Research Model

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As illustrated in Figure 1, our model postulates that repurchase is mainly determined by overall satisfaction and that this relationship is moderated by online shopping habit. In other words, online consumers who are satisfied with all the aspects of their shopping experience from a particular retailer are more likely to repurchase from that retailer if they have already acquired the habit of shopping online. Although satisfied, consumers may not shop again from an online retailer if online shopping is not yet part of their shopping habit. Consistent with Homburg and Giering (2001), our model also postulates that overall satisfaction is a function of product satisfaction, sales process satisfaction and after-sale service satisfaction. Each of the constructs and their interrelationships are discussed in more detail next.

Figure 1: The Research Model.

Repurchase

Customer retention has long been in the research agenda of the marketing discipline. It is typically defined as "an intangible ability to keep visitors returning again and again and for longer and longer periods" (Maciag, 2000) and as "a form of repeat purchasing of a particular product or service over time" (see Copeland, 1923). Retention reveals and is one facet of loyalty (Soderlund et al., 2001; Jacoby & Chestnut, 1978). In the current study, retention is measured as the number of repurchases. Unlike other measures, repurchase can better represent the "process of retaining prior customers with repeat business" (Nemzow, 1999). Other metrics like average length of time spent on browsing or click through ratios reflect site retention rather than customer retention, as they merely measure whether the site is being visited instead of whether orders are being placed (Nemzow, 1999). From an organizational perspective, repurchase is also an important measure for evaluating operational performance, given its direct impact on organizational profitability and competitiveness.

Satisfaction

Satisfaction has been widely defined as a post-evaluative judgment over a particular purchase (Bearden & Teel, 1983; Churchill & Suprenant, 1982; Oliver, 1979, 1980; Oliver & DeSarbo, 1988). Yi (1990) further specified that overall satisfaction is affected by three categories of satisfaction; namely, product satisfaction, sales process satisfaction and after-sale service satisfaction. Satisfaction can occur with the product/service itself, the sales process and during the post-sales stage. Product satisfaction is the most popular one adopted by researchers. It relates to the evaluation of product performance with regard to attributes such as value-for-money, ease of use and design sophistication (LaBarbera & Mazursky, 1983; Marr & Crosby, 1992). Sales process satisfaction occurs through the personal interaction with the sales personnel and the capability of the selling parties in meeting the individual needs of customers (Homburg & Giering, 2001). In the context of online shopping, however, it is rather the interaction with the website that largely determines the process satisfaction. During the post-sale stage, satisfaction with after-sale service is based on the quality of the service itself and the interpersonal experience with the after-sale service personnel (Crosby, Evans, & Cowles, 1990).

Satisfaction and Retention

We hypothesize that satisfaction has a direct effect on customer retention. A customer is more likely to come back if he/she is satisfied with the purchase. A number of firms are relying on managing the satisfaction of customers to avoid their defection (Capraro et al., 2003). Unpleasant buying experience or poor product performance easily leads to customer dissatisfaction and discourages him/her from coming back. There is ample empirical evidence from the marketing discipline that customer satisfaction is positively linked to repurchase (e.g., see Newman & Werbel, 1973; La Barbera & Mazursky, 1983; Rust & Zahorik, 1993; Rust, Zahorik, & Keiningham, 1995; Sambandam & Lord, 1995; Hallowell, 1996; Bolton, 1998) or repurchase intention (e.g., Fornell, 1992; Selnes, 1998), which is strongly related to actual purchase behavior (Innis & La Londe, 1994). For example, Mittal and Wagner (2001) argued that the relationship between satisfaction and repeated purchase behavior is nonlinear, drawing upon empirical evidence collected from more than 100,000 customers.

Online Shopping Habit

Habit is conceptualized as "situation-behavior sequences that are or have become automatic...the individual is usually not conscious of these sequences" (Triandis, 1980, p. 204). It is a behavior tendency developed from historical situations that an individual experienced in the past. Such tendency will then elicit behavioral response from the individual automatically upon a stimulus, which most likely is a situation similar to that in the past. The individual may act accordingly without being aware of it or having instructed him/herself to do it. Habit is distinguished from reflexes as it is developed based on the learning ability of an individual. Reflexes occur both naturally and automatically without having to go through historical experience in the first place. On the other hand, habit is developed partly based on the learning ability of an individual to convert/absorb the behavior into a cognitive schemata (Limayem, Hirt, & Chin, 2001).

Given its nature, habit is directly associated with behavior. A strong habit is more likely to induce a similar behavior. In addition, habit also has an interactive effect on behavior (Triandis, 1980, p. 228). As a certain behavior turns more routinized, habit also becomes more supreme. Similarly, Charng et al. (1988) suggested that when an action becomes routinized, the performance of it may also require less conscious decision-making. In the context of customer behavior, online shopping habit may lead to Internet purchasing behavior, while if such behavior occurs frequently and regularly, online shopping habit may in turn further be strengthened.

Moderating Effect of Online Shopping Habit Over the Relationship Between Satisfaction and Repurchase

Despite that a number of studies report satisfaction to be positively related to repurchase, many of them explain a relatively small portion of the variance in such behavior (e.g., Newman & Werbel, 1973; La Barbera & Mazursky, 1983; Bolton, 1998). A review of literature indicated that 65%–85% of satisfied customers did not return (Reichheld, 1996), implying that satisfaction alone does not necessarily lead to repurchase (Capraro et al., 2003). It is therefore important to consider moderating variables in gaining a better understanding of the relationship between satisfaction and customer retention (Oliver, 1999; Capraro et al., 2003; Nijssen et al., 2003).

Habit has been investigated by some researchers for its impact on the intention to adopt and the subsequent usage of information systems (e.g., see Bergeron et al., 1995; Limayem, Khalifa, & Chin, 1999). Very few studies, however, examined the moderating role of habit in the context of online customer behavior. Furthermore, to our knowledge, no study investigated the combined effects of habit and satisfaction on repeated behavior (repurchase). The effect of satisfaction on repurchase may be further strengthened if the customer habitually buys online. The effect of satisfaction on repurchase may, on the other hand, be weakened if the online shopping habit level is low. A customer who rarely purchases on the Internet may not repurchase from an online retailer despite that he/she is satisfied with that retailer. Therefore we hypothesize that online shopping habit moderates the relationship between satisfaction and repurchase.

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