Customer loyalty in e-commerce domain

Happy customers, Loyal customers!

When ever we plan to buy something, we just go to our favorite e-commerce portal and search for it. If it is available, then we search for the same in another e-commerce portal to see if you can get the same item for a lesser price or at a closer delivery date etc. Flipkart in India has surely changed the definition of e-commerce. Before that only few people used to order stuff online and eBay or Amazon used to be their primary sources. There were other sites doing business in India but the volumes were less compared to what Flipkart was able to acquire. After Amazon started its operations in India, the Indian e-commerce story took a turn.

In our childhood days, you might have seen families using same brand “Tooth paste” or “Soap” or “Shampoo” for years together. The brand loyalty was very high in those days. Another pattern was that most of the families used to purchase groceries or cosmetic material from a particular shop for years together even if new shops opened up. Reasons for this could be that you have an account in that shop and you pay your expenses at the beginning of next month or the shop keeper is a friend of you etc …

Here i am trying to bring up the two dimensions of customer loyalty.

  • Loyalty towards a Brand.
  • Loyalty towards the shop where you buy.

In the present digital age, Brand loyalty is still there to a decent extent but not as much as it used to be earlier. The fact that in the initial days of mobile phone usage Nokia used to be the market leader. The gap between Nokia and the second best mobile seller was so huge. But now a days,  we see so many mobile brands and penetration of these brands into people. The gap between the 1st best mobile seller and the 2nd best mobile seller could be considerably less these days.

If we consider the present day e-commerce portals   to the olden physical stores, I would say that the customer loyalty has dropped drastically. Every time you search for a particular product, you just don’t search it in your favorite e-commerce platform, if the same product is available at a cheaper price, in another platform, you are totally fine to order it from there. This is the reason why there is huge price war between all the e-commerce platforms. And the sad part of the story is that this war is never going to end as customer’s purchase decisions are always  driven by price rather than platform loyalty.

A good analogy to this would be the Indian mobile service providers story where service providers at one point had special SMS packs with free or minimal charges to attract customers from other networks. After the arrival of dual sim phones, this war kind of slowed down, as people started using one sim for SMS and another sim for calling.

If we think carefully, about what made this huge drop in the customers loyalty towards the the online retailers of the present day, the only reason that comes to my mind is “The human factor”. Yes! people used to buy stuff from those shops where the shop keeper maintained a personal  rapo with his customers. Until these online platforms figure out how to have that human (in the least human like) touch, retaining customers  loyalty will always be a problem.

 Here is a nice study report published recently on how much does it cost to loose a regular customer.

These are just my thoughts from what i observed and if you know anything more, please feel free to comment.

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