BINUS Business School

The Digital Technology Strategy on Building E-commerce Customer Loyalty, Doctor of Research in Management Thesis Defense by Rudy

Every year, more and more people rely on the internet to do many of their activities. In 2018, there were over 171.17 million internet users in Indonesia, a staggering number that has definitely increased. It is predicted that by 2025, Indonesia will emerge as a giant market in Asia, due to the fact that Indonesia is the highest populated country in Southeast Asia with great e-commerce potential.

Nowadays in Indonesia, you can order your transportation, appliances, groceries, massages, and all the things you can imagine online via e-commerce. The fashion and beauty industry is among the highest growth in Indonesian e-commerce with a 54% rate from 2018-2019. This is very shocking since shopping for clothes, accessories, cosmetics, and skincare products usually requires customers to try them out before purchasing.

There are two pillars that make it possible for us to safely buy fashion and beauty items from home: a business process focused on customers and a cohesive digital technology. By implementing these two pillars, e-commerce can provide a more dynamic customer journey, which in turn will result in a good customer experience, higher customer engagement, and gaining customer loyalty.

This topic became the main objective of Dr. Rudy’s thesis for Doctor of Research in Management BINUS Business School program, S3 BINUS University. His thesis titled “The Influence of Digital Technology, Customer Experience, and Customer Engagement on E-commerce Customer Loyalty Moderated by Firm Reputation” was presented in front of a team of promoters and examiners led by Prof. Idris Gautama So, SE, S.Kom., MM, Ph.D. on Wednesday, March 10, 2021. Dr. Rudy is currently working as Business Process Specialist at BINUS University.

Why customer loyalty matters

In the era of competitive business, customers have plenty of choices where they can buy fashion and beauty products. They don’t have to look for specific brands; they simply need to choose which e-commerce can offer them bigger and better benefits. In the end, e-commerce companies need to make sure that their online strategy can attract and retain as many customers as they can.

With this implementation, the goal is for the e-commerce companies to establish a brand identity. This is the key for any e-commerce business to stay on top of their customers’ minds. Does brand identity guarantee immediate customer loyalty? Not so much, according to Dr. Rudy’s thesis for Doctor of Research in Management BINUS Business School, S3 BINUS University. If an e-commerce company wants to have sustainable success, then what they need is an implementation of digital technology.

How digital technology affects fashion & beauty e-commerce

Dr. Rudy constructed 6 hypotheses to investigate the relationship between digital technology, customer experience, customer engagement, firm reputation, and customer loyalty. Dr. Rudy conducted a descriptive and explanatory survey with 400 respondents, all who were fashion & beauty e-commerce customers. From the survey, Dr. Rudy found that Lazada, Blibli, and Zalora were the top 3 most visited online retail e-commerce in Indonesia.

Based on his findings, Dr. Rudy created a customer loyalty model that might help Indonesian online retail e-commerce. According to Dr. Rudy’s research, digital technology greatly affects customer experience, and also positively influences customer engagement. Dr. Rudy stated that good and reliable digital technology consisted of three qualities, which were interactive, personalized, and easy-to-use UI.

A great customer experience and customer engagement formed by reliable digital technology implementation will result in customer loyalty (repurchase intention and word of mouth marketing). During his thesis defense for the promoters and examiners of S3 BINUS University, Dr. Rudy also explained that firm reputation had no impact whatsoever on the relationship between customer engagement and customer loyalty. This means that an e-commerce business that has successfully built strong customer engagement will directly lead to customer loyalty, despite its reputation.  **(PID)