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Value Creation and Stickiness

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Introduction

E-commerce has experienced phenomenal growth, not just in the United States but all over the world. Consumers continue to embrace e-commerce and internet both in the developed, as well as the developing countries. Internet usage was, in 2011, estimated to be at roughly 2.095 billion people which accounted for approximately 30.2 percent of the world populace. This was according to Internet World Stats results posted in March 2011. Statistically, this represented a rise by an almost 480.4 percent in comparison to year 2000. Internet penetration in Asia is approximated at 922.33 million people. This accounts for roughly 23.8 percent of the population regionally and about 44 percent of the total internet penetration. Again, this represents a rise by approximately 706.9 percent compared to year 2000 figures. Unprecedented internets use via Smartphone, and such other gadgets as the tablet is poised to encourage growth even further. E- Commerce models such flash sales which comprises of Gilt Group, Neiman Marcus and mid-day dash and digital media download will also be beneficial as far as internet connectivity is concerned.

In Europe, the figures for online buyers is projected to rise by 48 million to stand at 205 million come 2015;total purchases are projected to hit 133.6 billion Euros according to forester. In Malaysia, internet penetration stood at approximately 17.723 million users as of 2011. It is documented that internet users in Malaysia spent RM 1.8 billion worth of internet shopping in 2011 alone and according to Nielson Company survey this figure will likely triple in a span of three years. Internet service provider PayPal conducted a survey which found out that Malaysian spend substantially more funds on local websites going to a tune of RM 825 million worth of transactions in comparison to foreign websites whose transactions only recorded RM627 million in receipts in 2011.Out of roughly 2 million present day global internet consumers, about 28.3 percent cited English as their native language.  Notwithstanding these growing statistics and projected large numbers of internet consumers from a wide variety of cultures, no research has hitherto been done to try and put into perspective the fact that internet consumers from specific cultures usually exhibits greater propensity to cling to specific websites.

Problem Statement

In spite of the fact that encouraging accomplishment of B2C e-commerce exhibits a convincing case for the confluence of entrepreneurship and strategy research streams, a thoroughgoing academic research seeking to ascertain the effect of individual users on their reasons for sticking to the various B2C e-commerce  remains scanty. According to Priem (2007), Value creation calls for innovation that initiates or increases the value that consumers attach to the benefits accruing from consumption.  Existing literature has failed to adequately address the user perception and acceptance of the e-commerce B2C value creation model as an explanation to stickiness to the e-business sites as well as how these internet users perceived these underlying explanations to the prosperity for internationalization.

Literature Review

In 2001, Amit and Zott conducted a number of theoretical surveys which sampled 59 internet companies domiciled in the United States and Europe. The objective of these surveys was to try and offer as well as empirically test value creation for e-businesses. By drawing parallels from several studies including the value chain framework (Porter, 1985), Schumpeter’s theory of creative destruction (Schumpeter, 1942), the resource-based view of the firm (Barney, 1991), strategic network theory (Dyer and Singh, 1998), and transaction costs economics (Williamson, 1975), they tested how value is created. They did not stop there but went ahead to discuss if these theories could be applied in cases involving virtual markets.  They borrowed heavily from the grounded theory development methodology of Glaser and Strauss (1967) to try and find out which among the many sources of value contained in the vast literature related to e-businesses. They accepted the assertion that the total value can be appropriated by parties in e-business as suggested by Brandenburger and Stuart’s (1996). They went further to note that the presence of value drivers has the potential to enhance the value-creation for e-business. Specifically, they identified efficiency, complementarities, lock-in, and novelty as key ingredients of value creation. According to transaction costs theory (Williamson, 1975), transaction efficiency is inversely related to cost per transaction so that when it rises cost per transaction declines. In light of this, the larger the transaction efficiency the lower the costs and therefore the more beneficial it will be in any aspect of e-business.

Brandenburger and Nalebuff (1996) have further underscored the importance of offering complementary outputs to customers. By definition, Complementarities refers to the determinants of a firm’s profit function involving input and output. According to Resource Based View, complementarities occupy a very significant position in the process of value creation. In fact, complementarities rank among the most strategic assets as far as sources of value creation are concerned (Amit and Schoemaker, 1993). Also, value creation may be achieved if consumers are motivated to engage in repeat purchases. This normally results when strategic partners offer incentives to boost and maintain their relations with the firms. The potential of e-business to create value can be achieved through ‘lock in’. ‘Lock in’ prevents consumers as well as strategic partners from moving to other competitors the consequence of which is value creation. According to Williamson’s (1975), transaction cost framework identified lock-in as switching costs and as network externalities, which has its origin in network theory (Katz and Shapiro, 1985; Shapiro and Varian, 1999).  By definition novelty simply means the quality of being new. Alternatively, novelty means uniqueness so that if something is said to be novel, it means it is unique. Innovation and its potential for value creation is well documented in the works of a management guru named Schumpeter (1934). Having a very strong brand and being the first in the market as well offers the business an opportunity to succeed and these are two business opportunities that e-business innovators can benefit from to grow their business (Arthur, 1996; Shapiro and Varian, 1999). Majority of B2C e-commerce companies have no choice but to come up with diverse technologies and commit   a larger amount of their resources to bolster “stickiness” of consumers to their websites if they are to successfully prevent them from shifting to their competitor’s website. According to Oliver (2007), ‘stickiness’ in this case refers to the users’ tendency to regularly and repetitively visit a given website most often due to their previous experience amid attempts by competitors to influence their switching behavior.

Majority of studies on online consumers purchase, have mostly borrowed from attitude theory model such as TRA (Theory of Reasoned Action), theory of planned behavior (TPB), and Technology Acceptance Model (TAM) in an attempt to explore the effects like intention, attitude, subjective norm, perceived behavioral control, ease of use, perceived usefulness etc. as the determinant factors on online purchase intention. Simple and easy to use design is attractive to those who shop over the internet according to Jupiter Research (2006). Moreover, loyalty among internet shoppers can greatly be enhanced by attractive website features as well as reliable performance. Owing to the development in research on consumer psychology and conduct, online stickiness notably turns its attention to users’ characters. If a website is user-friendly such that they can comfortably control it at their own pleasure then such a website can be said to be sticky.  Stickiness (longer, frequent visits) according to Bush is unequivocally founded on providing unique content and customized services to vertical market niches [1]. Online users' tendency to stick to a website is conceptualized from the perspective of the user as research on consumer behavior continues to develop. For instance, Dahui Li, Glenn J. Browne, and James C. have all defined ‘stickiness’ from the user's perspective as repetitive visits to a given website due to strongly held preference to use the same in future irrespective of intense pressure in the prevailing circumstances to switch their loyalty to other websites.[2, p.1 06]. Additionally, Ling Xue, Gautam Ray, and Andrew B. Whinston concurs that investing in technology has the potential to produce a unique level of the stickiness referred to as the switching cost [3]. According to Kim, stickiness is the average time spends on a website and the frequency with which they visit it[6). From an online perspective, this is the most common unit of measurement. The first impression a user gets on visiting a website more often than not greatly shapes his feeling about the website and if he is likely to visit such websites in the future. Judy chose three factors which reflect the website's value: content, context and infrastructure, to study their effects on stickiness via imaginary website value [8). In her view, content refers to the information that a website offers to whoever visits it, infrastructure is the link that a website offers while the context is the website’s format. She went further to note that out of these, only website's content has effects on stickiness.

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