Impact of Value-Added Service Features in E-Retailing Processes: An Econometric Analysis of Website Functions

Decision Sciences Journal, Forthcoming

Mays Business School Research Paper No. 2325909

38 Pages Posted: 15 Sep 2013

See all articles by Howard Hao-Chun Chuang

Howard Hao-Chun Chuang

National Chengchi University - College of Commerce

Guanyi Lu

Oregon State University

David Xiaosong Peng

University of Houston - C.T. Bauer College of Business

Gregory R. Heim

Texas A&M University - Department of Information & Operations Management

Date Written: August 18, 2013

Abstract

We examine the impact of three classes of website functions (foundational, customer-centered, and value-added) upon e-retailer performance. Using secondary panel data for 2007-2009 on operating characteristics of over 600 e-retailers, our econometric analysis finds that only the value-added service functions are positively associated with changes in e-retail sales revenues across time. We also observe a decreasing marginal impact of deploying additional value-added service features. To account for possible alternate explanations, we control for firm- and time-specific fixed effects, merchant types, merchandise categories, and order fulfillment strategies. By further decomposing e-retail sales revenues into website traffic, conversion rate, and average order value, we find that website functions affect e-retail sales revenues mainly through their impact on website traffic. Our investigation demonstrates the empirical research usefulness of the Voss (2003) conceptual e-service sand cone model. Our results identify for managers where to focus ongoing e-retailing system development efforts, yet suggest that focusing too many retailing capabilities on exploratory and experimental value-added service features may backfire, potentially leading to worsening e-retailer performance.

Keywords: E-retailing, econometrics, Q-sort, sand cone model, website functions, e-service

JEL Classification: M11, O32, O33, L81, L86

Suggested Citation

Chuang, Howard Hao-Chun and Lu, Guanyi and Peng, David Xiaosong and Heim, Gregory R., Impact of Value-Added Service Features in E-Retailing Processes: An Econometric Analysis of Website Functions (August 18, 2013). Decision Sciences Journal, Forthcoming; Mays Business School Research Paper No. 2325909. Available at SSRN: https://ssrn.com/abstract=2325909

Howard Hao-Chun Chuang

National Chengchi University - College of Commerce ( email )

64 Sec 2 Zhinan Rd
Wens
Taipei, Taiwan 11605
Taiwan

Guanyi Lu

Oregon State University ( email )

Bexell Hall 200
Corvallis, OR 97331
United States

David Xiaosong Peng

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States

Gregory R. Heim (Contact Author)

Texas A&M University - Department of Information & Operations Management ( email )

320 Wehner Building
4217 TAMU
College Station, TX 77843-4217
United States
979-845-9218 (Phone)

HOME PAGE: http://mays.tamu.edu/info/

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