Greetings!!

Hello and welcome to e-Quality Digest's first issue of the year 2007. Since its inception, the Digest has been addressing specific themes of relevance to all senior executives around the World. The current issue explores how quality can be implemented in an electronic business atmosphere like E-commerce. We hope you enjoy reading this issue. We look forward to receiving your views and feedback on the content.

Wish you a happy new year!!

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Enhancing E-Quality!

With the advent of Internet, customers have become a highly empowered lot. They have access to an almost unlimited selection of products, brands and sellers. They can check out different products or compare brands with a single click of a mouse any time of the day or night. However, faced with the problem of limited time and unlimited choice, customers have high expectations and make their choice of websites based on these expectations. With price transparency being the norm, quality is considered crucial in determining whether a product or service is sold and whether the customer returns. Here, quality is not just about product quality. Instead it applies to every step, from the time a customer logs on to a site till the product he orders gets delivered to him.

The success of E-commerce demands perfection not only at the front end in terms of order entry, transfer of payments and data gathering, but also at the back end in terms of raw material ordering, monitoring of shipping and distribution, among others. Failure to achieve it means instant death. How then do companies grow and survive in such an electronic atmosphere sans human touch?

No touch or feel!

In the world of e-commerce having a largely impersonal culture where there is no face-to-face contact between businesses and customers, customer support enters a completely new dimension.

Several companies have made enormous investments in information technology. But the competitive advantages will go to those that use the information best and outperform competition in the quality of everything they do via their website. When it comes to keeping customers happy, providing quality customer service is one of the most valuable strategies at the disposal of an e-commerce retailer.

Thus, while every e-commerce site's customer service plan needs to be necessarily different, the staple features include:

• Web-based facets like simple navigation and design, easy downloads and quick access to information.
• Human facets like quick email responses, easily accessible customer service phone numbers and offline purchasing assistance from customer service representatives. E-commerce merchants need to provide sales transactions a personal touch, even when they may never speak to customers, by answering questions and confirming orders electronically.
• Product information facets like descriptions, accurate specifications, pricing, FAQs, bundling, smart shopping carts and cross-purchasing suggestions.
• Trust factors like guarantee of secure transactions, privacy of data collected branding and endorsements by other buyers.
• Incentive factors in terms of on-time delivery guarantees, offers of free shipping and handling, gift-wrapping and money-back guarantee in case of dissatisfied customers.
• Service assurance factors to ensure fulfilment follow-up through confirmation emails, an automated shipping/tracking system, prompt delivery and email satisfaction surveys.

Online customer satisfaction being a relatively new area, researchers have taken different approaches and focused on a variety of aspects in investigating the link between customer satisfaction and e-commerce. Widely accepted among these is a framework suggesting that e-commerce quality is impacted by beliefs about information quality, system quality and service quality.

1. High information quality: is associated with system use, user satisfaction and net benefits. Researchers say that information quality is a strong determinant of consumer satisfaction in Internet shopping and has four dimensions namely:

• Accuracy: The accuracy and reliability of information on a website affects consumer evaluation and subsequent purchasing decisions. Reliability of website content allows customers to perceive lower risks, better justifications for their decisions and ease in taking the optimal decisions.
  
  
• Content: Likewise, the relevance and completeness of information on a website can help dispel concerns or fears in customers’ minds. Complete and detailed information should include product price, availability, delivery time, product differentiation and comparison, most recent product changes and product picture. All these help customers make competent and informed decisions.
  
  
• Format: E-commerce merchants need to capitalise on the ‘media rich’ nature of the Web, which facilitates the provision of graphics, text, sound and videos, to ensure that information presentation occurs in an attractive, user-friendly manner. Studies have found that vividness (the way in which an environment presents information to the senses) and interactivity (the extent to which users can participate to clear doubts and the response they receive) have a considerable impact on customer attitude towards a website.
  
  
• Timeliness: It is important to ensure that a website is frequently updated to deliver the best services to online customers.

2. System quality: is a measure of the information processing system itself. The focus is on the interaction between customers and the website in terms of information searching, downloading and the overall transaction. This includes the arrangement of information, speed and layout of the website apart from consistency, ease of use, clarity of interaction and ease of reading. Four key aspects emerge here: navigation, ease of use, response time and security.

1. Navigation deals with the layout of the website, the sequencing of pages and consistency of navigation tools. During the information search stage, users tend to easily get ‘lost in space’. Keeping the navigation simple ensures that customers find all information about a particular product and can place orders easily. To enhance navigation efficiency, it is essential that:
   
   
   • The website is so designed that customers can obtain information in the fewest possible steps.
   • Hyperlinks are consistently provided on every web page.
   • The relevance of hyperlink description and the expected destination are described.
   • Hyperlinks are not broken.
     
     
2. Ease of use: is defined as the degree to which a system is “user-friendly”. In e-commerce, customers tend to visit websites based on how easy they are to use and how effective they are in enhancing their shopping experience.
   
   
3. Response Time (Accessibility): refers to the speed of access and information downloading and availability of the website at all times. It is important to note here that page loading speed has been rated as the most important determinant of a successful website design.
   
   
4. Security: According to a survey by PriceWaterhouseCoopers, almost 80 percent of the respondents cited security as a key barrier to Internet shopping. Researchers have observed that security has been a serious issue and an impediment to the acceptance of online purchases. Security refers to a website’s ability in preventing unauthorised use or disclosure of personal information of customers collected during electronic transactions. Privacy and security of online transactions are important to build trust and long-term relationship.

3. Service quality: is about how responsive, concerned and reliable online vendors are. It has five dimensions:

• Tangibles: Include the physical environment like appearance of the website, clarity of purchase procedures and ease of use.
  
  
• Reliability: is about delivering the promised service in a reliable, dependable and timely manner, exactly as ordered online.
  
  
• Responsiveness: Includes providing prompt service, helpful guidance when problems occur and accurate information about products and service. Customers tend to judge responsiveness by the time taken by the website in replying to their inquires.
  
  
• Assurance: To assure customers that the online store is knowledgeable and courteous. It can be shown through the system’s ability to guide a customer through the shopping process and through additional beneficial services. This could be fortified by means of courteous help-screens, appropriate error messages and guidance boxes.
  
  
• Empathy: is about providing care and individualised attention through customised content, personal greetings and individualised e-mail.

To achieve the e-commerce quality a customer desires, an e-commerce merchant has to ensure that processes perform at Six Sigma levels, taking care of all the aspects described above.

Enhancing E-Quality… Learning From The Winners!

Today, both businesses and customers alike have easy and instant access to an increasing number of products and services via the Internet, either in terms of business-to-business (B2B) or business-to-consumer (B2C). The reasons, we all know, include various factors like convenience, saving time and absence of sales pressure, among others. However, with price transparency being the norm, quality is a crucial factor in deciding whether a product or service is sold and whether the customer returns.

This means e-commerce merchants need to pay maximum attention to the quality factor by assessing all characteristics and attributes that influence quality. The focus needs to be on quality characteristics like usability, functionality, reliability, efficiency and other derived sub-characteristics and attributes from the user standpoint.

Let us look at an interesting case. Zappos.com, founded in the year 1999, is a leading website that sells shoes online. First of all, one would ask how shoes could be bought without trying them on? This was exactly the question that almost all Venture Capitalists (VCs) asked Nick, the founder of Zappos.com, when he approached them for funds. Despite facing many rejections, Nick remained firm as he believed that shoes had a 40 billion USD share in the US market.

He based his belief on some facts. First, people shopped for shoes by brand. So the company did not have to spend advertising money to build the Zappos.com brand. Instead, they only had to get a customer to click on an advertisement for Rockport or Nike shoes. The website also did not have to educate customers as they exhibited brand loyalty and knew what they were investing in. Moreover, shoe sales almost had a 50 percent profit margin.

The founders of Zappos.com attribute the website’s success to the aggressive focus on customer service. Great customer service helped the company build a loyal customer base. Today, the company says that about 50 percent of orders are from existing customers and an additional 20 percent are from new customers referred by existing customers.

What did Zappos.com do to keep customers coming back? The key policy was to surprise customers individually. Zappos.com realised that it was competing not just with offline shoe retailers but also with other online retailers. So while competition was delivering shoes within 5-7 days, Zappos.com decided to do it far better for free. The company rolled out a clever policy of quick shipping. However, it did not announce free shipping on the site. So when a customer thought his shoes would be delivered within 5-7 days of placing an order, he got an e-mail within one or two days from the website informing that he had been upgraded from regular to overnight air shipping category as he was a valued customer. This was a small gesture that left a wonderful impression on the customer. This one shipping policy strongly impacted return purchases.

The other key policy Zappos.com implemented was the returns policy. Zappos.com helped ease customer apprehension about buying shoes online by offering free return shipping and a 365-day free return policy. By the year 2003, the website’s returned products dropped from 25 percent to almost zero. Other customer-centric services of Zappos included:

• Establishing a 24/7 customer service centre at the company’s headquarters.
• Setting up a 24/7 shoe warehouse operated in Kentucky by the company.
• One month of customer service training for every new employee.

According to the CEO of Zappos, customer service is all about “to what extent a company can go to please a customer”. For instance, when Zappos runs out of inventory on a particular shoe, the customer service agent is encouraged to provide the customer links to purchase the shoe from other online retailers. While customer satisfaction in many customer helpline centres is taken as a measure of call durations, Zappos measured it based on how helpful the customer service agent was in providing service to the customer.

Researchers also cite another interesting aspect in the Zappos.com story. It was about how Zappos adapted its strategy and brand as it learned more about its business based on market conditions. Many websites tend to overlook this fact and are rigid about their initial strategy. Consequently, they do not understand the clues the market provides them. In fact, Zappos had planned one strategy before starting operations and eventually did the opposite by the time it went online. In fact, the initial strategy was to win customers by providing the greatest selection of shoes. The company started operations as ShoeSite.com – a good name to fit its initial strategy.

However, soon the company found that it was actually really difficult to provide a large selection of shoes. Most shoe manufacturers were hesitant to work with a small company selling shoes online. So, it would take years to secure inventory and offer a large selection. This made the company rethink on its strategy. It decided to focus its efforts on providing the best possible customer service. Thereupon, the company’s strategy and culture centred around service and re-launched as Zappos.com. This decision later proved to be the crucial factor that changed the fortunes of Zappos.com.

There are many such success stories. Another interesting point that comes to the fore when discussing e-commerce and quality is the Austrian E-Commerce Quality Mark. The criteria for award of this Quality Mark are in line with the requirements of Austrian law. It confirms the voluntary undertaking of companies to comply with the following criteria and quality features while processing electronic business or other electronic transactions with customers, keeping in mind the consumer protection legislation

This Quality Mark does not guarantee the customers or give any information about the quality or other performance characteristics of the products and services offered by the users of the mark. However, customers can rest assured about the authenticity and services of the site as the criteria for the Award are strict.

These are some of the interesting aspects of E-commerce quality in today’s world. Times are changing faster than we can predict. To be truly competitive, an E-commerce merchant must have defect-free products and super-quick processes with provision of excellent customer services. So, as an E-commerce merchant, do you have all that it takes to win and keep customers happy?

Companies give front-line employees more power
This article focuses on how consumers perceive quality of e-commerce.
http://www.crito.uci.edu/papers/2000/consumers-gilly.pdf

Austrian E-Commerce Quality Mark Guidelines
Read the award criteria of Austrian E-Commerce Quality Mark.
http://www.guetezeichen.at/kriterien/criteria.pdf

Quality and E-Commerce
A useful article discussing various issues related to quality in e-commerce. You need to be a member of American Society for Quality (ASQ) to read the article.
http://qic.asq.org/perl/search.pl?item=15334

Business to Business Electronic Commerce: Challenges and Solutions
By Merrill Warkentin (Editor)
Book Description
In the mid 1990s, the widespread adoption of the web browser led to rapid commercialisation of the Internet. In addition, initial success stories were reported from companies that learned how to create an effective direct marketing channel – selling tangible products to consumers directly with the World Wide Web. By the end of the 1990s, the next revolution began – called business-to-business electronic commerce. Business to Business Electronic Commerce will provide researchers and practitioners alike with a source of knowledge related to this emerging area of business.

Strategies for eCommerce Success
By Bijan Fazlollahi
Book Description
With electronic commerce growing so rapidly, businesses need to examine critical elements that could influence users' perceptions of business-to-business and business-to-consumer electronic commerce. This book presents a study of key components and concepts of e-commerce, evaluates the critical success factors for global e-commerce, the economics of e-commerce and the practical issues involved with e-commerce in various applications. Also included are discussions of the impact of e-commerce on small businesses and entrepreneurships in the United States, consequences of information technology for customer loyalty, internal e-mail messaging systems within organisations and e-commerce comparisons of the United States and the United Kingdom.

Managing Best Practices