An Analysis of Customer Loyalty in Amazon UK: Literature Review

This dissertation chapter presents a literature review focusing on customer loyalty within the context of Amazon UK. It begins by defining customer loyalty and exploring its significance, drawing on the works of Aaker, Bodet, and Kaplan. The review then delves into factors influencing consumer loyalty, including expectations, customer service, personal relationships, rewards, convenience, and community outreach, referencing studies by Pardalos, Kaplan, Ganguli, and Newell. The chapter also provides an overview of e-commerce operations, highlighting the growth of online retail and the impact of companies like Amazon in the UK and globally. The review synthesizes existing research to identify gaps and provide a foundation for further investigation into the impact of customer loyalty within the e-commerce landscape of Amazon UK.

DISSERTATION CHAPTER-
LITERATURE REVIEW

Table of Contents
INTRODUCTION...........................................................................................................................3
Empirical Review.............................................................................................................................8
Summary of the literature review..................................................................................................12
Critical literature review................................................................................................................13
REFERENCES..............................................................................................................................16

INTRODUCTION
Literature review is a process through which the existing literature is being evaluated
over a given topic. It can also said that, it is a in-depth evaluation of the previously conducted
research by the other researchers. This is a summarised form of the research topic or area which
allows others to identify the motive behind research. A literature is prepared with mainly four
objectives such as survey, synthesise, critically analysed and presentation of information which
are briefly explained further. However, a literature review emphasis on the examination of the
selected area or topic. Besides this, it precisely explains the information in a summarised
manner. In addition to this, as per this process the information is critically analysed with the help
of evaluating the gap between the current and required knowledge. Here, the theories and models
are evaluated by comparing the different view points of the authors and writers. This helps the
researcher to conduct the research in an effectual manner. Further, the whole information is
presented in a way that it can attain the motive of conducting the research.
A literature review helps a reader to evaluate the in-depth knowledge of the subject to the
researcher. However, it can be explained that a good literature review is necessarily be conducted
so that it can result in attaining the motive of the research process. However, this literature
review is conducted with a aim to identity the impact of customer loyalty in Amazon UK.
Concept of customer loyalty
As per (Aaker, 2012), Customer loyalty is an indication that the client is interested or
sicked to the product offered by a company. However, it is crucial for the management of an
organization to keep raising the needs and demands of the consumers. This enables a customer to
expect from the organization to get the demanded products and services. The loyalty of the
customers may towards the product or a company. If the customer is demanding the same
product again and again then it can also be known as the brand loyalty. Whereas, loyalty can also
be explained as the sticking of the consumers towards the particular brand even when the
different substitutes are available. On contrary to this, (Bodet and Bernache‐Assollant, 2011)
criticized that Customer loyalty is a reward for the supplier in consideration of the services or
product provided by the company. However, an organization needs to focus on analysing the
customer loyalty. It helps the company to improve their services in a way that the goals and
objectives of the organization can be attained. The management of a company needs to prepare a

customer loyalty plan in order to measure the loyalty level of their consumers. This allows an
organization to keep improve its performance with the adaption of different measures. Whereas,
customer loyalty is not somewhat related with customer satisfaction. Because the customers may
not be able to express their level of satisfaction but they can show their loyalty by purchasing
products from the same organization or a brand. This is an indication for an organization that the
products and services are highly demanded by the customers.
In context to above, (Kaplan, 2012) defined that if the organization is able to meet the
requirements and needs of the consumers then it results in developing the customer loyalty. If the
customer are loyal towards a brand then it can have positive influences on the company. This
concept will enable the firm to improve its brand image with the help of increased customer
base. As an conclusion, the positive image of the company will result in standing tall among the
competitors. It is the most crucial concept for an organization because if the customers are loyal
and satisfied then it will remain fruitful for the organization. It is important for a venture to keep
enhancing the loyalty factor of the customers by adopting the customer loyalty plan or statement.
With the help of this document, the management will be able to analyse the areas and factors
which can remain useful in raising the customer loyalty. The organization can offer rewards on
the birthed of the consumers. It leads to feel the customer that they are valued to the company as
the firm is concerned about its customers. It can result in bringing new customers to the company
as well. If the customers are satisfied with the company product then they will suggest their
friend and relatives for the same. This will enhance the customer base of the organization in an
effective manner.
In addition to above,(Bodet and Bernache‐Assollant, 2011) explained that the loyalty of
the consumers can be measured with the help of retention level of them. This is an indication for
the company that their products are valued in the market. In addition to this, purchasing is
another method which can be adopted by an organization for measuring the customer loyalty. If
the purchases of the company are high then it is an indication that the products of the firm are
highly demanded and vice versa. However, the management of a company needs to focus on
measuring this factor so that it can assist the organization to bring improvement. The overall
impact will be on the enhancement of the chances of company opportunities for future growth.
It helps the company to improve their services in a way that the goals and objectives of the
organization can be attained. The management of a company needs to prepare a customer loyalty

plan in order to measure the loyalty level of their consumers. This allows an organization to keep
improve its performance with the adaption of different measures. Whereas, customer loyalty is
not somewhat related with customer satisfaction. Because the customers may not be able to
express their level of satisfaction but they can show their loyalty by purchasing products from
the same organization or a brand.
Factor affecting consumer Loyalty
According to (Pardalos and Tsitsiringos eds., 2013), consumer loyalty may get affected
due to different factor which have huge impact on the company performance. Whereas,
Expectation is one of the factors which is responsible for affecting the customer loyalty.
Customers purchase products with certain level of expectations so that their needs can be
satisfied. If the purchased product is not up to the expectation level of the customers then it can
result in loosing the loyalty of the customers towards a brand. However, expectation is not
limited up to the desired product but also the prices and value of the product matters a lot. On
contrary to this, (Kaplan, 2012) criticized that customer services is the factor which affect the
consumer loyalty as compare to the expectations. If the organizations are not able to render the
products and services effectively then the customer will surely switch over to the competitors. In
order to provide excellent customer services, the organizations need to focus on enhancing their
services with the adaption of corrective measure. Its their duty to respond the user in a polite and
helping manner so that it creates positive image in their mind. However, the firms can resolve the
issues and problems raised with the purchased product. It will assist in lower down the chances
of disappointment of the customers from the concerned organization. The management of the
company must focus on gaining feedbacks for the customer so that they will be able to trace the
satisfaction level of the users.
On another hand,(Ganguli and Roy, 2011) explained that personal relationship is the
additional factor which leaves an impact on the consumer loyalty. If the customer are not treated
well by the third parties such as worker in stores and sales persons. Then it can create a negative
image of of the company but not the workers. It leads to affect the position of the organization in
a way that its sales will surely get influenced. For an instance, if the sales person of ASDA will
not properly behave with its customers then the customers will not purchase the products. In
opposition to this, () opposed rewards is the factor which can be responsible for influencing the
consumer loyalty. In order to remain with the company for long period the consumers expect

certain rewards which shows the interest of the company towards its users. The organizations can
offers rewards in form of discounts and bonuses. This will allow the customers to get informed
with the changes and offerings of the products. The customers will feel valued and demanded
and it results into customer retention.
In contrary to this,(Newell, 2010) opposed that convenience is the element which can
also be responsible for influencing the customer loyalty. It is seen that the customers generally
purchase those products which are nearby to them. If the products are conveniently available in
the market then it will help the users to get the products easily. In addition to this, there are
different organizations which offers the facility to transport the products at home after
purchasing. If it happens then the customers feel convenient and would prefer shopping there
only. It will result in attracting the new and existing customers towards the company.
In context to above, community outreach is the factor which will assist the company to
catch the attention of the customers. If this is not properly done then it can have huge impact on
the loyalty of the consumers. If a firm do something for the society then it will attract the
customers. The companies can adapt corporate social responsibility so that it will be able to take
steps for the development of the society. Besides this, the firms can resolve the issues and
problems raised with the purchased product. It will assist in lower down the chances of
disappointment of the customers from the concerned organization. The management of the
company must focus on gaining feedbacks for the customer so that they will be able to trace the
satisfaction level of the users.
Overview of e-commerce operations
According to (Ryu, Lee and Gon Kim, 2012), e-commerce is the process of buying and
selling the products and services with the use of online mode. This can be done with the use of
different technologies like mobile commerce, internet marketing and supply chain management.
In 1970's e-commerce was first developed in the form of electronic fund transfer and electronic
data interchange. Further, the concept was used by the organizations in order to sale their
products and services online. With the growth of internet, the e-commerce operations are also
enhanced. The organizations like Amazon, flip kart and Jabong who stated selling goods online.
This has resulted in increasing the demand of the products. In addition to this, the major impact
of e-commerce operations are increased the profits of this industry. The customer are getting the
products at one click. This has enhanced the eagerness of the purchasers to purchase the

products. In UK, more than 15% of market share is gained by the retail online sectors. They have
made the products readily available for the customers which has resulted in increasing the
customer base of these firms.
In context to above, This shows that this industry is enhancing its operations with the sue
of different measures. In addition to this, except UK there are more countries whose market
share is higher in e-commerce sector. This shows that the stated sector is growing sector at
global level and also useful for the economies. For an instance, in India 45% of market share is
gained by the e-commerce operators. This depicts that how frequently the firms are increasing
their operations in this sector. The major players are Amazon, myntra, flip kart are the most
gained market share companies. These firms have adopted the most crucial tool i.e. social media
which helped them to attract the large number of customers with their promotional techniques.
As a result, the share of this industry is higher and also the customers are satisfied with their
products. The major reason of the success of this sector is its timely improvements that are being
implemented by the management of these companies. This has allowed the customers to
purchase the products with convenience.

Organizational performance of Amazon
According to (Yuksel, Yuksel and Bilim, 2010), Amazon is one of the leading company
which is internet based retailer over the globe. The firm offers different types of goods such as
online books and other consumable goods. This is one of the separate online retailer which
operates in UK, USA and other parts of the world. The organization offers cross boundaries
shipping which has enhanced its operations at global level. The organization has gained its major
share in Asia and Europe which has resulted in increased customer base of this firm. The
company adapts the customer relationship management and information technology in order to
support the business strategy.
Empirical Review
(Ramanathan, 2010) explained that, there are different reasons which has made this
company so successful. For an instance, the organization keep taking customer reviews which
helps the company to identify the pros and cons of their operations. With the help of this, the
firm brings requisite changes which allows this company to remain successful at global level. On

contrary to this, (Rainer and et.al., 2013) started that adaption of chaotic storage technology for
the storage of the products. This assist the company to keep the track of the records with
reference to the storage. With the help of this technology, the company is able to store large
volume of goods which allows the company to effectively manage its operations. In addition to
this, the venture adopts the efficient tracking system which assist the firm to handle and manage
the products on regular basis.
Methods that used by amazon to achieve customer loyalty in UK
In the E-commerce retail industry amazon is world leading online retailer company in
UK as it provide wide range of products, deliver customer experience and also offer prime
membership which is unique feature of the firm. They also offer product at low price that create
high customer and influence them for repetitive purchase from the organization. According to
Wang, Lin and Wang (2011) various methods used by an organisation that enhance customer
loyalty that is personalized e-mail marketing that improves performance and it add more value in
company's products which satisfy needs of customers. These method include Cart abandonment,
special offer emails that fitted customer's profits and triggered emails. Benefits of personalized e-
mail marketing is that it helps the firm to build long time relationship with customers. In context
of Amazon it get benefit of long term relationship with customers by adopting personalized e-
mail marketing that enhance their customer loyalty. Another methods is also highlighted by them
that enhance customer loyalty that is customer self-service support for fast growing firms. This
method is used in order to minimising customer complaints by handling support issues in an
effective manner. With regard to this, firm get benefits by use of self-service support that it can
reduce cost that directly improve productivity and it also provide accurate and detailed
information with wide range of products on its website that improve customers loyalty.
However, Santouridis and Trivellas (2010) has supported customer service method because it
helps the firm in attaining customer loyalty on customer point of view. 90% customer prefer that
product that have additional customer service they want not only physical product alone but they
also want high quality customer service. That deliver superior value and meets their expectations
in a competitive market. The potential benefits of this for a firm is that it increase sales, build a
brand image, enhance customer loyalty and create positive environment. Zichermann and Linder
(2010) asserted that Amazon have improve its customers loyalty by improving its customer
service channel in the view of fact that call centres are tremendous channel. 50% customer feel

uncomfortable with this. They dissatisfy due to its poor quality service deliver by its middlemen
who offer product service to its final customers. It also takes more time to pick customers calls
so amazon decide to improve the customer service channel by adopting another method. They
have adopt a simple point system which is a very common process for customer loyalty
programs. For this, customer earn rewards frequently and get best discount offers as well as
special customer treatment it also offer. Although this point system is best way or form that is
used by every businessmen to encourage customer so they purchase frequently in short-term. As
per the Yuksel and Bilim (2010) e- commerce industry use online customer service methods to
increase customer satisfaction and customer loyalty. It is very important to attain customer
retention by live chat tools. This helps an organisation to reduce customer complaints by live
chat so it can help to solve various issues instantly. It is a best way to communicate with firms
and solve issue quickly that leads to increase customer satisfaction level. This chat feature have
becomes one of the best way to contact with customer, 50 % of customer complaints is fulfil by
use of live online chatting with firms and other side 30 % by use of email or 20% by phone calls.
Additionally, live online chat is more effective way to enhance customer loyalty and satisfy their
needs. have stated that, 65 percent consumer who use internet they prefer those e-commerce
firms who provide wide range of products online with customer online support. In context of
Amazon it provide customer online support facility in order to increase sales by reduce customer
complaints by live chat. That is available 24 *7 online services with its customer that leads to
enhance customer loyalty in UK. Along with this, it not only increase sales and enhance
customer loyalty but it also reduce service cost of Amazon by use of live chat. The initial set up
of live chat tool is less expensive and implementation is very simple and quick. The cost of live
chat tools is lower than other customer service support such a personalised email marketing and
customer call centre.
As per the view of Woisetschläger,Lentz and Evanschitzky (2011), company can focus
on diverse methods of customer loyalty improvement. It has been noticed that reducing attrition
by having use of social media tools. It means by having improvement in relationship with
customers the ratio of attrition can be controlled. By having an application of diverse tools like
frequent communication calendar so that regular interaction with customers can be attained
effectively. It will allow to make sure that long term sustainability can be advanced effectively.
Paintin, Roberts and Galuppo (2010) has stated that courtesy system allows to meet key goals

and objectives. By having an improved focus on such aspects the business firm can have better
opportunities because it allows to ensure about work standards. It helps in meeting relationship
values for better improvement.
Challenges faced by companies during attaining customer loyalty
It has been noticed that businesses faces number of challenges in regard to loyalty. By
having continuous improvement the key measures are required to consider by company like
Amazon. Businesses faces various challenges while they adopt various methods to attain
customer loyalty. E-commerce retail industry use Personalized e-mail marketing to attain
customer loyalty they face various challenges. According to Woisetschläger,Lentz and
Evanschitzky (2011) it said that before implementing any method to attain customer loyalty first
they require personal customer information so it help the firm to share and offer various
products information through personalised email marketing. Entities face challenges while using
this strategy for enhancing customer loyalty for that reason, they put more effort in collecting
customer email address and telephone number. Company contact customers by covering wide
areas through the use of social media such as Facebook, Twitter and LinkedIn etc. Along with
this, they attending trade shows and networking events so it help them in getting newsletter
emails and it also ask from audience and note down their personal email addresses. Another
method is adopt by businessmen that is customer service support for reducing various issues of
customers that are faced by various firms. For example, Amazon solve various issues through
social media avenues so it require to respond it customers regularly and monitoring social media.
As per the advancement of technology it influence the firm to satisfy customers dynamic
demand by use various method. They conduct market survey so they collect large information
about customer preferences by questionnaire and interviews about new technology. As per
Paintin, Roberts and Galuppo (2010) for solving customer issue they choose best technology
among various technology so, it supports the customer base that directly achieve customer
loyalty. To resolve various issues they look over various technology that is email marketing and
online live chat to support customer issue. For this reason , Amazon spent huge investment for
conducting training programmes so their staff members become more expert and knowledgable.
So they deliver best solution about a problem to its customers for increase their satisfaction level.
Along with this they need to evaluating and analysing customer data information for this reason
they hire experts who interpret this information. So, by analysing it help the amazon to choose

best and suitable technology among various alternative technology according to customer
demand. The whole process takes more time, energy and efforts to choose an effective
techniques and organize in a suitable format because customer demand are ever changing so it
becomes ineffective in future. Author has asserted that to resolve various complaints of customer
through online chat tools amazon face biggest challenges they needs to develop a software
solution programs. Also they require a experts who develop and design software it depends upon
the size of a business.
Along with that they also develop Website Alive so they tracking, monitoring and
handling customers live chat on its sites simultaneously. For handling a large chat they also
spend huge amount on recruiting and selection process. They spend money on various different
methods to attract a large number of experts to solve various issue. They spent large amount on
advertising on newspaper, television and through various agencies it help them to attract a
talented experts who handle various issues of customers. Guillén, Nielsen, Scheike (2012)
asserted that to attain customer loyalty e-commerce need to conducting market survey to collect
more information about customers so they make effective decision regarding to its customers. It
also face challenge to make effective budget to improve customer loyalty and various programs
for this they hire financial experts. Who also designed various software programs that directly
helps the firm to fill a gap between customer and company. Another issue is that they have to
make effective marketing mix strategy and maintain brand image. As well as they need to
examine market trends and its competitors current strategy related to customer loyalty programs.
So marketer of an organisation continue monitor the internal and external environment. In
addition to this, Amazon maintain customer relationship management through survey, social
media websites and online live chat that acquire huge cost to attain customer loyalty. And
effective marketing strategy they also use such as marketing segmentation and target marketing
to satisfy customer in a potential market.
Ways by which company can more effectively attain customers loyalty
According to (Qin, 2010), customer loyalty of the customers can get enhanced with the
help of letting the customers know what the company is doing. Here, the management of the
company can sent newsletters to the users which will make them aware of the actions of this
firm. The venture can inform its customers with the use of different methods. This will help the
company to keep attracting its customers. In addition to this, the customers will also be aware of

the acts of this firm. If the firm do not let their customer know about their act then it will create a
chance of confusion among the users. On contrary to this, (Pardalos and Tsitsiringos, eds., 2013)
criticized that remembering the special occasions can also help this company to improve the
customer loyalty. For an instance, on the birthdays and festivals the firm can send greeting cards
to their loyal customers. This will increase the customer interest towards this organization. Or the
firm can also offer discounts to the person on his birthday which leads to attract the customers to
this company. It will create a positive image in the customers minds.
Summary of the literature review
From the above themes, it can be stated customer loyalty is the most importance element
for the success of an organization. The e-commerce industry needs to focus on different factors
that have mentioned above. This will allow this industry enhance the loyalty factors towards its
customers. Amazon is facing different challenges which are being solved with the consideration
of different ways. This will assist the company to decrease the customer retention and maintain
the position of this firm at global level.
Critical literature review
(De Chernatony, 2010) explained customer loyalty is the way through which the
retention of the customers can be uplifted towards the company. However, customer loyalty
plays an essential role in raising the sales objective of the company. If the customers are loyal
towards a brand then it will directly impact the sales and profitability of the company. In addition
to this, the major reason behind the necessity of the customer loyalty is that it lower downs the
customer retention form the brand or a product. It results in enhancing the sustainability of an
organization in long run. Besides this, customer loyalty has a major impact on the relationship of
the company with the consumers. If the firm has maintained good relations with its customers
then it will increase the productivity of the company.
(Ragas and Bueno, 2011) stated that reputation is the factor which can affect the loyalty
of the customers. How the product and services are played and image created information of the
media. In long term, the company can only survive if they have good reputation in the market.
Whereas, the financial and human resource capabilities have helps in attracting a customers. If an
organization has all these capabilities then it will have an impact on the likes and dislikes of the
customers. The reputation of a firm can be maintained positive only when the improvements are
timely implemented. For the same, an organization needs to analyse both macro and micro

factors so that the current picture can be understood. The management of an organization needs
to evaluate t6he factors which improve and enhance the reputation of the company.
(Yoon, Lee and Lee, 2010) explained the e-commerce operations has unique impact on
the society towards the purchasing of the products. These organizations have maintained
transparency in their operations which has resulted in increasing the interest of the customers. In
addition to this, there are different organizations who have stated the online business for attain
the needs and requirements of the customers at one click. This section has different distribution
channels which is being adopted by this industry. Earlier, this sector has faced issues in terms of
quality, time and price. But with the time they have implemented the improvements in order to
improve their position. Additionally, these organizations also maintained transparency in their
payments which has attracted the customers. On the basis below stated graph, it can be seen that
UK is one the top economy which has gained its market share up to 15% in 2015.
As per the structure of this organization, the firm has large number of employees. In
addition to this, the firm has good financial and human capabilities which leads to maintain good
position of this firm. In 2015, this company has generated around 105 billion USD which shows
that the organization has good financial capability. In addition to this, the promotion and
marketing activities of this company is also effective. The firm adopted social media marketing
which allow the company to attract the attention of the consumers. In addition to this, the
management of this firms keeps on improving its operations by taking feedbacks form the
customers This has resulted in increasing the trust factor of the customers towards this firm.
Additionally, the adaption of different strategies has resulted in growth of this organization in
years.
On the basis of above study, it can be stated that overall literature and further elements are
being well maintained in the study. In addition to this, study indicates that e-commerce is the
process of buying and selling the products and services with the use of online mode. This can be
done with the use of different technologies like mobile commerce, internet marketing and supply
chain management. The organization offers cross boundaries shipping which has enhanced its
operations at global level. The organization has gained its major share in Asia and Europe which
has resulted in increased customer base of this firm. The company adapts the customer
relationship management and information technology in order to support the business strategy.

In addition to above, (Zichermann and Linder, 2010) explained that the management of
Amazon can use the concept of keep the things personal. While sending emails, the personal
touch towards an individual is lost. The organization can send voice messages to their loyal
customers which will result in attracting the customers. It would make them feel that they are
valued for this company. Besides this, the organization can also create good relations with the
customers by using social media and other tools. Here, they can update their latest offers and
discounts which will allow the customers to be alert. As a result, these steps will generate a
positive image of their company towards the customers.

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