Article

Information Development
1–17
Customer satisfaction using website ª The Author(s) 2015
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functionality, perceived usability and DOI: 10.1177/0266666915621106
idv.sagepub.com
perceived usefulness towards online
shopping in India

Urvashi Tandon
Thapar University

Ravi Kiran
Thapar University

Ash N. Sah
Thapar University

Abstract
The purpose of this research is to understand and analyze the role of perceived usability and perceived use-
fulness influencing customer satisfaction towards online shopping in India. Findings of the study reveal that
website functionality has a significant and positive impact on perceived usability. Additionally, perceived usefulness
and perceived usability has a positive impact on customer satisfaction. The scale has been extended to include
satisfaction with the ‘Cash-on-delivery’ mode of payment being adopted by Asian countries. This paper builds
a foundation for researchers to extend online retailing research in developing countries where the switch over
to Internet shopping is more of a recent phenomenon as compared to its adoption by developed countries.

Keywords
online retailing, perceived usability, perceived usefulness, website functionality, customer satisfaction, online
shopping, India

Received August 20, 2015; Accepted: November 11, 2015.

Cash-on delivery as a secure mode of payment is inducing customers to switch to online

purchasing.

Introduction retailers focus on their websites. Both practitioners

With the rise of the Internet, online retailing has
gained popularity in India and has led to a significant
number of online retailers like flipcart.com, snap-
deal.com, homeshop18.com, fashionandyou.com and
amazon.in and many others entering online business.
Along with these large players many small online
retailers also have made their entry into e-space.
Despite this, a recent survey by Singh et al. (2012)
depicts that online retailing is still only 0.1% of total
retail volume. However, it is projected to grow at an
exponential rate to reach 7-8% of the total Indian
retail market by 2020. To attract the customers, online
and researchers have recognized the importance of
perceived usability and perceived usefulness for
customer satisfaction (Flavian et al. 2006, Casalo
et al. 2008; Kim and Eom, 2002; Hernandez et al.
2009; Lee and Kozer, 2012). A few researchers have
Corresponding author:
Ms Urvashi Tandon, Research Scholar, School of Humanities and
Social Sciences (SHSS), Thapar University, PO Box 32, Patiala,
India. PIN- 147004. Phone: 919805050060. Fax: 91-175-2364498,
2393020.
Email: urvashiguptav@gmail.com

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2 Information Development
identified factors that elicit website attributes like
security and privacy, atmospheric features and navi-
gation characteristics as key building blocks of cus-
tomer satisfaction (Chen et al. 2010; Maditinos and
Theodoridis, 2010; Gehrt et al. 2012).
Most of the models and frameworks on online
shopping are derived mainly from the studies con-
ducted in industrialized and western countries.
Research paradigms and models developed for the
US and Western Europe are applicable primarily to
the western context (Palvia, 2013). There has been a
dramatic increase in the growth of online shopping
in India and in emerging markets of Asia, but the
related research is not matching the pace noticed in
western countries. Furthermore, emerging markets
have different institutional contexts in terms of their
socio-economic and regulatory aspects. Therefore,
the models developed in advanced countries need to
be validated in diverse cultures, so that these may
have wider acceptance (Palvia, 2013).
The primary concern of online retailers in India is
to persuade people who are apprehensive of online
shopping to adopt it. The knowledge excavated from
study of the factors leading to customer satisfaction
would be of great help for researchers and marketers
to visualise and suggest how the occasional shoppers
could be converted into regular online shoppers.
Against these backdrops, the present study has
been taken up with the objective to identify and ana-
lyse the features of website functionality, perceived
usability and perceived usefulness that lead to cus-
tomer satisfaction. In this perspective this study will
contribute to the literature by developing a model of
customer satisfaction and identifying factors that may
induce Indian consumers to shop online.
Literature review
Indian studies on online retailing
Online retailing is of recent origin in India, but is on
the path of growth and is thus attracting researchers
to undertake research in this emerging area. A study
by Singh et al. (2005) found that websites that adapt
to Indian culture are favoured. According to Kiran
et al. (2009) accurate information about product fea-
tures and product warranties affects online shopping
confidence among Indian consumers. Dawn and Kar
(2011) suggested prompt and reliable delivery, reli-
able supply chain practices, focus on reverse logistics
and security for transacting online. Nair and Prabakar
(2007), covering the Bangalore Metropolitan area,
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indicated security, communication and gullibility as
the antecedents of perceived trust. Gullibility is the
extent to which customers get influenced by and form
opinions based on word-of-mouth communication
from others (p. 27). Perceived trust and technological
comfort are antecedents of actual online buying. Fur-
ther, Nair (2009) found that major perceived problems
in online shopping are: lost orders, security and pri-
vacy getting compromised, unsatisfactory quality of
products, inadequate grievance-handling mechan-
isms, delay in obtaining products and a non-existing
goods return policy. Prasad and Ansari (2009)
revealed that convenience, web store environment,
online shopping enjoyment and customer service have
a significant impact on willingness to buy online.
Kahre and Rakesh (2011) in their research on Indian
students found that utilitarian shopping value for
online shopping websites affects intention to pur-
chase. Dash (2012) revealed that reliability, trust,
complexity, product variety and privacy have a signif-
icant connection with online purchase, while time fac-
tor and risk are negatively related with customer
satisfaction. Gehrt et al. (2012) explored Indian shop-
ping orientations and identified three segments: value
singularity, quality at any price, and reputation or
recreation and suggested that the value singularity
segment is not the pioneer online shopper segment
in India and needs to be targeted. Malik and Sachdeva
(2015) opined that promotional e-mails, discounts,
promotional pop ups etc., have an important role in
stimulating online sales.
Online retailing studies in the Indian context have
analyzed the process for its adoption and identify
the factors which lead to online purchase. But most
previous studies have been conducted in specific
geographic territory with limited sample size, and a
comprehensive model of factors that lead to customer
satisfaction, covering website functionality, perceived
usability and perceived usefulness, is lacking. Hence,
the purpose of this study is to design a model to
enhance customer satisfaction by focusing on its rela-
tion with website functionality, perceived usability
and perceived usefulness.
Customer satisfaction
In marketing, customer satisfaction is one of the
most examined constructs. Customer satisfaction
plays a pivotal role in competitive environments of
e-commerce because of its impact on retaining old
customers and introducing new customers. In an
Tandon et al: Customer satisfaction using website functionality, perceived usability
online environment, customer satisfaction is one of
the essential keys leading to increasing customer
retention, long-term growth of online stores and inten-
tion to purchase (Chen et al. 2012). Earlier studies
have related customer satisfaction with behavioural
intention and attitude to buying. Behavioural inten-
tion is a person’s intention to perform various beha-
viours (Ajzen, 1991) and indicates the intention of
an individual to perform certain tasks towards some
goal. Previous studies have implied a direct relation-
ship between customer satisfaction and behavioural
intentions (Tsai and Huang, 2007; Wen et al. 2011).
The studies by Gounaris et al. (2010) and Zeng
et al. (2009) confirmed the positive association of cus-
tomer satisfaction and behavioural intention. Attitude
is defined as the extent to which the customer likes
online shopping and considers it to be a good idea
(Vijayasarathy, 2004). There are studies suggesting
the role of positive attitude in enhancing customer
satisfaction (Pavlou and Fygensen, 2006; Sanchez-
Garcı́a et al. 2012). In order to improve business per-
formance and increase the level of consumer satisfac-
tion, online retailers should have a clear and deep
understanding of the antecedents of consumer satis-
faction in the online environment, and these aspects
are being covered through this study.
Cash-on-delivery mode of payment. The cash-on-
delivery (COD) mode of payment was introduced
by flipcart.com (an online retailer) in 2010. Prior to its
initiation, consumers had to input card or payment
details online, which created distrust among the con-
sumers towards online shopping. The Indian consu-
mers, being suspicious about paying through credit
card or debit card, acknowledged the COD mode of
payment, as consumers pay only after receiving the
product. Indian studies (Thakur and Srivastava,
2015; Sharma and Rawat, 2014) have highlighted the
COD mode of payment as a main stimulator, as most
consumers prefer to pay online through this mode. A
study by Chiejina and Olamide (2014) on Nigerian
consumers highlighted the cash-on-delivery mode of
payment as a major trust builder between consumers.
Cash-on-delivery, though suggested and considered
in many studies, has not been empirically validated
to date. To fill this gap, the COD mode of payment
has been included in the construct of customer satis-
faction in this study.
Accordingly, the related hypothesis for customer
satisfaction is:
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3
H1: Customer satisfaction is significantly explained by
behavioral intention and attitude to buy.
Website functionality. The quality of a website can be
accessed through its functionality. Functionality is the
extent to which the website operates in the way that it
is structured and is expected to perform as users desire
(Bertot et al. 2006). A website can be evaluated on the
basis of the performance of certain functions such as
atmospherics and design (Gehrt et al. 2012; Prasad
and Ansari, 2009; Ha and Stoel, 2009), easy to use
features (Khare and Rakesh, 2011; Dholakia and
Zhao, 2010) and usability (Hernandez et al. 2009;
Chen et al. 2010; Lee and Kozar, 2012). Researchers
have also developed attributes to envisage the security
features of websites (Nair 2009; Maditinos and Theo-
doridis 2010) and navigability (Nair, 2009; Lee and
Kozar, 2012). Wolfinbarger and Gilly (2003) identi-
fied usability, information availability, product selec-
tion and appropriate personalization as dimensions of
website design and fulfilment / reliability, customer
service and privacy / security as important factors of
online shopping. Stefani et al. (2006) and Seffah
et al. (2008) incorporated security as a website func-
tionality factor. Kim and Stoel (2004) identified six
dimensions, viz. web appearance, entertainment,
informational fit-to task, transaction capability,
response time and trust affecting websites. Guo
et al. (2012) revealed website design, information
quality, payment method, e-service quality, product
quality and delivery service to be positively related
to customer satisfaction for online retailing. Though
a number of attributes have been identified and efforts
have been made to show that these are related to satis-
faction, little commonality exists among the scales
developed for measuring website characteristics that
are important for the customers.
To identify what dimensions of website functional-
ity are of vital importance to consumers and to simplify
the model, this study proposes website functionality
as a second order construct with five dimensions, viz.,
security and privacy, website design, experiential fea-
tures, navigational characteristics and consistency
features.
The related hypothesis is as under:
H2: Website functionality is a second-order multidimen-
sional construct significantly predicted by security and
privacy, website design, experiential features, naviga-
tional characteristics and consistency features.
4 Information Development
Perceived Usability and customer satisfaction. Perceived
usability has been revealed as a crucial factor in Inter-
net shopping. Usability is associated with ease-of-use
and is considered as a critical factor for gaining trust
and satisfaction of customers (Flavian et al. 2006;
Casalo et al. 2008; Neilsen, 2012). Roy et al. (2001)
suggested that online retailers need to pay attention
to ease of navigation, ease of learning, perception and
support while designing online shopping websites.
Kim and Eom (2002) and Ranganathan and Ganapa-
thy (2002) mentioned the importance of usability in
identifying the key dimensions of website quality.
Nielsen (2012) suggested that usability is concerned
with the ease with which the user is capable of learn-
ing to manage the system, the ease of memorizing the
basic functions, the grade of efficiency with which the
site has been designed, the degree of error avoidance
and the general satisfaction of the user in terms of
manageability. Thus, the concept of usability consid-
ers the following factors:
 The ease of understanding the structure of a
website, its functions, interface and the con-
tents that can be observed by the user.
 Simplicity of use of the website in its initial
stages.
 The speed with which the users can find what
they are looking for.
 The perceived ease of site navigation and pur-
chase in terms of time required and action nec-
essary in order to obtain the desired results.
 The ability of the users to control what they are
doing and where they are at any given moment
(Nielsen, 2012).
Venkatesh and Agarwal (2006) proposed a usabil-
ity model examining the link between content, ease of
use and promotion as important usability constructs.
Ease of understanding (Liacono et al. 2002) and ease
of use (Pearson, 2007; Casalo et al. 2007) play a sig-
nificant role in the adoption of websites. Bauer et al.
(2006) developed a transaction process-based scale
in the context of online shopping and argued that
order delivery and return policy are important
dimensions of online shopping. Qu et al. (2008) con-
sidered order tracking service and ease of return of
products as important determinants that affect over-
all ratings of online retailers. Satisfaction may be an
especially critical factor for usage of websites,
because it is generally expected that users tend to
revisit a website when they find it satisfactory on
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their first visit (Ha and Janda, 2008). Hence, the
related hypotheses are:
H3: Perceived usability is a second order construct sig-
nificantly explained through ease of ordering, ease of
use, ease of understanding and ease of purchase.
H4: Perceived usability has a significant positive effect
on consumer satisfaction in online retailing.
Relationship between website functionality and perceived
usability. Usability refers to the extent to which a web-
site allows users to utilize its functions easily and
appropriately. Usability is an important factor in com-
mercial website success. Seffah et al. (2008) empha-
sized that internal attributes (i.e. functionality) of a
website can affect the usability of the whole system.
But it becomes decisive to balance functionality and
usability. Tarafdar and Zhang (2005) stressed that
website functionality features like security and
customization influence usability. Evaluation of
websites through functionality and usability factors
can help online retailers to improve their services
(Bertot et al. 2006). Calisir et al. (2009) deter-
mined the importance of usability and functional-
ity factors of online shopping websites and found
that customers give higher priority to usability
than to functionality factors with navigation.
Incorporating website functionality factors may
enhance perceived usability, which in turn will
meet the expectations of consumers. Due to this,
it becomes crucial to understand which factors of
website functionality have positive effects on per-
ceived usability. Based on this discussion, the fol-
lowing hypothesis is proposed:
H5: There is a significant positive association between
website functionality and perceived usability.
Perceived Usefulness and customer satisfaction. Per-
ceived usefulness is defined as the extent to which a
consumer believes that online shopping will enhance
transaction performance. According to Davis (1989),
individuals form behavioural intentions towards
online shopping based largely on a cognitive appraisal
of how it will improve their shopping performance.
Alreck et al. (2009) suggested that online merchants
who simultaneously promote both time-saving and
quicker accomplishment of tasks are likely to win
more buyers than those focusing on only one of
these benefits. Ha and Stoel (2009) proposed that
Tandon et al: Customer satisfaction using website functionality, perceived usability
ATM WEBD
FUNCTIONALITY
EASEU
EASEP
PERCEIVED
USABILITY
EASEORD
EASEUND
USEFULNESS
TIMECON
Figure 1. Measurement Model.
customers’ perception of usefulness and attitude
towards online shopping influence intention to buy
online. Hernandez et al. (2009) opined that self-
efficacy and usefulness are two important perceptions
explaining the behaviour of experienced consumers,
while ease of use does not have a significant impact
on experienced shoppers. Luarn and Lin (2005) sug-
gested that the greater the perceived usefulness, the
greater will be the number of transactions. Various
studies have focussed on the promotional aspect of
online shopping. Malik and Sachdeva (2015) empiri-
cally validated that heavy discounts are one of the
main reasons why consumers prefer to shop online.
According to them, promotional techniques used by
online retailers are really working and have been
effective in increasing customers’ average monthly
expenditure online. Price promotions are important
communication links between online retailers and
consumers. Jiang et al. (2015) demonstrated that opti-
mal promotions and attractive discounts increase the
performance of consumers and stimulate consumers
to purchase products. Therefore, perceived usefulness
is conceptualized as a second order construct explained
by time convenience, promotional performance and
product performance.
The related hypotheses are:
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5
SANDP NAV CONS
WEBSITE
BI
CUSTOMER
SATISFACTION
ATB
PERCEIVED
PROUSE PROMUSE
H6: Perceived usefulness is a second order multidimen-
sional construct significantly explained by time perfor-
mance, product performance and promotion performance.
H7: Perceived usefulness has a significant positive effect
on consumer satisfaction in online retailing.
Based on the above discussion, the designed
research model is shown in Figure 1.
Method
Survey instrument
After the literature review, a self-administered ques-
tionnaire was developed to capture data from users
of online shopping. Wherever possible, initial scale
items were taken from previously validated measures
of online purchase satisfaction and then reorganized
and adapted to the current content. Prominent website
functionality items reported by Prasad and Ansari
(2009), Ha and Stoel (2009) and Wolfinbarger and
Gilly (2003) were included in this study. Similarly,
the items of perceived usability were adopted from
studies by Roy et al. (2001), Kim and Eom (2002) and
Flavian et al. (2006), while perceived usefulness
items were adapted from studies by Devraj et al.
(2002), Ha and Stoel (2009) and Hernandez et al.
6 Information Development

(2009). The items of the dependent variable ‘Overall Table 1. Frequency distribution for respondent’s
Satisfaction’ were adapted from studies of Devraj demographics.
et al. (2002) and Maditinos and Theodoridis (2010).
Demographic Characteristics Valid
New scale items include ‘satisfaction with cash-on- N¼365 Response percentage
delivery’ in the construct of overall satisfaction,
‘promotional performance’ in the construct of per- Gender
ceived usefulness, and ‘ease of ordering’ in the con- Male 201 55.06
struct of perceived usability, so as to make the scale Female 164 44.94
suitable for developing economies. The constructs Age
developed were tested for reliability and validated 18-30 248 67.9
31-45 83 22.7
using composite reliability and average variance
Above 45 34 9.3
extracted.
Education Qualification
Undergraduate 100 27.4
Graduate 89 24.4
Data collection procedures Postgraduate 176 48.2
Nature of consumer
In order to get accurate responses and reduce ambi-
Student 158 43.3
guity, a preliminary questionnaire was distributed
Self-employed 42 11.5
to a pilot group of 50 people selected on the basis Service 165 45.2
of convenience sampling. This pilot group con- Annual income (INR)
sisted of academics and management experts, who Less than 3.5 lakhs (Less than 231 63.3
not only answered the questions but also suggested US$ 5830)
some changes in the wording and relevance of 3.5-6 lakhs (US$ 5830 –10000) 90 24.7
questions. The pilot group suggested the addition More than 6 lakhs (More than 44 12.0
of items of ‘ease of ordering’. The final question- US$ 10000)
naire had close-ended questions on a 5-point Likert
scale.
The population of this research comprised North Results
Indian consumers who had some online shopping Demographic profile of respondents
experience. A total of 2000 questionnaires were admi-
Table 1 shows the demographic profile of the consu-
nistered to respondents from the North Indian States
mers surveyed. Out of the 365 respondents, 55.06%
(Jammu and Kashmir, Punjab, Himachal, Haryana
were male and 44.94% were female. A t-test was
and Union Territory of Delhi and Union Territory
conducted to determine whether there was a signifi-
of Chandigarh) through personal visits and online.
cant difference between males and females regarding
The sample covered urban and rural areas, both the
customer satisfaction. The results suggest that there
genders, graduates and postgraduates, service class
was no significant difference between the two
people, businessmen and students to make it repre-
groups (for males, Mean ¼ 4.02, SD ¼ 0.575 and
sentative of the entire population. The northern
for females, Mean ¼ 3.93, SD ¼ 0.528, t ¼ 1.486,
region of the country has the highest share of
p ¼ 0.541). Among the respondents, 67.9% were
income as compared to the rest of the country. It
between 18-30 years of age, followed by 22.7% in
is wealthiest in terms of income share and income
the middle age group of 31-45 years and 9.3% were
density and is dominated by Delhi and Chandigarh,
above 45 years of age. A majority of respondents were
having the largest population of rich households
in service (45.2%), followed by students (43.3%).
(Vaid, 2006). On this basis, North India was cho-
ANOVA was conducted to understand whether
sen for the study.
there is a significant difference in these age groups
After repeated rounds of visits and reminders
and customer satisfaction. As suggested through the
through emails, a total of 500 responses were
results, there is a significant difference in the mean
obtained. Careful examination revealed some incom-
score of three age groups, viz. 18-30 (Group 1),
plete questionnaires. From these, 365 usable and com-
31-45 (Group 2) and above 45 (Group 3) regarding
plete questionnaires were retained for analysis; a
customer satisfaction. (F ¼ 3.392, df: 364, p ¼
response rate of 18.25%.
0.031). The analysis suggests that there is a difference

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Tandon et al: Customer satisfaction using website functionality, perceived usability 7

Table 2. Characteristics of respondents. Table 3. Sample characteristics.

Number of hours spent on Internet in a week Std.

Less than 7 hours 110 30.1 Variable Mean Deviation Skewness Kurtosis
8-16 hours 126 34.5
More than 16 hours 129 35.3 Website design 3.890 0.764 -0.864 1.340
Number of years of online shopping Navigation 3.820 0.626 -0.622 0.559
Less than 1 year 145 39.7 Security and 3.426 0.885 -0.297 0.135
1-3 years 169 46.3 privacy
More than 3 years 51 14.0 Ease of use 4.298 0.602 -0.749 0.307
Hours spent on online shopping in a month Ease of purchase 3.969 0.718 -0.668 0.498
Less than 2 hours 152 41.6 Ease of 3.992 0.645 -0.356 -0.158
2-6 hours 168 46.0 understanding
More than 6 hours 45 12.4 Ease of ordering 3.428 0.845 -0.138 -0.321
Number of products purchased online in a month Time convenience 3.972 0.692 -0.590 0.236
Less than 2 73 20.0 Product usefulness 3.909 0.755 -0.424 0.358
2-5 152 41.6 Promotional 4.120 0.806 -1.252 -1.798
More than 5 140 30.4 usefulness
Preferred mode of payment Customer 3.980 0.555 -0.536 0.227
Cash-on-delivery 268 73.4 satisfaction
Debit card 61 16.7
Credit card 36 9.9
perceived usability and perceived usefulness. The
second investigates the relative importance of each
in the perception regarding customer satisfaction for independent variable in customer satisfaction.
different age groups. The survey was carried out in two waves from
Table 2 shows the characteristics of respondents August to December 2014. To check the non-
surveyed. Of the total respondents, 46.3% have been response bias, the mean differences in key variables
shopping online from 1-3 years, followed by 39.7% across early (n ¼ 279) and late respondents (n ¼
respondents who have been shopping online for less 86) were tested. No significant differences between
than a year and only 14% who have been shopping the two samples were found, indicating absence of
online from more than 3 years. The majority of the non-response bias. The assumption of normal distri-
respondents (41.6%) had purchased 2-5 products from bution has been tested through normal distribution
the Internet, followed by 30.4% who had purchased plots, skewness and kurtosis (Table 3). There is high
more than five products from the Internet, in the last correlation between usability and functionality as well
year. When asked about their preferred mode of pay- as satisfaction and behavioural intention when mea-
ment, 73.4% of the respondents preferred cash-on- sured in the same survey; common method bias was
delivery mode of payment to credit card and debit checked. All variables were subjected to a principal
card. These results indicate that the respondents have components factor analysis with varimax rotation.
perceived online shopping optimistically. This sub- Our analysis revealed five factors in website func-
stantiates the growth of online shopping in India. tionality, four factors in perceived usability, three
However, as is evident from the characteristics of factors in perceived usefulness and two factors in
respondents, the frequency of online shopping is com- customer satisfaction, with each construct account-
paratively low. Online retailers may use the variables ing for 0.50% of variation. Thus, no general factor
emerged from this study to formulate their plans and was noticeable.
strategies in order to retain existing customers and
attract new customers.
Reliability and validity
To assess reliability and validity of the proposed mea-
Data analysis surement model, confirmatory factor analysis (CFA)
Data analysis is covered in two stages. The first was carried out on all the constructs. Based on the
confirms the factor structure of measurement items analysis, 41 items out of 50 were retained for further
of customer satisfaction, website functionality, analysis. The items of consistency feature and

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8 Information Development

Table 4. The measurement model.

Items Standardized loadings SE CR Composite Reliability AVE

Website Design WD4 0.52 1

WD3 0.81 0.185 8.359 0.82 0.65
WD2 0.74 0.186 8.392
Navigation NAV1 0.66 0.095 9.373
NAV2 0.65 0.114 8.291 0.8 0.59
NAV3 0.71 1
Security and Privacy SP1 0.62 0.132 8.331
SP2 0.80 0.177 9.402 0.87 0.65
SP3 0.81 0.17 9.385
SP4 0.63 1
Ease of use EASEU1 0.71 0.085 10.595
EASEU2 0.85 0.085 12.067 0.88 0.75
EASEU3 0.75 1
Ease of purchase EASEP1 0.82 0.125 8.336
EASEP2 0.61 0.119 6.741 0.85 0.66
EASEP3 0.77 1
Ease of Understanding EASEUND1 0.75 0.113 9.605
EASEUND2 0.80 0.101 9.183 0.89 0.65
EASEUND3 0.68 0.092 8.905
EASEUND4 0.71 1
Ease of ordering EASEORD1 0.63 0.085 9.022
EASEORD2 0.70 1 0.8 0.56
EASEORD3 0.70 0.091 8.762
Promotional usefulness PUSEF1 0.84 0.051 17.548
PUSEF2 0.86 1 0.89 0.70
PUSEF3 0.66 0.056 13.229
PUSEF4 0.61 0.053 11.782
Time convenience TIMECON1 0.62 0.155 8
TIMECON2 0.73 0.144 8.817 0.80 0.54
TIMECON3 0.57 1
Product usefulness PROUSE1 0.85 1 0.93 0.88
PROUSE2 0.92 0.092 8.286
Behavioural intention BI1 0.71 0.032 15.393
BI2 0.67 0.029 13.942
BI3 0.72 0.033 16.052 0.9 0.65
BI4 0.65 0.028 14.103
BI5 0.84 1
Attitude to buy ATB1 0.80 0.039 19.748
ATB2 0.86 0.039 18.185 0.92 0.82
ATB3 0.82 1

experiential features were removed due to low factor
loadings and unclear factor structure. One item of
website design (WD1), EASEORD4 for ease of order-
ing, and NAV4 for navigation, were also omitted due
to low factor loadings. Table 3 depicts the results of
CFA indicating that standardized loadings of all the
variables included are significant. The instrument
demonstrates evidence of convergent validity (aver-
age variance extracted >0.50 in all occasions), com-
posite reliability (values >0.70 in all occasions) and
discriminant validity (AVE) estimate of each construct
is larger than the squared correlations of this construct
to any other construct (Fornell and Larcker, 1981)
Structural model
Structural equation modelling was adopted using
AMOS to estimate the structural model. The hypothe-
sized second order model was estimated separately on
all three second order independent variables i.e.,

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Tandon et al: Customer satisfaction using website functionality, perceived usability 9

Table 5. The correlation matrix and discriminant validity.

EASE TIME PRO PROM EASE EAS EASE

ORD ATB BI CON USE USE USE EPUR UND SANDP WEBD NAV

EASEORD 0.74
ATB .057 0.90
BI .161 .469 0.80
TIMECON .354 .332 .530 0.73
PROUSE .249 .353 .436 .541 0.93
PROMUSE .190 .248 .380 .462 .524 0.83
EASEUSE .201 .394 .400 .409 .328 .256 0.86
EASEPUR .267 .426 .423 .533 .325 .286 .391 0.81
EASEUND .324 .423 .405 .448 .327 .349 .408 .437 0.81
SANDP .241 .296 .236 .323 .223 .202 .194 .254 .398 0.80
WEBD .109 .258 .377 .331 .213 .262 .301 .408 .287 .245 0.80
NAV .235 .357 .411 .478 .407 .335 .438 .505 .449 .434 .406 0.76
Note: The square root of AVE is shown in italics.
EASEORD: Ease of ordering, ATB: Attitude to buy, BI: Behavioural intention, TIMECON: Time convenience, PROUSE: Product related
usefulness, PROMUSE: Promotional usefulness, EASEUSE: Ease of use, EASEPUR: EASE of purchasing, EASEUND: Ease of
understanding, SANDP: Security and privacy, WEBD; Website design, NAV: Navigation.

website functionality, perceived usability, perceived

usefulness and one dependent variable i.e., customer
satisfaction. The results are summarized in Table 6.
Website functionality is significantly explained by
website design, navigation and security and privacy,
partially supporting H2. Perceived usability is signif-
icantly explained by ease of understanding, ease of
purchase, ease of use and ease of ordering, thereby
supporting H3. Perceived usefulness is also signifi-
cantly explained by time convenience, product useful-
ness and promotional usefulness, thus supporting H6.
Similarly, findings also support H1, where customer
satisfaction is explained by behavioural intention and
attitude to buy. The AMOS output of second order
CFA of website functionality, perceived usability, per- Figure 2. Path diagram and causal relationships.
ceived usefulness and customer satisfaction (CMIN/df
¼ 3.047, GFI ¼ 0.941, CFI ¼ 0.928, TLI ¼ 0.901, significant positive effect on customer satisfaction
RMSEA ¼ 0.07), indicated an acceptable fit with the (standardized factor loading ¼ 0.373, R2 ¼ 0.324,
data. All the measurement models have been found p<0.001), thereby supporting H4 and H7. The overall
to qualify goodness of fit indices as they fall within the fit indices of the research model are shown to be
prescribed limits. acceptable (CMIN/df ¼ 3.111, GFI ¼ 0.938, CFI
The next step involved was testing of the structural ¼ 0.923, TLI ¼ 0.90, RMSEA ¼ 0.07). This indi-
model and corresponding theoretical relationships. cates that the hypothesized model is a reasonable
The structural model with standardized weights is presentation of the structures underlying the observed
shown in Figure 2 (Tables 6, 7 and 8). Website func- data.
tionality had a positive effect on perceived usability
(standardized factor loading ¼ 0.971, R2 ¼ 0.360,
p<0.001) thereby supporting H5. Similarly, perceived Discussion and conclusion
usability (standardized factor loading ¼ 0.540, R2 ¼ In the following section, the results of the study are
0. 342, p<0.001) and perceived usefulness had a discussed. The research contributes to an overall

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10 Information Development

Table 6. Second order measurement model.

First order Path Second order Standardized estimate S.E C.R

Website design <— Website functionality 0.521 0.096 9.076

Navigation <— Website functionality 0.732
Security and privacy <— Website functionality 0.49 0.111 8.526
Ease of understanding <— Perceived usability 0.671 0.078 11.125
Ease of purchase <— Perceived usability 0.693 1
Ease of use <— Perceived usability 0.597 0.072 10.029
Ease of ordering <— Perceived usability 0.38 0.099 6.44
Promotional usefulness <— Perceived usefulness 0.616 1
Time convenience <— Perceived usefulness 0.803 0.103 10.984
Product usefulness <— Perceived usefulness 0.698 0.102 10.194
Behavioural Intention <— Customer satisfaction 0.752 1
Attitude to buy <— Customer satisfaction 0.624 0.099 10.069

Table 7. Results of hypothesis testing.

Hypothesis Independent variable Path Dependent variable Path coefficient CR value Result

H4 Perceived Usability --- ~ Customer Satisfaction 0.540 4.136 Supported***

H5 Website Functionality --- ~ Perceived Usability 0.971 11.090 Supported***
H7 Perceived Usefulness --- ~ Customer Satisfaction 0.373 2.884 Supported**
Notes: ***p < 0.001; **p < 0.01

Table 8. Regression analysis.

Independent variable Dependent variable R R-square Adjusted R2 F Sig

Website functionality Perceived usability 0.600 0.360 0.356 11.185 ***

Perceived usability Customer satisfaction 0.587 0.345 0.342 32.089 ***
Perceived usefulness Customer satisfaction 0.574 0.330 0.324 21.667 ***

Table 9. Fit indices for structural model. usability. Measurement model analysis indicated that
Recommended navigation characteristics of websites, followed by
Index Score value Reference website design and security and privacy, are the sig-
nificant dimensions of website functionality. This
GFI 0.938 >0.90 Joreskog et al.(1989) corroborates the findings of earlier studies indicating
RMSEA 0.07 <0.08 Browne et al. (1993) that website design and security and privacy have sig-
NFI 0.90 >0.90 Browne et al. (1993)
nificant positive relationships with customer satisfac-
CFI 0.923 >0.90 Browne et al. (1993)
tion (Nair, 2009; Prasad and Ansari, 2009; Gehrt
CMIN/df 3.111 <5.0 Browne et al. (1993)
et al., 2012). This suggests security and privacy pro-
tection as an important driver influencing intention
understanding of factors which lead to customer satis-
to buy. While consumers may benefit from online
faction in an Indian context. The study also identifies
purchases, concerns about privacy and security are
the limitations and suggests topics for further research.
an important issue demanding the attention of online
retailers. Navigation also emerged as an important
Website functionality factor for online transactions leading to increased
The research model validated and identified those fea- usability. This is also supported by previous studies
tures of websites which have an impact on perceived (Roy et al. 2001; Calisir et al. 2009). This suggests

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Tandon et al: Customer satisfaction using website functionality, perceived usability
that consumers incline to find the relevant informa-
tion with minimal effort through graphical compo-
nents, hyperlinks and sequences and layout through
menus. There is a radical improvement in online secu-
rity technologies over the years as online shopping is
being adopted. Almost every online retailer’s website
has a detailed privacy statement aimed at fortifying
customer confidence. Consumers may be anxious
about possible theft and faulty product performance.
Therefore online retailers must provide the best online
security, as it is a basic requirement. As reflected
through the present study, poorly designed web pages,
outdated information, tiresome navigation proce-
dures, complicated language and intricate check-out
procedures all contribute to abandonment of shopping
carts by consumers.
Perceived usability
‘Ease of use’, ‘ease of understanding’, ‘ease of order-
ing’ and ‘ease of purchase’ emerged as significant
variables from the analysis. The easy to use features
of online retailers’ websites, ease in finding informa-
tion about products, easy to track, modify, cancel
orders and making comparisons are the benefits that
people are looking for. The results are in synchroniza-
tion with the results of similar studies, where ease-of-
use and ease of understanding have been observed to
have positive valuation (Nair, 2009; Khare and
Rakesh, 2011, Kim and Eom. 2002; Flavian et al.
2006; Casalo et al. 2006). In this study, ‘ease of order-
ing’ as a separate construct was validated for the first
time and was found significant (Std. loading ¼ 0.38, p
¼ 0.002). This indicates that ease of ordering is
important for general usability and consumers are still
finding difficulty in placing, tracing, replacing and
cancelling orders once placed. This can be reduced
by improving quality of information, instructions
about payment and virtual tour through the website.
Features like online chat, forums and feedback also
instil confidence in online shopping.
Perceived usability and website functionality
This study is one of the pioneering studies examining
the relationship of website functionality with per-
ceived usability in an Indian context. All three sub-
constructs of website functionality (navigation char-
acteristics of websites, website design, security and
privacy) and four constructs of perceived usability
(ease of use, ease of understanding, ease of ordering
and ease of purchase) are meaningful and are
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11
theoretically relevant. For the adoption of online
shopping these sub-constructs need to be present and
these have emerged as significant and valuable in the
present study. An important finding of this study is
that security and privacy was found to be the least
important of all the constructs of website functionality
that influence perceived usability.
Perceived usefulness and customer satisfaction
The construct of perceived usefulness has been dee-
pened in the present study by validating variables like
‘time convenience’, ‘promotional usefulness’ and
‘product related usefulness’. Time convenience has
emerged as the strongest indicator of customer satis-
faction, followed by ‘promotional usefulness’ and
‘product related usefulness’, indicating the existence
of strong positive association between perceived use-
fulness and customer satisfaction. Some earlier stud-
ies have also reported this (Nair, 2009; Chen et al.,
2010; Lin and Sun, 2009, Jiang et al., 2015). The
results have emerged as significant for Indian online
consumers, also indicating that consumers prefer
shopping online as it saves their time and they get bet-
ter discounts than at brick and click stores. Other sav-
ings like transportation hassles, time costs, parking
costs, petrol savings and quick search of products also
motivate people to shop online.
Other results
As listed in Table 7, all hypothesized paths are sup-
ported by the results. Website functionality factors are
significantly related to perceived usability. Perceived
usability and perceived usefulness collectively are
significantly related to customer satisfaction, whereas
customer satisfaction is predicted by behavioural inten-
tion and attitude to buy. Among the factors affecting
customer satisfaction, perceived usability had a greater
effect as compared to perceived usefulness. This indi-
cates that perceived usability is likely to be the most
important factor in the adoption of any new technolo-
gical service. It can also imply that people make an
all-inclusive assessment of any new technology in
terms of usability and performance, as against the sep-
arate assessment of individual elements.
Theoretical and practical implications
Implications for theory
This research has important implications for research-
ers and academics as well as for online retailers. This
12
study has a higher relevance for developing countries
where the switch to Internet based retail purchasing is
a recent phenomenon. The findings of this study have
advanced our understanding of the under-researched
topic of customer satisfaction with online shopping
in India. The model can be extended to other develop-
ing countries to have an overall assessment of the fac-
tors leading to online purchase.
The foremost theoretical contribution of this study
is the refinement of existing scales by including cash-
on-delivery mode of payment as a new dimension of
customer satisfaction. This study also suggests the
critical features associated with website functionality,
perceived usability and perceived usefulness and their
association with customer satisfaction.
The second theoretical contribution has been to
examine the impact of website functionality factors
on perceived usability. There is rich literature avail-
able on website functionality factors and perceived
usability, but the question of which factors of website
functionality influence perceived usability has not
been examined extensively. The present research tries
to fill this gap by examining the relationship between
the two. This study has also conceptualized perceived
usefulness as the second order independent variable
and extended the scale by adding time performance,
product related usefulness and promotional useful-
ness, not covered earlier. The study has extended the
application of theoretical frameworks regarding
online shopping adoption and has advanced the
understanding of key factors of website functionality,
perceived usability and perceived usefulness.
Implications for practice
The findings of this study are useful for online retai-
lers, who can use them to get valuable insights about
the factors leading to customer satisfaction. Based
on these findings, they may identify important indi-
cators leading to customer satisfaction which will in
turn infuse confidence among consumers about
online shopping. Online shopping enables a change
in the consumer’s buying habits and they need some
time to adjust to this change in buying practices.
Online retailers need to be empathetic towards
people. Thus, in order to retain customers, online
retailers should pay added attention to navigation
characteristics, website design, security and privacy,
ease of use, ease of understanding, ease of purchase
and ease of ordering, as highlighted through the
results.
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Information Development
This study offers significant suggestions to Indian
online retailers who are in the early stages of design-
ing their shopping website. First, customers assign
higher priority to navigation characteristics and web-
site design. Thus, in the early stages, online retailers
need to focus on graphics, picture display and
interaction-related issues. As reflected in the study,
there is a need to focus on attractive and vibrant web
pages that are easy to upload, and websites have to be
user friendly. The designers also need to include basic
and advanced search options to increase the number
of online shoppers. There is a need to improve quality
of information, instructions about payment and virtual
tour through the website. Features like online chat,
forums, feedback also instil confidence in online
shopping. A FAQ (frequently asked questions) page
mentioning all the questions which a customer might
put to customer care executives can further instil con-
fidence among people.
In spite of best assurances given by online retai-
lers, e-shoppers consider security and privacy a
major matter of concern. Online retailers must invest
in security software to enhance best online security
as it is the basic requirement. One challenge is COD
(cash-on delivery) mode of payment as a secure way
to overcome this fear. COD is inducing customers to
switch to online purchasing and there are less
chances of faulty product being delivered as custom-
ers can check the product and then make payment.
But it needs to be extended to all pincodes of the
country. An online demonstration before placing
orders online may familiarize consumers with the
procedure of online purchasing. Further, online
shoppers need to be acquainted with the policy of
replacements and an effective query handling soft-
ware, which is the need of the hour. Competent sales
support staff well versed with regional dialects and
language will help in providing a local touch. The
designed model will help online retailers to improve
customer satisfaction and eventually increase cus-
tomers of online shopping.
Limitations and future research
The study has some limitations. The sample in the
present study was restricted to the responses from the
North Indian states that may have slightly affected the
results. Future research needs to generalize this model
in other developing countries as well. Future studies
may concentrate on consumers in rural areas having
limited access to technology adoption. This study
Tandon et al: Customer satisfaction using website functionality, perceived usability 13

does not consider variables like trust, habit, social
influence and hedonic factors, which may be useful
to understand consumer behaviour in developing
countries. Future research may examine these under
diverse socio-cultural conditions. This study leaves
significant room for research considering the relation
between post-purchase behaviour and customer satis-
faction. Finally, future studies may include cash-on-
delivery mode of payment as a construct and validate
its significance in online shopping adoption.

Appendix 1: Measurement Scales

Scale Items

Website functionality: (Prasad and Ansari, 2009; Ha and Stoel, 2009; Dholakia and Zhao, 2010; Chen et al., 2010;
Maditinos and Theodoridis, 2010; Wolfinbarger and Gilly, 2003; Lin and Sun, 2009)

Website design
Website functionality Navigation
Security and privacy
The layout of online retailing websites facilitates shopping. WD1(Deleted
item)
The attractive colour scheme of online retailing websites facilitates
shopping. WD2
The graphics displayed in websites provide ease for ordering
product. WD3
Shopping online is an exciting experience. WD4
Pictures of products are downloaded quickly. NAV1
The search function at the websites is helpful. NAV2
The websites allow easy return to the previous display pages.
NAV3
The web pages which I am looking for can be reached through multiple
tabs/windows. NAV4(Deleted item)
The websites have adequate security measures. SP1
I feel safe while using my credit card/debit card on the websites.
SP2
I trust that the websites will not give my personal details to other
websites without my permission. SP3
Online retailers offer user memberships for surfing on the
password protected web pages within the website. SP4

Perceived usability: (Roy et al., 2001; Kim and Eom, 2002; Flavian et al., 2006; Calisir et al., 2009; Casalo et al., 2007;
Pearson et al., 2007)
Ease of use It was easy for me to learn Internet shopping. EASEUSE1
Internet shopping websites are easy to use. EASEUSE2
Navigation for Internet shopping is easy for me. EASEUSE3
Ease of purchase Online retailers provide ample information. EASEPUR1
Information provided by online retailers help me to purchase
products. EASEPUR2
Successful initial purchasing builds confidence for further
purchasing. EASEPUR3
Perceived usability Ease of understanding The language used by online retailers is easy to understand.
EASEUND1
**Display pages lead to further detailed information. EASEUND2
**Process of transaction on the web is convenient. EASEUND3
It is easy to place orders online. EASEUND4
Ease of ordering **It is easy to track orders placed online. EASEORD1
**It is easy to modify orders placed online. EASEORD2
**It is easy to cancel orders placed online. EASEORD3
**It is easy to replace orders placed online. EASEORD4 (Deleted item)
(continued)

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14 Information Development

Appendix 1. (continued)
Scale Items

Perceived usefulness Devraj et al., 2002; Ha and Stoel, 2009; Nair, 2009; Hernandez et al., 2009; Lin and Sun, 2009; Liao
and Shi, 2009; Wu 2013.
Time convenience Online shopping enables me to accomplish shopping more quickly
than traditional stores. TIMECON1
Online shopping helps me to find product information within the
shortest time frame. TIMECON2
Shopping online takes less time from search of products to
transaction. TIMECON3
Perceived usefulness Product usefulness **Online retailers provide a wider assortment (variety) of products
than traditional stores. PROUSE1
Online retailers provide more information about the features of
products than traditional stores. PROUSE2
Promotional While shopping on Internet I can find some products that are not
usefulness easily available in physical stores PROMUSE1
**Online discounts and promotions offered are often attractive.
PROMUSE2
**Detailed order submission helps in purchasing PROMUSE3
Online shopping facilitates comparative analysis of similar products.
PROMUSE4

Customer satisfaction (Devraj et al. 2002; Hernandez et al. 2009; Maditinos and Theodoridis, 2010)
Behavioural intention I am satisfied with product range offered by online retailers. BI1
I am satisfied with the quality of products offered online. BI2
I would continue to purchase products online. BI3
Customer satisfaction I recommend online shopping websites to other people. BI4
Online shopping is a satisfying experience as it offers customized
product at my convenience. BI5
Attitude to buy Products purchased online have measured up to my expectations.
ATB1
I am satisfied with the way online retailers carry out transactions.
ATB2
**I am satisfied with the Cash on Delivery (COD) mode of online
retailers. ATB3
**New Scale items
Items in italics are deleted items

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About the authors
Urvashi Tandon is a Research Scholar at Thapar Univer-
sity. She holds an MBA degree and is completing her PhD
in Online Retailing in the School of Humanities and Social
Sciences, Thapar University. Her research interests include
electronic commerce, online retailing and rural marketing.
Contact: School of Humanities and Social Sciences(SHSS),
Thapar University, PO Box 32, Patiala, India. PIN-147004.
Tandon et al: Customer satisfaction using website functionality, perceived usability
Phone: 919805050060. Fax: 91-175-2364498, 2393020.
e-mail: urvashiguptav@gmail.com
Ravi Kiran is Professor at the School of Humanities and
Social Sciences at Thapar University. She has 25 years of
teaching experience. She completed her PhD in Industrial
Management from Thapar University, Patiala. Her research
areas of interest are: industrial management, business eco-
nomics, e-business and intellectual property rights. She has
published 101 papers in refereed journals, 55 papers in
national/international conferences and 12 book chapters.
She has completed six research projects including AICTE
Major Project on IPRs in the Pharmaceutical Sector of
India. She is on the editorial board of international journals
and referee of many journals. She has travelled widely in
many countries including Hong Kong, Bangkok, Australia,
Singapore and Ireland for presenting papers, keynote
address and for academic collaboration. Contact: School
of Humanities and Social Sciences (SHSS), Thapar
Downloaded from idv.sagepub.com at Middle East Technical Univ on December 25, 2015
17
University, PO Box 32, Patiala, India. PIN-147004. Phone:
91-175-2393133. Mobile: 919876114591. Fax: 91-175-
2364498, 2393020. e-mail: rkiran@thapar.edu
AN Sah is working as Assistant Professor in the area of
Economics and Econometrics in Thapar University.
He has a doctorate in finance from the University of
Hyderabad, India, and has 10 research publications
to his credit. In addition, he has published a book on
data analysis using MS-Excel. His areas of interest are
financial markets and macroeconomics. He has exper-
tise in SPSS, Eviews and Data Analysis in Excel. A
research project for the National Stock Exchange
(NSE) on Stock Market Seasonality is one of his other
credentials. Contact: School of Humanities and Social
Sciences (SHSS), Thapar University, PO Box 32,
Patiala, India. PIN-147004. Phone: 91-175-2393133.
Mobile: 08557811875. Fax: 91-175-2364498, 239302.
e-mail: asah259@gmail.com