335 0.157 0.335 respondents was unsatisfactory despite the effort of the
author to attain a large sample, which may have influenced
IV. DISCUSSION the findings. Third, Lazada is operating in Southeast Asia
thus geographical location and diversified sampling can
The analysis of path coefficients revealed that also be considered. Lastly, the demographic profile of the
Products/Services is the most predictor in Buying Decision. respondents and years of experience in online shopping
The result corresponds to a previous study suggests that the might be added as it can be valuable in the research
availability of product details, product type and specification direction.
positively influences the buying decision in online shopping
[3, 11]. This study revealed that Filipinos when shop online V. CONCLUSION
seek more information that suits their preferences.
COVID-19 pandemic is a big challenge in the
Interestingly, Products/Services was also found the highest
Philippines [26]. With the rise of online shopping during
indirect effect in Customer Satisfaction.
COVID-19 pandemic in the Philippines, it is important to
This study suggests that Lazada should focus more on
understand the buying decision among Filipinos. The
providing detailed description to cover the informational
purpose of this study was to determine the factors affecting
needs of Filipinos as it greatly influences their buying
customer satisfaction in online shopping. A valid response
decision and satisfaction. Pricing also represents a strong
of 251 Filipinos participated in the empirical study.
impact as a direct effect on buying decisions and an indirect
Structural Equation Modeling (SEM) was used to validate
effect on satisfaction. It is visible that product price,
the measurement model and to test the causal relationship
shipping cost, and discounts play a role when online
in the model. The result revealed that products/services,
shopping [3, 11]. It is also assumed that Filipinos still want
pricing, consumer, and technological were significantly
to choose the right product based on personal interest rather
influenced the consumer buying decision which also affect
than solely buy the cheapest product. The needs and wants

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 customer satisfaction. Surprisingly, operational was found
not significant as a predictor for buying decisions and
customer satisfaction. The SEM derived from the study
could be beneficial to e-commerce platforms and businesses
which can contribute to a better understanding of the
determinants that affect buying decision and customer
satisfaction.
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