To read this content please select one of the options below:

Would compensation be necessary? The importance of service recovery strategy in e-retail delivery problems

Erlinda Nusron Yunus (Operations Management Department, Sekolah Tinggi Manajemen PPM, Jakarta, Indonesia)

International Journal of Productivity and Performance Management

ISSN: 1741-0401

Article publication date: 11 November 2021

Issue publication date: 17 May 2023

706

Abstract

Purpose

This study examines the different effects of service recovery strategies on customers' future intentions when online shoppers were experiencing delivery failures. Two types of problem severity are evaluated: wrong-product delivery (issues with the product quality or quantity) and late delivery. This study also investigates the impact of service criticality on the relationship between service recovery strategies and customers' future intentions.

Design/methodology/approach

This study employs experimental research with 123 online shoppers as participants. Following the results, a subsequent test is conducted to examine the effect of participants' demographics on future intentions. Finally, the current study elaborates the findings using qualitative research, interviewing both sides impacted by the service failures: online shoppers and e-retail managers.

Findings

The findings show that complementing product replacement with monetary compensation is the most effective strategy to improve repurchase intention after a dissatisfaction moment. This effect is indifferent to service criticality and severity. Age influences the participants' repurchase intentions, in which younger people are less tolerant of service failures. In contrast, gender and education level do not provide any differences. To prevent delivery failures, managers participating in this study suggest several best practices regarding systems and infrastructure, people and coordination and collaboration with logistics partners.

Research limitations/implications

The study mainly examines a limited type of service and service failures. Further studies are encouraged to expand the variables and scenarios, as well as to employ more distinctive methods, to enrich the findings related to recovery strategy in the e-commerce industry.

Practical implications

Given proper compensation, service failure could create momentum for online retailers to boost customer loyalty. This study suggests that managers design the most effective service recovery to win customers back to the business.

Originality/value

This paper enriches the literature related to a service recovery strategy, particularly within the online shopping context.

Keywords

Acknowledgements

The author is most grateful to the anonymous reviewer(s) for the valuable and thorough feedback, which significantly improved the contents of this paper. The author would also like to extend their gratitude to the Editor.

Citation

Yunus, E.N. (2023), "Would compensation be necessary? The importance of service recovery strategy in e-retail delivery problems", International Journal of Productivity and Performance Management, Vol. 72 No. 5, pp. 1286-1303. https://doi.org/10.1108/IJPPM-05-2021-0273

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

Related articles