Consumer response to E-commerce service failure: Leveraging repurchase intentions through strategic recovery policies

Abstract

The study emphasizes on the impact of online retailers' recovery policies on consumer empowerment and gratification together with repurchase intentions. The research surveyed online shoppers who experienced service failure after which subsequent recovery efforts were made by retailers. The first stage of the study which involved a structural model analysis revealed that consumers' perceptions of the quality of retailers’ recovery policies significantly influence consumer empowerment, consumer gratification and repurchase intentions, and the financial risk associated with a product significantly moderates the relationship between the recovery policies and consumer intentions to repurchase the product. The second stage involved considering six different full-profile hypothetical scenarios. Following this, the study simulated consumer choices by calculating the total utility for each scenario based on the attribute levels. The study then applied a scenario-based probabilistic game model that normalizes these utilities to estimate consumer preference probability. The results indicated that scenarios combining high-value attributes, such as premium upgrades and full refunds, have the highest likelihood of being chosen. The study concludes with proposed managerial strategies for online retailers to enhance customer retention.