Customer Satisfaction and Profitability in Australian Ecommerce Market

This case study explores the relationship between customer satisfaction and profitability in the Australian ecommerce market, with Amazon as the representative company. The study examines the roles of customer satisfaction, marketing mix, and capital generation in ensuring profitability, and the challenges ecommerce companies face in Australia. The research design includes both qualitative and quantitative methods, and the study concludes with suggestions for future research.

Running head: CASE STUDY OF AMAZON
Customer Satisfaction and Profitability in Australian Ecommerce Market
Name of the Student
Name of the University
Author note

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CASE STUDY OF AMAZON
Table of Contents
1. Introduction:............................................................................................................................1
2. Project objective:.........................................................................................................................1
3. Project scope:...............................................................................................................................1
4. Literature review:.........................................................................................................................2
4.1. Introduction:.........................................................................................................................2
Customer satisfaction model:......................................................................................................2
Marketing mix:............................................................................................................................3
Capital generation:.......................................................................................................................5
5. Research questions/hypothesis:...................................................................................................6
5.1. Primary question:..................................................................................................................7
5.2. Secondary questions:............................................................................................................7
6. Research design and methodology:.............................................................................................7
6.1. Qualitative research:.............................................................................................................7
6.2. Quantitative research:...........................................................................................................7
7. Research limitations:...................................................................................................................8
8. Time schedule (Research plan):...................................................................................................8
9. Conclusion:..................................................................................................................................9
10. Reference lists:.........................................................................................................................10

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CASE STUDY OF AMAZON
1. Introduction:
The ecommerce today plays a very significant role in ensuring customer satisfaction in
developed markets like Australia. Australian Postal Corporation reports that Australian
consumers spent a whopping $ 21.3 billion buying goods using ecommerce and on average a
fifth of all ecommerce transactions take place in Australia (auspost.com.au 2018). This report by
the Australian Post lays the perfect background for the aim of the paper. The primary aim of the
paper would be to explore how the Australian ecommerce market integrates customer
satisfaction and profitability. The study would be conducted by taking the global ecommerce
leader commanding business of almost half of the ecommerce market, Amazon (CNBC.com
2018).
2. Project objective:
The main objective of the project is to study how customer satisfaction ensures
profitability in the ecommerce market. As pointed out, the market considered for the study would
be Australia with Amazon as the representative of the ecommerce market by virtue of its apical
position. The secondary objective would be to study the challenges which the ecommerce
companies face while ensuring customer satisfaction in Australia.
3. Project scope:
The scope of the project would consist of studying the roles customer satisfaction plays in
ensuring profitability in the ecommerce market and how the ecommerce companies are taking
steps to boots this customer satisfaction to enhance their profits./ The scope of the project would
also include taking a tour to the capital generation since major ecommerce companies are listed
companies. The scope of the project would however not include human resource aspects except

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CASE STUDY OF AMAZON
the training and develop aspects. The scope of the study would once again taken Australia as the
market and Amazon as the company to for study.
4. Literature review:
4.1. Introduction:
The literature review would explore works of different authors to understand the
relationship between customer satisfaction and profitability which ecommerce companies
integrate to sustain in the market.
Customer satisfaction model:
Customer satisfaction model stands on three components namely, customer satisfaction,
market share and ultimately profits. Yi and Nataraajan (2018) in their work defines customer
satisfaction as the power of companies to surpass the expectations of customers to create a sense
of satisfaction among them as the outcome of consumption of a product.
Figure 1. Customer satisfaction
Customer satisfaction
Appropriate
marketing mix
Market share
customer
satisfaction and
shareholder
support
Profits
Competitive
advantage and
stakeholder support

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CASE STUDY OF AMAZON
(Source Yi and Nataraajan 2018)
As far as ecommerce companies are concerned, they have strong marketing mixes which
is supported by their immense financial bases. Zablah et al.(2016) mention that the strong
financial base of ecommerce companies enable to market a diverse range of products which in
turn leads to customer satisfaction. Ramanathan, Subramanian and Parrott (2017) support this
opinion by pointing out that customer satisfaction yields high profit for the ecommerce
companies which enables them to reinvest immense amount of money into product offering.
Thus, it can be inferred that customer satisfaction and profitability are interdependent in the
ecommerce market.
Marketing mix:
Marketing mix is a model which ecommerce companies use to create customer
satisfaction and earn profits especially in highly competitive markets like Australia. The
marketing mix model consists of four composed of components namely product, pricing, place
and promotion (Bahadir, Bharadwaj and Srivastava, 2015). The ecommerce companies as per
Pomering, and Johnson (2018) provide a wide range of products right from products by
multinational companies to locally grown products. As Bahadir, Bharadwaj and Srivastava
(2015) point out that in developed markets like Australia ecommerce companies offer wide range
of products with appropriate pricing. For example, the ecommerce portals charge more price for
organic products compared to their inorganic counterparts. Lu et al. (2017) opine that this
legitimate pricing strategy which ecommerce companies use in Australia creates a sense of value
creation among the middle and upper class customers which in fact goes on to enhance their
customer satisfaction levels. Hannak et al. (2014) add to the discussion that ecommerce
companies like Australia in order to enhance this level of customer satisfaction and to create

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CASE STUDY OF AMAZON
more values for their purchases collaborate with local suppliers. The leading ecommerce
companies are purchasing local grocery chains which further strengthens their presence in the
host markets besides their online presence (News.com.au. 2018). Porter and Heppelmann (2015)
further points out this physical presence of ecommerce companies create a more sense of
relatedness and satisfaction among customers, thus encouraging them to order more products
online. This once again points out that customer satisfaction enhance profitability of the
ecommerce companies. The fourth component of the marketing mix of the ecommerce
companies is promotion. Sharma and Lijuan (2015) point out that ecommerce companies
promote their products on offline as well as online platforms to attract customers. Mao (2016)
though does not contradict with their opinion, point out that promotion has to be supported by
appropriate product and pricing strategies to ultimately ensure customer satisfaction. Thus, it can
be pointed out that customer satisfaction using marketing mix is capable of ensuring profitability
of the ecommerce commerce companies. Bahadir, Bharadwaj and Srivastava (2015) can be
reiterated in this respect that wide range of products are responsible for the high level of

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CASE STUDY OF AMAZON
customer satisfaction which leading ecommerce companies create.
Figure 2. Marketing mix
(Source: Liu et al. 2017)
Capital generation:
Capital generation in ecommerce companies is the base of marketing mixes, customer
satisfaction and profitability. This is evident from the fact that top ecommerce companies are
public limited companies listed on stock exchanges like ASX. Chaudhuri and Kumar (2015)
point out that the listed ecommerce companies are able to raise capital by issuing shares in the
Marketing mix of
ecommerce
companeis
Products (high price
products, low price
products, commercial
products, domestic
products, local and
international products
Pricing (Depend on the
products like size, brand
value etc
Place (foreign,
local etc)
Promotions (discount
offers, social media
advertising etc)

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CASE STUDY OF AMAZON
secondary market which provides them a massive base required to support their immense
marketing mixes. This strong financial bases of leading ecommerce companies as Patra,
Mahapatra and Patnaik (2016) allows acquisition of subsidiary companies and market a wide
range of products. Qu et al.(2015) mention that the formidable capital base support the marketing
mixes of ecommerce companies which in turn go on to create customer satisfaction. Guercini
and Runfola (2015) merely point out that the literature gap in the study which authors tend to
avoid which is the marketing mix of leading ecommerce companies are composed mostly of
branded products owned by other MNCs. These international brands find acceptance in the
market and generate customer satisfaction. Thus customer satisfaction in turn generates high
profits a part of which goes into giving back high returns to investors, thus in turn attracting
more capital. Thus, it can be inferred that customer satisfaction is directly associated with capital
generation.
capital from
stock market
operations like
formation of
marketing mix
startegy
Customer
satisfaction
Profits
High ROI to
investors

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CASE STUDY OF AMAZON
5. Research questions/hypothesis:
H0: Customer satisfaction is directly proportionate to profitability in ecommerce companies.
H1: Customer satisfaction and profitability are not related directly related in ecommerce
companies.
5.1. Primary question:
What is the relationship between customer relationship and profitability in ecommerce
market?
5.2. Secondary questions:
1. What are the main drivers of customer satisfaction in ecommerce companies in Australia?
2. What is the relationship between profit and capital generation with respect to ecommerce
market leader companies?
3. What is the role of brands in profit generation of ecommerce companies in Australia?
6. Research design and methodology:
6.1. Qualitative research:
The researcher should conduct qualitative research by studying secondary sources of
information like articles and books. The process of qualitative research would start with reading
a large number of books and articles. The researcher should strength the base of the knowledge
acquired by reading several journals and official journals regarding ecommerce companies. He
should check the reliability and validity of the materials. The data collection method here would
be secondary and hence, sampling is not applicable. The two variables to be linked would be
customer satisfaction and profitability.

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CASE STUDY OF AMAZON
6.2. Quantitative research:
The quantitative research should contain gaining of information directly from the chosen
group of respondents. The proposed process of the quantitative research design would contain
setting of interview questions followed by giving interviews. The researcher should collect a
large number of responses so that he is able to capture valid data. The sample size should be 200
and the quantitative data analysis process should consist of statistical analysis of the data using
tools like SPSS. The questionnaire design should consist of questions regarding the preferences
of Australian customers on ecommerce portals. The questions should try to capture their
lifestyle, tastes and purchase preferences. The interview should ask valid questions and avoid
asking personal questions.
Justification of the method:
It can be justified that the research would require both qualitative and quantitative
methods. There are several researches have been done on customer satisfaction but the concept
of ecommerce is comparatively new. It is true that large amount of data about ecommerce is
available online but very few sources are reliable. The researcher would require to collect
sizeable amount of primary data to substantiate this lack of reliable data online. Hence, it is
justified that the research would embrace both qualitative and quantitative (Lewis 2015).
7. Research limitations:
The first limitation which the researcher have to face is lack of money to buy online
articles beyond a certain numbers and time to study the large of resources he would gather. The
second limitation would be that several respondents would refuse to take the interview.

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CASE STUDY OF AMAZON
8. Time schedule (Research plan):
The time schedule for the research would be 4 months approximately. The first month
should be dedicated towards choosing a topic of research and getting approval from the
professor. The next step would planning the questionnaire for a week followed by interviews for
1 month. The next one month would be spent analyzing the data collected and qualitative
analysis. This would should followed by preparation of the final dissertation and submission with
the professor.
9. Conclusion:
The research fails to explore several important areas like stakeholders’ theory and risk
management, two topics so pertinent in case of ecommerce market. The researcher should try to
visit these new topics in future. The research would show light to future researches regarding
ecommerce.
StartM
on
6/4/18
Finish
Fri
10/5/
18
J
u
ly
Au
gu
st
Sept
emb
er
Oct
obe
r

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CASE STUDY OF AMAZON
10. Reference lists:
Auspost.com.au. 2018. Auspost.com.au. [online] Available at:
https://auspost.com.au/content/dam/auspost_corp/media/documents/2018-ecommerce-industry-
paper-inside-australian-online-shopping.pdf [Accessed 19 Oct. 2018].
Bahadir, S.C., Bharadwaj, S.G. and Srivastava, R.K., 2015. Marketing mix and brand sales in
global markets: Examining the contingent role of country-market characteristics. Journal of
International Business Studies, 46(5), pp.596-619.
Chaudhuri, M.P. and Kumar, A., 2015, December. Role of Digitization and E-commerce in
Indian Economic Growth: An Employment Generation Perspective. In 98th Annual of
Conference of Indian Economic Association, December.
CNBC.com 2018. CNBC.com. [online] CNBC.com. Available at:
https://www.cnbc.com/2018/07/12/amazon-to-take-almost-50-percent-of-us-e-commerce-
market-by-years-end.html [Accessed 19 Oct. 2018].
Lewis, S., 2015. Qualitative inquiry and research design: Choosing among five
approaches. Health promotion practice, 16(4), pp.473-475.
Lu, J., Liu, S., Cui, L., Pan, L. and Wu, L., 2017. Crowd wisdom drives intelligent
manufacturing. International Journal of Crowd Science, 1(1), pp.39-47.
News.com.au. 2018. News.com.au. [online] Available at:
https://www.news.com.au/finance/business/retail/what-amazons-whole-foods-deal-means-for-
australia/news-story/2279750bc147720059ebf290b621fc92 [Accessed 19 Oct. 2018].

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CASE STUDY OF AMAZON
Patra, S.K., Mahapatra, D.M. and Patnaik, R., 2016. Diffusion of Technological Innovation in
Business: A Study on New Generation Business in India in E-Business
Environment. Parikalpana: KIIT Journal of Management, 12(2).
Pomering, A. and Johnson, L., 2018. Building sustainability into services marketing: expanding
decision-making from a mix to a matrix. Sustainability, 10(9), p.2992.
Porter, M.E. and Heppelmann, J.E., 2015. How smart, connected products are transforming
companies. Harvard Business Review, 93(10), pp.96-114.
Qu, W.G., Pinsonneault, A., Tomiuk, D., Wang, S. and Liu, Y., 2015. The impacts of social trust
on open and closed B2B e-commerce: A Europe-based study. Information &
Management, 52(2), pp.151-159.
Guercini, S. and Runfola, A., 2015. Internationalization through e-commerce. The case of
multibrand luxury retailers in the fashion industry. In International Marketing in the Fast
Changing World (pp. 15-31). Emerald Group Publishing Limited.
Ramanathan, U., Subramanian, N. and Parrott, G., 2017. Role of social media in retail network
operations and marketing to enhance customer satisfaction. International Journal of Operations
& Production Management, 37(1), pp.105-123.
Sharma, G. and Lijuan, W., 2015. The effects of online service quality of e-commerce Websites
on user satisfaction. The Electronic Library, 33(3), pp.468-485.
Yi, Y. and Nataraajan, R., 2018. Customer satisfaction in Asia. Psychology & Marketing, 35(6),
pp.387-391.

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Zablah, A.R., Carlson, B.D., Donavan, D.T., Maxham III, J.G. and Brown, T.J., 2016. A cross-
lagged test of the association between customer satisfaction and employee job satisfaction in a
relational context. Journal of Applied Psychology, 101(5), p.743.

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11. Appendix:
Task Name Duration Start Finish Predecessors
Customer satisfaction and
profitability of ecommerce
industry in Australia
4.5 mons Mon 6/4/18 Fri 10/5/18
Choosing a topic of
research and getting
approval from the
professor
0.5 mons Mon 6/4/18 Fri 6/15/18
planning the
questionnaire 1 mon Mon 6/18/18 Fri 7/13/18 2
interviews 1 mon Mon 7/16/18 Fri 8/10/18 3
analyzing the data
collected and qualitative
analysis
1 mon Mon 8/13/18 Fri 9/7/18 4
preparation of the final
dissertation and
submission with the
professor
1 mon Mon 9/10/18 Fri 10/5/18 5

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CASE STUDY OF AMAZON
1
Customer satisfaction
and profitability of
ecommerce industry in
Australia
1.1
Choosing a topic of
research and getting
approval from the
professor
1.2
planning the
questionnaire
1.3
interviews
1.4
analyzing the data
collected and
qualitative analysis
1.5
preparation of the final
dissertation and
submission with the
professor
1
23456
4.5 months 0%
6/4/18 10/5/18
0.5 months 0%
6/4/18 6/15/18
1 month 0%
6/18/18 7/13/18
1 month 0%
7/16/18 8/10/18
1 month 0%
8/13/18 9/7/18
1 month 0%
9/10/18 10/5/18