Impact of product assortment, perceived service quality, website quality, and customer reviews on customer happiness and word of mouth

Shriedeh, Fayez Bassam; Hanaysha, Jalal Rajeh; Gulseven, Osman Article Impact of product assortment, perceived service quality, website quality, and customer reviews on customer happiness and word of mouth Pakistan Journal of Commerce and Social Sciences (PJCSS) Provided in Cooperation with: Johar Education Society, Pakistan (JESPK) Suggested Citation: Shriedeh, Fayez Bassam; Hanaysha, Jalal Rajeh; Gulseven, Osman (2024) : Impact of product assortment, perceived service quality, website quality, and customer reviews on customer happiness and word of mouth, Pakistan Journal of Commerce and Social Sciences (PJCSS), ISSN 2309-8619, Johar Education Society, Pakistan (JESPK), Lahore, Vol. 18, Iss. 1, pp. 157-180 This Version is available at: https://hdl.handle.net/10419/294813 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/4.0/ Pakistan Journal of Commerce and Social Sciences 2024, Vol. 18(1), 157-180 Pak J Commer Soc Sci Impact of Product Assortment, Perceived Service Quality, Website Quality, and Customer Reviews on Customer Happiness and Word of Mouth Fayez Bassam Shriedeh Department of Marketing, Hashemite University, Zarqa, Jordan E-Mail: [email protected] Jalal Rajeh Hanaysha (Corresponding author) School of Business, Skyline University College, 1797, Sharjah, United Arab Emirates E-mail: jalal.hanay[email protected] Osman Gulseven Faculty of Agricultural and Marine Sciences, Sultan Qaboos University, Muscat, Oman E-mail: [email protected] Article History Received: 29 Dec 2023 Revised: 24 Mar 2024 Accepted: 27 Mar 2024 Published: 31 Mar 2024 Abstract The main aim of this paper focuses on examining the effect of website quality, product assortment, customer reviews, and perceived service quality on customer happiness and word of mouth. The data for this research was gathered from online shoppers of retail stores in United Arab Emirates. Data was analyzed using partial least square based structural equation modeling through SmartPLS software in order to verify research hypotheses and draw conclusions. The findings also showed that website quality, customer reviews and perceived service quality have positive effects on customer happiness and word of mouth. Finally, the results revealed that product assortment positively affects word of mouth, while its effect on customer happiness is insignificant. This research builds upon the existing literature by demonstrating the effect of selected factors on customer happiness and word of mouth, considering that only limited studies were conducted in the past about these variables in the Middle East region. Keywords: Product assortment, customer reviews, perceived service quality, online retail customers, website quality, customer happiness, word of mouth, United Arab Emirates. 1. Introduction The advancements in technology and growth of internet usage among individuals worldwide has urged marketers to seek for the optimal methods to reach their clients and Product Assortment, Customer Happiness and Word of Mouth 158 meet their expectations. As a result of these shifts, retailers now need to complement their traditional storefronts with online buying options. The use of these e-commerce websites provides a cost-effective approach for manufacturers or retailers to improve the efficiency of the distribution of their goods and to connect with potential customers. In the meantime, customers shopping on various e-commerce websites will have access to a wider variety of options and more favorable pricing (Chiu & Cho, 2019). Accordingly, the e-commerce business has attracted the attentions of both academics and practitioners in order to clearly understand about this online distribution method from both the consumer's and the seller's perspectives (Escobar-Rodrguez & Bonsón-Fernández, 2017). Furthermore, as consumers nowadays are well-versed in technology, it has become increasingly important for ecommerce managers and academics to obtain clear understanding of customers’ needs and the factors that influence their word of mouth towards e-commerce websites. Researchers in the field of marketing evaluated the significance of word of mouth and the factors that affect it in different contexts. One of the most important ways in which retailers can set themselves apart is through their product assortment (Kautish & Sharma, 2019). However, the academic literature is still debating the question of product assortment due to the inconclusive results with regards to its effect on consumer behavior (Gao & Simonson, 2016). One school of thought holds that more customers from various segment groups are likely to say positive words about a store if it has more items to choose from, and this consequently will improve the store's sales and profits (Kautish & Sharma, 2019). Another contradicting view was reported in the prior research which suggested that consumers can make better use of their time at the store if they are presented with a more limited selection of products; thus, allowing them to make judgments more quickly with minimal frustration caused by excess of choice (Jamil, 2001). However, despite this contention, other scholars suggested that brands should present consumers with a variety of goods and services so that they have a variety of options from which to select (de Villiers, Visnenza, & Phiri, 2018). In the internet shopping context, website quality has also been regarded in the earlier literature as a significant factor for influencing customer happiness and word of mouth. Effective website design characteristics are the reason why certain online retailers' websites receive more traffic than others (Boardman & Mccormick, 2022). Sellers' websites often include pre-sale information (e.g. product and pricing details) in an effort to minimize the searching cost and time for customers. It has been suggested by some scholars that shoppers' favorable impressions of and attitudes toward a retailer can be facilitated by the quality of its website (Chen, Huang, & Davison, 2017). In light of the intense competition in the modern online retail market, managers of e-commerce sites need to be aware of the other factors that may affect shoppers' behavior. Over the past few years, the service quality has been viewed as a vital aspect in the success of e-commerce businesses (Dhingra, Gupta, & Bhatt, 2022). Due to the lack of physical interaction, it is even more important for online retailers to provide satisfactory customer service to their clients as they browse for products, place orders, and patiently wait for their deliveries (Rita et al., 2019). Tsao et al. Shriedeh, Hanaysha & Gulseven 159 (2016) outlined that giving customers the impression that they will receive their orders promptly and will have an easy time while exchanging or returning them increases their happiness (e.g. high predictability and the enjoyment of waiting for goods) and stimulate them to spread positive word of mouth. Previous studies also showed that customer reviews have a significant impact, not only on the sales of products across a variety of categories (such as books, hotel rooms, and movies), but also on the customer happiness and word of mouth (Donthu et al., 2021; Jia, 2020). Several retailers post customer reviews on their websites for better normative evaluations, such as overall product rankings and ratings for product features in order to assist customers in determining the level of quality offered by a given product. Customers nowadays rely heavily on online reviews to form opinions about the quality of goods, the efficiency of service, and the overall happiness from a purchase (Li et al., 2023). Based on this premise, online product reviews have been considered to be highly influential and powerful (Pop et al., 2023) because people trust the opinions of their peers when they intend to purchase from a certain website. Dwidienawati et al. (2020) indicated that consumers place greater weight on the recommendations from their peers than those provided by businesses. This is likely due to the fact that peers are perceived as unbiased and more reliable than official company representatives. However, very limited studies have been conducted so far about the effect of customer reviews on word of mouth and customer happiness. As online shopping presents greater risks and uncertainties; therefore, customer happiness towards the seller’ website should be nurtured through enriching customer experience in order stimulate positive word of mouth communication. Accordingly, the lack of customer happiness is commonly seen as the primary barrier to the widespread of positive word of mouth (Niedermeier et al., 2019). However, there are scarce studies in the service literature that looked at the impact of a retailer's website quality and product assortment on customer happiness. While many scholars have looked at the importance of customer happiness in online buying, very limited studies have been dedicated to the examination of its role in affecting word of mouth. Niedermeier et al. (2019) also stated that there is still a necessity to develop the theoretical reasoning and offer precise evidence for verifying how customer happiness can be nurtured and improved. Therefore, this research intends to explore the effect of customer happiness on word of mouth (Ventre & Kolbe, 2020). In addition, online retailers have become recently highly concerned towards understanding the significance of website quality, product assortment, customer reviews, and perceived service quality in predicting word of mouth. In light of the limited research in this area, this paper was set out to explore the impact the stated factors on word of mouth and customer happiness with reference to the retail industry in UAE context. The findings will be useful for the decision makers in e-commerce business by providing them with novel insights regarding the significance of selected factors in attaining customer happiness and developing positive Product Assortment, Customer Happiness and Word of Mouth 160 word of mouth about their brands, especially in the existence of growing competition and changing consumers’ needs. An overview of the pertinent literature review for this study is provided in the following section. 2. Literature Review and Hypotheses Development 2.1 Website Quality Electronic commerce relies heavily on the use of websites to facilitate trade between customers and sellers. Websites of certain online retailers receive more visits than those of their rivals due to the superior quality of their design and features (Chen et al., 2017; Luo, Ba, & Zhang (2012). In addition, Tsao et al. (2016) argued that website quality is crucial to the growth of an e-commerce business because it serves as a brand's unique selling proposition. In order to succeed as an online retailer, every aspect of its website must demonstrate professionalism. In the documented literature, several definitions of website quality were proposed. Perceived web quality, as defined by Al-Debei et al. (2015) is the overall evaluate of the ease, speed, reliability, and efficacy of a website's design and processes from the perspective of an online shopper. Website quality was also described as the extent to which customers rate a website as excellent or superior (Tran & Strutton, 2020). Likewise, Hsiao et al. (2010) conceptualized website quality as the extent to which customers believes that the features and attributes of a website match their needs and expectations. Therefore, understanding which components of the website a user views to be most significant should be the focus of businesses when developing their websites. Previous research verified website quality positively affects customer happiness (Jongmans et al., 2022) and word of mouth (O’cass & Carlson, 2012; Zeqiri et al., 2023). Bai et al. (2008) reported that the quality of a seller’s website is essential in the realm of online commerce due to the fact that consumers' opinions of the quality of a website directly influence their behaviors. According Hsiao et al. (2010), shoppers' confidence in e-commerce websites is significantly influenced by their impressions of the website quality. Indeed, previous studies have shown that consumers' impressions of the quality of the website account for a some of the variation in happiness (Al-Maghrabi et al., 2011; Sastika et al., 2023) and word of mouth. Banerjee, Shaikh, and Sharma (2024) also found that website experience has a positive impact on brand happiness in the retail setting. Most people will think twice before sharing sensitive information on an untrusted website, including both personal and financial details (Kim et al., 2012). Accordingly, the subsequent hypotheses are projected: ➢ H1: Website quality has a positive effect on customer happiness. ➢ H2: Website quality has a positive effect on word of mouth. 2.2 Product Assortment The term product assortment has gained increased attention in the contemporary marketing literature. It was conceptualized by Lombart et al. (2018) within a certain merchandise / grocery group as the diversity in products offerings. The perceptions of customers towards Shriedeh, Hanaysha & Gulseven 161 an assortment can be shaped by the level of product quality, brand name, and price; which all enhance the reputation and market position of a seller and influence the purchase decision as well satisfaction of buyers (Li et al., 2020). The assortment offered by a retail store have noteworthy effects on store selection decisions among consumers, and is regarded as one of the most significant factors after price affordability and convenience of location. Nevertheless, assortment strategies are vital for customer acquisition and nurturing retention rate. Beneke et al. (2013) outlined that customers tend to select certain merchandise over another due to the perceived benefits and value. Hence, offering adequate assortments in a retail store have significant implications on sales and profits and are important for ensuring long-term business growth. Azhari et al. (2023) indicated that the perceptions of customers towards a store's assortments positively influence their purchase happiness. Henkel and Toporowski (2023) also supported that providing shoppers with wide merchandise options stimulate them to spread a positive word of mouth. Past studies also supported the positive effect of product assortment on word of mouth (Davis & Khazanchi, 2008; Errajaa et al., 2022; Hervas-Drane, 2015) and customer happiness (Choi et al., 2018; Verma & Pant, 2021). Furthermore, offering a mix of products with diverse features allows clients to easily find the specific products which meet their requirements, regardless of how niche a market segment they fit in (Gajanan et al., 2007). Accordingly, buyers tend to have greater willingness for searching what they are looking for, which satisfies their interest for a diverse selection and happiness towards the retailer. Therefore, this study posits that: ➢ H3: Product assortment has a positive effect on customer happiness. ➢ H4: Product assortment has a positive effect on word of mouth. 2.3 Customer Reviews An increasingly large number of people around the world rely on online reviews as a key source of information before making online purchases (DeAndrea et al., 2018; Filieri, 2016; Zhao, Wang, Guo, & Law, 2015). A number of online retailer post customer reviews on their websites by displaying normative assessments, like overall product rankings and ratings for product features, in order to assist customers in determining the overall quality of a product (Filieri, 2015). Reviews written by other customers are an invaluable resource for online shoppers, who can use them to make more informed purchases and even be persuaded to switch to online channels from more conventional ones. Product reviews are more reliable when they are written by actual consumers who have used the item before (Tran & Strutton, 2020; Zhu, Li, Wang, He, & Tian, 2020). They represent a reflection and a record of customers’ opinions, assessments, and experiences. A high number of reviews is an indication of a well-liked website, which in turn boosts the perceived worth of the user experience. Meanwhile, timely, complete reviews with appropriate explanations according to specific facts about the offerings have a greater persuasive impact as Product Assortment, Customer Happiness and Word of Mouth 162 customers may quickly locate useable cues to form decisions according to the review (Luo & Ye, 2019; Zhu et al., 2020). Prior studies acknowledged the effect of customers reviews on customer happiness and word of mouth (Ventre & Kolbe, 2020; Quan et al., 2023). Verma and Yadav (2021) also found a positive association between online reviews and word of mouth. Furthermore, Luo et al. (2021) showed that customers are likely foster favourable word of mouth when they have greater happiness towards the seller, for the simple reason that people to reciprocate what they have experienced. In spite of the possible concerns about their reliability, customers tend to have higher trust towards online reviews than those recommendations and product information created by the marketers themselves and disseminated via conventional marketing communication channels. Eslami, Ghasemaghaei, and Hassanein (2018) stated that about eighty-five percent of buyers believe in customers reviews as they do in recommendations from friends and family. Reviews written by happy customers give others clear idea about how well a product functions in various situations of usage (Tran & Strutton, 2020; Yi & Liu, 2020). However, although prior researches emphasized about the significance of customer reviews in affecting customer happiness and word of mouth, the empirical literature about this link is very limited. Hence, this research suggests the following hypotheses: ➢ H5: Customer reviews have positive effect on customer happiness. ➢ H6: Customer reviews have positive effect on online word of mouth. 2.4 Perceived Service Quality Over the past few years, service quality has emerged as the primary element in the success of an e-commerce business. According to Kautish and Sharma (2019), the quality of an online retailer’s service is measured by how well it simplifies the shopping experience for customers throughout the entire process of using the website, from browsing to making a purchase to receiving the product. The experiences that buyers get while interacting with a seller, as well as after sale are the basis for website rating. When customers' needs are met through obtaining high-quality service, they tend to develop a positive impression about the service provider (Chen et al., 2017; Mamakou, Zaharias, & Milesi, 2024). Moreover, buyers may perceive the willingness of support from the seller based on its service quality. Sellers can improve their service quality by listening to their customers' concerns and addressing them, as well as by proactively responding to their customers' needs and suggesting complementary items or services if needed (Golara et al., 2021). In addition, Zhou et al. (2009) found that when customers receive high-quality of services, their happiness and willingness to recommend the brand to others increases. Accordingly, online retailers should provide shoppers with individualized services, promptly address their concerns, and promote two-way communication among them (Liang & Chen, 2009). In general, earlier literature showed that service quality positively affects customer happiness (Gong & Yi, 2018; Theodorakis et al., 2015; Yi & Nataraajan, 2018; Zhong & Moon, 2020) and word of mouth (Pappachan, 2023; Stribbell, & Duangekanong, 2022; Ullah, Ranjha, Shriedeh, Hanaysha & Gulseven 163 & Rehan, 2018). However, insufficient research has been done to verify this link, particularly in retail context. Therefore, this study proposes the next hypotheses: ➢ H7: Perceived service quality has a positive effect on customer happiness. ➢ H8: Perceived service has a positive effect on word of mouth. 2.5 Customer Happiness Due to the increasing focus on the social impact of marketing efforts, companies are now placing greater importance on customer happiness. Customer happiness was defined in the literature as the extent to which a client feels that his/her well-being and quality of life have been improved (Gong & Yi, 2018). Hellén and Sääksjärvi (2011) also defined customer happiness as a state of well-being characterized by an abundance of positive emotions and a dearth of negative ones, and it is frequently related with one's own experiences of joy, contentment, and a meaningful life. In other words, customer happiness is a reflection of the culmination of clients’ subjective assessments of their present life conditions. Earlier research emphasized the theoretical significance of customer happiness for attaining longterm brand loyalty and maximizing a firm’s profits. Moreover, previous studies showed that customer happiness has a positive impact on word of mouth (Khoo, 2020; Loureiro et al., 2018; Niedermeier, Albrecht, & Jahn, 2019). Schmitt and Van Zutphen (2012) also stated that happy customers tend to return for future purchases and spread favorable wordof-mouth recommendations to their peers, friends, and family members. Hence, the following hypothesis is suggested: ➢ H9: Customer happiness has a positive effect on word of mouth. In accordance of the above literature and underlining theories, the conceptual framework for the present research is displayed in Figure 1. H1 H2 H4 H3 H9 H5 H7 ` H8 H6 Figure 1: Conceptual Model Perceived Service Quality Customer Reviews Website Quality Product Assortment Customer Happiness Word of Mouth Product Assortment, Customer Happiness and Word of Mouth 164 3. Methodology 3.1 Sample and Data Collection The required data for conducting this study was gathered through an online survey distributed to customers of online stores in UAE. During data collection, we opted for a convenience sampling technique. According to the literature, it is appropriate and effective to use a convenience sample while conducting research on consumer behavior regarding online purchasing and running multivariate statistical analysis. Moreover, this sampling methodology was used because it is less costly and the data collection could be completed in a reasonable time. It was also used by similar previous studies in the online shopping context (Alves & Luís Reis, 2020; Park et al., 2021; Sumarliah et al., 2021). In the beginning, the targeted respondents were asked to participate in answering the survey if they have any experience in purchasing products/items from online stores in UAE. Social media networks, for instance Instagram and WhatsApp, Twitter, and Facebook in addition to emails were all employed for distributing the survey on targeted respondents. During the data collection process, we adhered to the most stringent ethical requirements. It was made clear to the respondents that responses will be used exclusively for research, and their anonymity will be maintained throughout the study. Overall, 335 surveys were collected from the targeted respondents over the period of April to June 2023. Among these responses, 8 were excluded because there were found incomplete. Finally, 327 valid responses were used for data analysis. The analysis for obtained data was performed using the partial least square structural equation modelling (PLS-SEM). According to the literature (Hair et al., 2019; Sarstedt et al., 2022), PLS-SEM is appropriate for data analysis when the purpose is to test a theoretical model from the perspective of prediction, the sample size is small, and when the structural model contains several variables, indicators and/or theoretical relationships. Also, as far as issues of distribution are a key concern, for instance lack of normality, then PLS-SEM is deemed appropriate for data analysis. Initially, the validity of measurement scales was calculated based on confirmatory factor analysis via smart PLS software by calculating PLS Algorithm while estimating the measurement model. Also, the reliability of measurement items was verified via both composite reliability and the Cronbach’s alpha. After that, the hypotheses were tested using bootstrapping technique and the results were generated from path coefficient table. 3.2 Measures All of our model's constructs were rated on validated scales. Expert feedback was also gathered from two professors and two store managers over the course of two meetings to ensure the questionnaire's content validity. According to their suggestions, the measurement scales were modified slightly as needed to provide a good fit with our research setting. The designed survey contained two sections. In the first part, we included general questions to capture the demographic profile of the responders. The other section covered the measurement scales of variables. First, we used seven items to measure website Shriedeh, Hanaysha & Gulseven 171 sellers which prioritize the delivery of efficient services to their clients can improve their happiness, and stimulate them to recommend the brand in their social network. 6. Conclusion and Implications 6.1 Practical Implications This paper focused on examining the effect of website quality, product assortment, customer reviews, and perceived service quality on customer happiness and word of mouth. The results outlined that website quality has a positive effect on both word of mouth and customer happiness. From a managerial perspective, this paper provides noteworthy implications for both the literature and online store managers. While developing shopping websites, store managers should prioritize the usability of their sites by paying close attention to page layout, accessibility, download speed, and the organized classification of products. The management should also have alternate plans in place in case of system malfunction in addition to performing routine maintenance to keep the system running smoothly. In addition, improving search results and preventing information overload requires offering high-quality content that is up-to-date, clear, relevant, and simple to grasp. To minimize the costs that can be experienced by website visitors before, during, and after purchasing, it is necessary to understand customers’ needs and expectation and fulfill them. By providing variety of choices for consumers and enhance shipping efficiency, as well as allowing for the return of defective goods with appropriate compensation in the case of service interruption, this can boost customer happiness and ultimately stimulate positive word of mouth. The results also showed that customer reviews have significant positive impact on customer happiness and word of mouth. The results of this research also have implications for online stores in terms of the value of customer feedback. Customers' happiness towards purchasing from the seller and willingness to recommend it to others can be positively affected by the information provided by online reviews. Consequently, it is imperative for online stores to consider both the volume and quality of customer reviews. In addition, they need to think about ways to make online reviews more engaging for customers to increase the number of reviews with high quality content. Nevertheless, customer reviews are an essential component of the environmental aspects that make up a retailer's website, because customers' expectations of websites are becoming increasingly difficult to fulfill. For customer of online retail stores, the inability of touching, smelling or trying a product is likely to complicate the purchase decision process. Online retailers can mitigate the aforementioned drawbacks by soliciting high quality reviews from customers. This usergenerated content effects consumers' happiness and improve their willingness to spread positive word of mouth. Furthermore, the finding showed that product assortment positively affects word of mouth while its effect on customer happiness is negative and insignificant. The result suggests Product Assortment, Customer Happiness and Word of Mouth 172 that retailers should pay close attentions to their product offerings, particularly the selection composition. It is important that the retailer's choice of products should conform to the expectations set by the marketing materials and customers’ needs. That is, the store's offerings must be aligned the descriptions given to customers. Therefore, "what the customers want to buy" rather than "what the retailers want to sell" should be the focal point in determining what to offer. Finally, the results supported the positive effect of perceived service quality on customers' happiness and word of mouth. Therefore, online store managers need to understand that in today's market, excellent customer service is essential to the survival of their businesses. Due to the impersonal nature of providing services online, it is crucial for managers to warrant that their IT-based communication platforms are reliable. Besides the standard online payment methods, online store websites in UAE may consider Cash on Delivery (CoD) option. This is relatively important for minimizing the perceptions of risk that is associated with online shopping. 6.2 Theoretical Implications This paper provides a key contribution to the marketing literature in the field of consumer behavior. From a theoretical standpoint, this paper has addressed the calls for undertaking future research on the potential determinants of customer happiness and word of mouth, particularly in emerging markets and Arab nations. It mainly aimed to make a significant contribution towards enhancing and extending our understanding regarding the roles of perceived website quality, product assortment, customer reviews, perceived service quality, and trust along with their effects on word of mouth towards retail stores in Middle East region. This paper also addresses existing gaps in the empirical literature through the examination of their effects on customer happiness. This is the first study that integrates these variables together in one model. By looking as past literature, it can also be noticed that there are limited studies concerning the impact of product assortment on customer happiness and word of mouth. Earlier studies also paid less attention towards testing the effect of customer reviews on customer happiness and word of mouth. Consequently, this research aimed to provide a noteworthy contribution to the literature by bringing new insights from UAE’s online retail context. 6.3 Limitations and Future Research Suggestions There are some limitations in this research which could be taken into consideration in future researches. Whilst there are many factors that affect customer happiness and word of mouth, the current study focuses on only four (website quality, product assortment, customer reviews, and perceived service quality). In future studies, it could be useful to include additional variables, such as perceived price and online advertising. Future research is also suggested to verify if customer happiness functions as a mediator between them. Second, the respondents in this research are comprised of online shoppers in UAE, therefore, it is recommended for future researches to collect data from other nations in Middle East region to confirm the findings. Third, demographic characteristics (e.g. gender and age) may play vital roles in influencing buyers’ online shopping behavior; thus, the Shriedeh, Hanaysha & Gulseven 173 current research model can be expanded in the future and include them as moderators. Forth, a quantitative research method was employed for data collection using a crosssectional survey; therefore, future studies can adopt qualitative techniques (e.g. focus group or depth interviews) to verify the findings. Furthermore, there was no differentiation made between users who had placed their orders via mobile apps or via websites. In light of this, an investigation focusing just on users of mobile apps or website users may yield findings that are more platform-specific. 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