Management Project Report

Digital Service Quality Measurements And Strategies

For The E-Retailing Industry In India

Submitted by

Ritwij Pradeep
Kelshikar

PGDM
(Marketing)
ID: 21A3HP634

To
Prof. Dr. Devi Prasad Ghosh

Institute of Management Technology Hyderabad

1st March 2023

1
 Table of Contents

Sr No Sub-Topic Page No
1 Executive Summary 4
2 Introduction 4
3 Literature Review 5
4 Objectives 7
5 Methodology 7
6 SERVQUAL Model 8
7 SERVQUAL in Digital Context 8
8 Findings 10
9 Limitations 14
10 Conclusion 14
11 Scope for Further Studies 14
12 References 15
13 Annexure 16

2
 List of Tables & Figures
Sr No Description Page No
1 SERVQUAL dimensions 10
ranked
2 Individual factors with the 10
lowest satisfaction levels
3 Individual factors with the 11
highest expectation levels
4 CFA Covariances 12
5 CFA Model Fit 12
6 Path Diagram 13

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 Executive Summary
E-commerce has positively impacted businesses in terms of revenue generation, reach, and
variety of choices. Combining the powers of information technology has also increased the
competition among companies. It is more complex than ever to cater to the demands (which
dictate loyalty) and satisfaction levels of the customers. This research paper is a humble
attempt at understanding the driving service quality components in the digital e-commerce.
An e-commerce website developer could use the results from this research to recognize the
areas of improvement and components of e-service quality in the e-commerce business. This
research also contributes to a general knowledge of the e-service quality field and enhances
the future understanding of e-service quality components in the e-commerce business.
Introduction
With the fast growth of e-commerce, many physical retail stores have adopted online retailing
to approach consumers and boost sales. Consumer shopping patterns have changed with the
explosive growth of Internet usage. Consumers can now access the Internet anytime from any
place due to advances in new technology such as wireless Internet service and mobile
devices. E-retailing has numerous advantages over offline retailing. However, unlike offline
stores, where consumers can direct interactions with salespersons, consumers interact with
the retailer through a technical interface. Consumers expect to be able to receive personalized
attention, complete transactions correctly, have the product delivered on time, and have
access to information. Therefore, to be successful in the current competitive e-business, e-
retailers need to pay attention to e-service quality. How consumers perceive e-service quality
can determine the success or failure of an e-business. Many types of e-retailing use the
Internet, which has flattened out price advantages, so service is a differentiator that delivers
more value. With the increasing adoption of e-retailing, consumers’ expectations for online
services are changing and growing. Retailers are expected to offer 24/7 communications
options and to respond in a timely manner to customer inquiries.
Many definitions of e-service exist and what the service consists of may be vague and
ambiguous. SERVQUAL was developed and widely used to measure offline service quality
and was also based on the discrepancy between perceptions of services and expectations for
service. However, since definitions developed to assess service delivered by people, i.e., in a
brick-and-mortar context, may not apply to services delivered without interpersonal contact
or via electronic means, such definitions may be inappropriate in the context of e-retailing.
E-service quality is defined as consumers’ overall evaluation and judgment of the excellence
and quality of e-retailing offerings in the virtual marketplace. It is the extent to which an
electronic service can effectively and efficiently fulfil relevant customer needs.

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 Literature Review
1. Electronic Retailing and Service Quality by Jung-Hwan Kim and Sharron J.
Lennon
This paper explores the relationship between electronic retailing and service quality.
The authors aim to understand how service quality affects customer satisfaction and
loyalty in electronic retailing. The study collected customer perceptions of service
quality, customer satisfaction, and loyalty. The authors used structural equation
modelling to analyse the data and test their hypotheses.
The study results showed that service quality positively impacts customer satisfaction
and loyalty in the context of electronic retailing. The authors found that website
design, product information, and delivery speed are essential to determine service
quality. The study highlights the importance of website design in electronic retailing.
A well-designed website can make it easier for customers to find the information they
need, navigate the site, and purchase. Customers who had access to complete and
accurate information about the products they were interested in were more likely to be
satisfied with their purchase and more likely to be loyal to the retailer. Finally, the
authors found that delivery speed is important in determining service quality.
Customers who received their products quickly were more likely to be satisfied with
their purchase and more likely to be loyal to the retailer.
2. A Research on Measuring E-Service Quality in E-Retailing by MURAT AKIN
The paper examines the concept of e-service quality in the context of e-retailing. The
author aims to develop a comprehensive model for measuring e-service quality in e-
retailing and to test the model using customer data. The study was conducted by
surveying customers who had recently purchased through an e-retailing website. The
survey collected customer perceptions of e-service quality, customer satisfaction, and
loyalty. The author used factor and regression analyses to analyse the data and test the
model.
The study showed that e-service quality is a complex and multi-dimensional concept
with several factors, including website design, product information, delivery speed,
and customer support. Finally, the author found that customer support is important in
determining e-service quality. Customers who received helpful and responsive
customer support were more likely to be satisfied with their purchase and more likely
to be loyal to the retailer. This highlights the importance of providing high-quality
customer support for customers in the e-retailing industry.
3. Online Service Quality Determinants and E-trust in Internet Shopping: A
Psychometric Approach by Suhail Ahmad Bhat and Mushtaq Ahmad Darzi
This paper explores the factors determining online service quality and e-trust in
internet shopping. The authors use a psychometric approach to identify and measure
the underlying constructs of online service quality and e-trust.
The study was conducted among online shoppers in India using a survey
questionnaire. The questionnaire consisted of items that measured the different
dimensions of online service quality and e-trust. The authors used factor analysis to
identify the underlying constructs of online service quality and e-trust.

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 The authors found that website design, security, and customer service are the
dimensions of online service quality that significantly influence e-trust. Website
design is the aesthetic appeal and functionality of the website, including ease of
navigation, search, and purchase. The security measures the online retailer takes to
protect the online shoppers' personal and financial information service is the quality
of support the online retailer provides to address the queries, concerns, or complaints
of online shoppers. The paper also suggests that online retailers should build
reputation and trust through social media, online reviews, and word of mouth. In
addition, online retailers should provide shoppers with a clear and transparent return
and refund policy to reduce the perceived risk and uncertainty. The authors found that
e-trust is positively correlated with customer satisfaction and loyalty and negatively
correlated with perceived risk and uncertainty. This suggests that online retailers
should build e-trust by improving online service quality to enhance customer
satisfaction and loyalty.
4. Measuring Service Quality in Online Shopping: A Case Study of E-Retailing in
Iran
The paper aims to measure the service quality of e-retailers in Iran using the
SERVQUAL model. The authors surveyed 250 customers who had shopped online in
the past six months. The survey included five service quality dimensions: tangibility,
reliability, responsiveness, assurance, and empathy. The results showed that the e-
retailers scored low on tangibility and assurance dimensions, which included website
design, product information, payment security, and customer support.
To enhance customer satisfaction, the authors concluded that e-retailers must improve
their website design, product information, payment security, and customer support.
The authors recommended that e-retailers provide accurate and detailed product
information, offer multiple payment options, ensure secure payment transactions, and
provide prompt and efficient customer support.
5. The E-Service Quality of E-Commerce Websites: What Do Customers Look
For? by Sabiroh Md Sabri, Nursyamilah Annuar, Nurul Labanihuda Abdull
Rahman, Sharifah Khairol Musairah, Hasyeilla Abd Mutalib, Iwan Kurniawan
Subagja.
The paper identifies the critical factors influencing e-service quality in e-commerce
websites. E-service quality is essential in determining customers' satisfaction and
loyalty towards e-commerce websites. The authors surveyed 253 respondents who
had made online purchases in the last six months in Malaysia. The survey included
questions related to the dimensions of e-service quality: website design, security and
privacy, reliability, responsiveness, and customer service. The study also considered
the impact of demographics, including age, gender, education, and income, on
customers' e-service quality perceptions.
The results showed that website design, reliability, and customer service were the
critical determinants of e-service quality. Website design was found to be the most
significant predictor of e-service quality, followed by reliability and customer service.
Security and privacy, and responsiveness were not significant predictors of e-service

6
 quality. The study also found that age and income significantly impacted customers'
e-service quality perceptions.
6. The impact of e-service quality and customer satisfaction on customer behavior
in online shopping by Paulo Rita, Tiago Oliveira & Almira.
The study was conducted in Portugal, and data was collected from 410 online
shoppers using an online survey. The study used structural equation modelling to
analyze the data and test the hypotheses. The study measured e-service quality using
six dimensions: website design, responsiveness, reliability, assurance, security, and
empathy. Customer satisfaction was measured as a second-order factor, including
three dimensions: satisfaction with the website, the product, and the overall shopping
experience. The study measured customer behavior as a second-order factor,
including purchase intention, online word-of-mouth, and loyalty.
The results of the study showed that e-service quality significantly impacted customer
satisfaction, which, in turn, significantly impacted customer behavior. The study
found that responsiveness, reliability, and security were the most critical dimensions
of e-service quality influencing customer satisfaction. The study also found that
satisfaction with the website and satisfaction with the overall shopping experience
were the most critical dimensions of customer satisfaction that influenced customer
behavior.
Objectives

 To identify service quality measurement parameters suitable for the digital context.
 Test whether a relationship exists between the Digital Service Quality Dimensions.
 Determine the gaps between expected levels and satisfaction levels.

Methodology
The process flow of the project will be as follows:

 Step 1: Understanding the existing components of the SERVQUAL methodology

of determining service quality measurements and identifying how they influence
in a digital context.
 Step 2: Understanding and identifying additional components to better capture the
elements that influence service quality measurements in a digital context that can
be applied in addition to SERVQUAL components by analyzing published papers
on the topic.
 Step 4: Understand the content and analysis presented in the published papers.
 Step 5: Conduct a survey of Indian consumers taking inputs such as their
expectations and satisfaction levels on digital service quality dimensions on a
Likert scale.
 Step 6: Conduct quantitative tests on the survey responses.
 Step 7: Offer strategies and recommendations.

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 The SERVQUAL Model
The SERVQUAL model is a widely used framework for evaluating the quality of service
organizations provide. It was developed by Parasuraman, Zeithaml, and Berry in 1985, and it
aims to measure customers' perceptions of service quality across five key dimensions:
1. Tangibles: The physical appearance and facilities of the service, such as the
equipment, facilities, and appearance of personnel.
2. Reliability: The ability to perform the promised service dependably and accurately,
including the ability to deliver on time, keep records accurately, and fulfill promises.
3. Responsiveness: The willingness and ability to help customers and provide prompt
service.
4. Assurance: The knowledge and courtesy of employees and their ability to inspire trust
and confidence in customers.
5. Empathy: The ability to understand and be responsive to customers' needs and
concerns, including personalized attention, caring, and individualized communication.
The SERVQUAL model is used to assess customer satisfaction and identify areas for
improvement in the service delivery process. It involves gathering customer data about
customer expectations and perceptions of the service provided using a survey questionnaire
measuring the five service quality dimensions.
The survey results can then be used to identify gaps between customer expectations and
perceptions and to develop strategies to close those gaps and improve service quality. The
SERVQUAL model has been widely used in various service industries, including healthcare,
banking, retail, and hospitality.
SERVQUAL in Digital Context
We cannot apply the SERVQUAL dimensions with their traditional definitions to E-
commerce businesses or in any digital services context. We need to modify and tweak some
definitions to fit the model in the digital context. For example, the traditional tangibility
dimension refers to the physical attributes of the company, such as infrastructure or
appearance of the product/ company. But if we must fit the tangibility dimension in digital
context, it must refer to attributes such as website design and fulfilment. Similarly, for all the
five dimensions, we need to modify their definitions to fit the digital context.
Some crucial components are missing (due to lack of relevance when the SERVQUAL model
was being developed) in the original SERVQUAL dimensions that make it unfit for E-
commerce, such as personalization of offerings and privacy.

The following are modified definitions of the SERVQUAL Model dimensions in the digital
context:

8
 1. Tangibles: In the context of e-commerce, tangibles refer to the visual and functional
design of the website and its features. This includes aspects such as the layout, ease of
navigation, and quality of product images and descriptions. Additionally, the quality
and accessibility of customer support resources, such as chatbots, self-help sections,
or FAQs, can also impact customers' perceptions of tangibles.
2. Reliability: In e-commerce, reliability includes the accuracy and completeness of
product information, the speed and efficiency of the ordering process, and the timely
delivery of products. Reliability can also extend to the security and privacy of
customer data, ensuring that personal and financial information is protected from
fraud and unauthorized access.
3. Responsiveness: Responsiveness in e-commerce is measured by the speed and quality
of customer service and support. This includes aspects such as the availability of
customer support channels (such as chat or phone), the responsiveness of customer
service agents, and the effectiveness of problem resolution.
4. Assurance: In the context of e-commerce, assurance refers to customers' trust and
confidence in the website and the organization behind it. This can be influenced by
factors such as the credibility and reputation of the organization, the transparency of
policies (such as shipping and return policies), and the quality and accuracy of
product reviews and ratings.
5. Empathy: Empathy in e-commerce relates to the level of personalization and
customization offered to customers. This includes aspects such as personalized
recommendations based on previous purchases, tailored marketing communications,
and the ability to customize product features and options.
In addition to the five SERVQUAL dimensions, some additional dimensions may be relevant
for e-commerce:
6. Privacy/ Security: Privacy and security are key evaluative criteria in online services.
Privacy involves protecting personal information - not sharing personal information
collected about consumers with other sites, protecting anonymity, and providing
informed consent. Privacy concerns are negatively related to purchase behavior and
purchase decision. Thus, some web sites have developed and displayed consumer
privacy policies, and several companies have also emerged to verify, audit, and certify
the privacy policies of various web sites.
Security, on the other hand, involves protecting users from the risk of fraud and
financial loss from using their credit card or other financial information. Security of
monetary transaction, a key customer concern, influences web site quality.
6. Recommendation System/ Personalization: The recommendation system dimension
was adopted from a previous study. It is a recommendation system as a program or
system designed to recommend product/service/content that the user might find
interesting and relevant on a platform based on factors such as the user’s history and
preferences.

9
 7. Accessibility: Accessibility refers to the ease of use and availability of the e-
commerce platform. This includes aspects such as the compatibility with different
devices and operating systems, the load times and overall performance of the website,
and the website’s availability across different regions and languages.
8. Social Responsibility: Social responsibility is becoming increasingly important for
customers and refers to the ethical and sustainable practices of the e-commerce
organization. This includes aspects such as environmental impact, fair labor practices,
and community involvement. Organizations that demonstrate a commitment to social
responsibility can improve customer loyalty and enhance their brand reputation.
Findings
Gap Analysis
Gap analysis is a critical step in the SERVQUAL model, which helps organizations identify
the gaps between customers' expectations and their perceptions of service quality.

Dimension Expectation Mean Satisfaction Mean Change

Reliability 5.93125 5.10625 0.825
Responsivenes
s 5.73125 5.16875 0.5625
Assurance 5.625 5.29375 0.33125
Empathy 5.5375 5.23125 0.30625
Tangibility 5.5375 5.44375 0.09375

From the above table, we can conclude from the Expectation Mean that respondents gave the
most relative importance to the Reliability dimension and also he least satisfaction level in
the same dimension.
Managerial Implication: The website developer should focus most of their efforts on the
Reliability of service delivery factors such as completeness of product information, the speed
and efficiency of the ordering process, and privacy and security aspects.
From individual factors, the lowest satisfaction levels are given to the following:

factor point
The E-commerce Platform
Provides A Safe And Secure
Shopping Experience 4.84375
The E-commerce Platform
Maintains Confidentiality And
Privacy 4.875
The E-commerce Platform
Responds Promptly To
Inquiries And Complaints 4.9375
The E-commerce Platform
Provides Personalized And
Friendly Customer Service 5.375

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 The E-commerce Platform
Offers Personalized
Recommendations And
Promotions 5.40625

From individual factors, the highest expectation levels are given to the following:

Expectation Column1
The E-commerce Platform Has A
User-Friendly Interface And
Navigation 6.3125
The E-commerce Platform Provides A
Safe And Secure Shopping
Experience 6.21875
The E-commerce Platform Provides
Clear And Accurate Return And
Refund Policies 6.125
The E-commerce Platform Provides
Clear And Accurate Pricing
Information 6.09375
The E-commerce Platform Provides
Clear And Accurate Product
Descriptions 6

Confirmatory Factor Analysis

Confirmatory Factor Analysis (CFA) is a statistical technique used to test the fit of a
theoretical model to the observed data. It is a type of structural equation modelling (SEM)
that is used to confirm the number of factors and the relationships between them in a
hypothesized model. The primary goal of CFA is to determine the extent to which the
observed variables reflect the underlying constructs or factors in a model.
CFA is also used to assess the reliability and validity of measurement scales used in research.
By testing the fit of the theoretical model to the observed data, CFA helps researchers to
assess the extent to which the measurement scales are capturing the underlying constructs
accurately. If the measurement scales are not measuring the underlying constructs accurately,
CFA can help identify the specific items that need to be modified or removed to improve the
validity and reliability of the scales.

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 Factor Covariances

Estimate SE Z p

Relibility Relibility 1.000 ᵃ

Responsiveness 0.724 0.1276 5.67 < .001
Asuarance 0.830 0.0790 10.51 < .001
Empathy 0.682 0.1195 5.70 < .001
tangibility 0.768 0.1099 6.99 < .001

Responsiveness Responsiveness 1.000 ᵃ

Asuarance 0.702 0.1138 6.17 < .001
Empathy 0.949 0.0449 21.15 < .001
tangibility 0.770 0.1132 6.81 < .001

Asuarance Asuarance 1.000 ᵃ

Empathy 0.834 0.0732 11.39 < .001
tangibility 0.784 0.0968 8.10 < .001

Empathy Empathy 1.000 ᵃ

tangibility 0.860 0.0782 10.99 < .001

tangibility tangibility 1.000 ᵃ

ᵃ fixed parameter
Results of confirmatory factor analysis indicate that each item loaded significantly on its
respective underlying construct. Various indices were used to assess the model’s goodness of fit
such as normed X², and the Root Mean Square Error of Approximation (RMSEA). The Normed
X² was 731 less than the cut-off value of 300 suggested. The value of the RMSEA was 0.234
indicating a bad fit.

Model Fit

Test for Exact Fit

χ² df p

731 265 < .001

Fit Measures

RMSE
A 90%
CI

R L U
C T M o p
FI LI SE w p
A er er

0. 0. 0.
0. 0.
4 4 2
23 25
9 3 1
4 5
7 1 4

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Path Diagram

The path diagram is a visual representation of the loadings and cross-loadings between the
different dimensions. The path diagram suggests that all the five dimensions have an active
influence on one another.

13
 Limitations
The study has some limitations. Firstly, the study was conducted in India, which limits the
generalizability of the findings to other countries. Not only that, but the study cannot cover
the entirety of the country itself. Consumer behaviour and expectations across India change
every few hundred kilometres, so getting a response from individuals representing such
diverse expectations and behaviours is difficult. If you look at the sample characteristics, you
will also find that the demographics are skewed towards the city and metro population and
respondents are not random.
Secondly, the study only focused on five SERVQUAL dimensions; dimensions like social
responsibility, brand image, and accessibility were not considered.
Thirdly, the study did not consider the impact of the human tendency to choose the safest
option in the survey forms. The respondents also tend to have high expectation levels in all
dimensions (reliability, responsiveness, assurance, empathy & tangibility) which can also
distort the data and not give a clear picture as to which they give relative importance the
most.
Conclusion
This study ranked the five service quality dimensions from the Indian customers’ perspective
in the online retailing sector. Customers’ perceptions are very important especially in the
service sector such as online purchasing and e-commerce since there is high customer
involvement in the delivery of the service itself. Theoretically, this study extends the
knowledge body of service quality and customer satisfaction by enriching consumer
preferences in the online retailing sector and based on existing theories. We measured the
twenty-five factors of service quality based on SERVQUAL dimensions. The results of the
study obviously indicated that to maintain a high level of overall service quality, online
retailers should pay attention to all these dimensions brought in this study, especially the
factors concerning reliability and responsiveness dimensions. E-commerce platforms are
doing great on factors concerning tangibility aspects and are advised to maintain this standard
as this performance metric has become a point of parity in the industry.

To emerge as a leader, e-commerce companies must focus on factors such as the speed and
efficiency of the ordering process, the timely delivery of products, data privacy, security,
payment options, and complaint handling.

Scope for Further Studies

We can take this study a step further by collecting sample data from a larger audience that
will represent the choices of all the online shoppers present in India. And conducting more
advanced statistical tests like Structural Equation Modelling & Mediation Analysis. This will
allow us to test the relationship of SERVQUAL dimensions with customer loyalty and churn
rate quantitatively.

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 References

 (PDF) Service Quality Measurements: A review - researchgate (no date). Available

at:
[Link]
_A_Review (Accessed: November 24, 2022).
 Measuring the quality of E-service: Scale development and initial ... (no date).
Available at:
[Link]
service_Scale_development_and_initial_validation (Accessed: November 24, 2022).
 Measuring e-commerce service quality from online customer review using ... (no date).
Available at: [Link] (Accessed:
November 24, 2022).

 Fripp, G. (2021, March 22). Understanding the SERVQUAL model. THE Marketing
Study Guide. Retrieved February 28, 2023, from
[Link]
 Measuring Service Quality in online shopping: A case study of e ... (n.d.). Retrieved
February 28, 2023, from
[Link]
_Online_Shopping_A_Case_Study_of_E-Retailing_in_Iran
 Measuring Service Quality in Sport Management: An application of the ... (n.d.).
Retrieved February 28, 2023, from
[Link]
port_management_an_application_of_the_SERVQUAL_scale
 Measuring Service Quality in online shopping: A case study of e ... (n.d.). Retrieved
February 28, 2023, from
[Link]
_Online_Shopping_A_Case_Study_of_E-Retailing_in_Iran
 Servqual a multiple item scale for measuring consumer perceptions of ... (n.d.).
Retrieved February 28, 2023, from [Link]
Zeithaml-2/publication/225083802_SERVQUAL_A_multiple-
_Item_Scale_for_measuring_consumer_perceptions_of_service_quality/links/
5429a4540cf27e39fa8e6531/SERVQUAL-A-multiple-Item-Scale-for-measuring-
[Link]
 Online service quality determinants and E-trust in ... - sage journals. (n.d.). Retrieved
February 28, 2023, from
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 Swaid, S. I., & Wigand, R. T. (n.d.). Key dimensions of e-commerce service quality
and its relationships to satisfaction and loyalty. AIS Electronic Library (AISeL).
Retrieved February 28, 2023, from [Link]

15
 Annexure

The following is the survey questionnaire:

Reliability
A. The E-Commerce Platform Is Available 24/7.
B. The E-Commerce Platform Operates Quickly And Efficiently.
C. The E-Commerce Platform Provides Accurate And Up-To-Date Information.
D. The E-Commerce Platform Provides A Safe And Secure Shopping Experience.
E. The E-Commerce Platform Delivers Products On Time.

Responsiveness
A. The E-Commerce Platform Responds Promptly To Inquiries And Complaints.
B. The E-Commerce Platform Offers A Variety Of Delivery Options.
C. The E-Commerce Platform Offers A Variety Of Payment Options.
D. The E-Commerce Platform Offers User-Friendly Navigation And Search Features.
E. The E-Commerce Platform Offers Personalized Recommendations And Promotions.

Assurance
A. The E-Commerce Platform Inspires Confidence And Trust.
B. The E-Commerce Platform Maintains Confidentiality And Privacy.
C. The E-Commerce Platform Provides Clear And Accurate Product Descriptions.
D. The E-Commerce Platform Provides Clear And Accurate Pricing Information.
E. The E-Commerce Platform Provides Clear And Accurate Return And Refund Policies.

Empathy
A. The E-Commerce Platform Demonstrates A Caring Attitude Towards Customers.
B. The E-Commerce Platform Is Easy To Contact For Help And Support.
C. The E-Commerce Platform Provides Personalized And Friendly Customer Service.
D. The E-Commerce Platform Values Customer Feedback And Suggestions.
E. The E-Commerce Platform Takes Responsibility For Resolving Customer Problems.

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Tangibles
A. The E-Commerce Platform Has A Professional And Attractive Design.
B. The E-Commerce Platform Has High-Quality Product Images And Descriptions.
C. The E-Commerce Platform Has A User-Friendly Interface And Navigation.
D. The E-Commerce Platform Provides Multiple Channels For Customer Support.
E. The E-Commerce Platform Provides Timely And Accurate Delivery Updates.

17