Mediating Roles of Customer Engagement and Satisfaction in the Connection Between E-Retail Customer Experience and Loyalty

Over the last two decades, the use of digital platforms in Indonesia has grown dramatically. People are rapidly using e-retail platforms for various activities, such as social media, shopping, health, entertainment, traveling, learning, and food ordering [1], because of their hectic schedules, people prefer to buy and sell online. The e-retail platform is continuously developing, creating an excellent potential for online shops. In Indonesia, the online retail industry is entering a new era of competition as companies compete to outdo one another in service and product offerings [2].

According to the Indonesian statistical data, 204.7 million Indonesians have internet connectivity as of January 2022 [3]. This figure, representing internet connectivity, increased by only 1.03% over the previous year. The number of people in Indonesia who use the Internet has steadily increased over the last five years. The overall number of internet users in the country increased by 54.25% compared to 2018.

The Indonesian people's need for quick and easy online access to products and services is driving the rapid development in internet usage in Indonesia. The increased use of the Internet has fueled the growth of firms that provide services linked to online shopping. As a result, many customers buy online to suit their everyday necessities [4]. In these conditions, e-retail is a wise consumer purchase option [5]. Because of the easiness with which transactions may be bought and sold, people's needs and wishes can be addressed through e-retail utilizing only cell phones and internet networks [6].

Previous studies have discovered that the way a person feels has a big effect on how engaged they are [7]. According to other studies, the way a person feels has a big effect on how satisfied they are. As a result, a study in the e-retail [8] and residential industries [9] revealed that customer satisfaction (CS) significantly impacted customer loyalty (CL). Furthermore, Al-Dmour et al. [7] discovered that customer engagement (CE) significantly and directly affects CL [10].

In addition, customer experience (CX) is how much value a customer puts on a brand based on how they see its value, service, quality, and what it provides. These multiple elements influence CS and influence CE [11]. When customers completely trust a brand, he or she is satisfied [12]. CS, conversely, is determined by how pleased customers are with the chosen brand and how well it satisfies their expectations. CS is crucial for gauging customer interactions in the e-retail industry. These findings support the earlier study, which uncovered CS as a moderating variable in measuring CX relationships [13]. The importance of CE in developing CL is then recognized [14]. To reduce risk, the loyal consumer will review the total CL, CX, CE, and CS. Because of this, it is crucial for the e-retail business to study how CX, CE, CS, and CL are related.

Much research has been done on the link between CL and CS. Nonetheless, there has not been any study done on how long-term brand equity affects CE, CS, and CL. Prior research examined the significance of CX in the contexts of the industry of automotive [15], retail fashion [16], industry of hospitality [17], industry of insurance [18] industry of tourism [19], industry of telecommunication [20], industry of food [21], industry of banks [22], and industry of education [23]. According to the researchers, this is the first study to examine the e-retailer industry's CX. Hence, the researchers want to explore the e-retailer industry, which has been regarded as a vital industry in enhancing the circular economy [24].

As previously said, most research on the e-retail industry has concentrated on service improvement, with no previous studies considering CE. The primary purpose of this study is to look into the effects of long-term CE in the e-retail industry. CE research in the e-retail business has been regarded as a ground-breaking innovation in offering theoretical value for CE, CX, and CL.

3.1 Customer experience (CX)

A positive CX has a beneficial and considerable influence on the development of CE, claim McColl-Kennedy et al. [38]. CE directly or indirectly involves customers in an online retailer's marketing initiatives. CX can inspire customers to engage with a firm in a way that involves both emotional and physical activity on their behalf. A consumer may have a favorable or unfavorable experience. A positive experience will increase CL and CE and motivate them to utilize the business' services again, while a negative one will make them switch to a rival. The results demonstrated that CE is significantly impacted by CX [39].

According to Nobar and Rostamzadeh [40], CX and CE are closely associated. It is also highlighted that experiences and engagements are essential in exchanging goods and/or services between businesses and customers. Engagement can be raised by utilizing memorable, worthwhile, and engaging experiences. Therefore, it suggests that CX and CE have an excellent link. This highlights the relationship between CE and CX.

The other study showed that focusing on CS is necessary to maintain a customer base. Create meaningful CXs based on their demands to get a competitive advantage and increase CS [41]. As a result, without satisfied customers, the company has fewer chances of surviving in a market that is becoming increasingly competitive. The study's findings revealed that, in the retail sector, CX had a considerable effect on CS [42]. CS is influenced by whether a customer's favorable or bad experience. Customers are believed to be satisfied when they positively remember the encounter [43].

A spectacular CX will entice customers to repeat the experience, which will, in the long term, retain CL, according to the conclusions of the study done by NasarAmini Jeloudarlou et al. [44]. The unshakeable commitment to support or use a specific brand again in the future is loyalty. CLis is described by Manyanga et al. [37] as customers' intention to continue supporting a business over time. According to the other study, loyalty is the determination to repurchase and support brands in the future despite marketing campaigns and external factors [45].

If a customer has a satisfying and memorable experience when dealing with a company's service providers, they are likelier to remain loyal to that company. The fantastic CX produces the customers' favorable emotional values. Customers who receive services from businesses will feel more loyal to them, increasing their propensity to make follow-up purchases and refer friends and family to their products and services. According to this study, CL and CXs are positively and significantly related [46].

Although the proposed price is more significant or associated with many other considerations, customers with a great experience will be likelier to do it again, ultimately increasing CL. This suggests that the effect of CX on CL is both favorable and considerable [47]. This highlights the link between CL and the CX. The study's hypotheses are as follows based on this interpretation:

• H1: CX significantly and favorably affects CE.
• H2: CX significantly and favorably affects CS.
• H3: CX significantly and favorably affects CL.

3.2 Customer engagement (CE)

The organization's objective is to increase the number of new consumers obtained through positive engagement, per the conclusions of the research done by Tahamtan and Bornmann [48]. This is so because happy customers are more engaged. Additionally, it provides capabilities that improve CXs, allowing the business to interact with customers. Engaged customers will likely exhibit favorable future behavioral responses toward CL [49].

As Tuguinay et al.’s [50] study stated, CE mediates the association between CX with automated games and their loyalty to casinos. According to Kurniawati and Ariyani's path analysis research findings from 2021, CE mediates between CX and CL. A positive CX can encourage loyalty by creating an emotional connection in a compelling, consistent, unified environment. Customers can be exposed to scenarios through the CX that affect their decisions on loyalty [50].

Consistent with the study's findings, a CX and demands being met are crucial for fostering loyalty. Thus, CS is the mediating variable to achieve the ultimate objective of comprehending CL [51]. Consequently, CX can considerably affect CL, mediated by CS [52]. According to Sandra and Keni's research, customers are more devoted and inclined to frequent a store if they are pleased with the level of service they receive and the overall quality of their shopping experience. Therefore, we may conclude that CS can effectively mediate the impact of CX and CL in retail businesses [53].

Additionally, Ramadani's research indicates that for customers to feel content and form a long-lasting, loyal mindset, a company must offer a positive and satisfying CX. As a result, CS serves as a bridge between CX and CL [54]. Hence, the researchers proposed:

• H4: The influence of CX on CLis mediated by CE, yielding a positive and substantial relationship.
• H5: The influence of CX on CL is found to be positive and statistically significant, mediated by CS.

3.3 Customer satisfaction (CS)

CS is the outcome of their efforts, claims Jonathan [55]. The degree to which the customer interacts with the brand or product will affect how highly they value it and how satisfied they are. The assumption is that positive CE is crucial for CS. We can infer that CE strongly and favorably impacts CS.

Additionally, the basis of CE can impact the degree of CS [56]. Thus, it may be said that CE increases CS. Thus, it can be seen that raising CE will raise CS [57]. The current study has made the following suggestion in response to these investigations:

• H6: CE significantly and favorably affects CS.

3.4 Customer loyalty (CL)

The cognitive, emotional, and behavioral components of CE can significantly aid CL's mental and emotional components, suggesting that CL significantly impacts loyalty [58]. The results confirm the multidimensional nature of CE and provide evidence for each model's predictions. In conclusion, CE significantly impacts loyalty [59]. CE and CL appear to have a substantial association, according to a study by Pandey et al. [60]. This indicates how strengthening CL will be impacted by raising CE.

CS is one of the elements thought to be a precursor to CL. This suggests that CS and CL are directly related [61]. The level of satisfaction and willingness to stick with a brand will directly depend on how well they were treated. This demonstrated that CS greatly and favorably influences CL [62]. CS must be constant and free of unfavorable incidents to build CL. CL significantly impacts, as empirically shown [63]. The research presented the hypotheses below:

• H7: The level of CE has a large and positive impact on CL.
• H8: The level of CS has a large and positive impact on CL.

Structural Equation Modelling (SEM) was used in this study to evaluate hypotheses using the AMOS program. The data was gathered from an Indonesian e-retailer user. Two hundred twenty responses were collected from the 300 questionnaires sent to housing developer clients. In this survey, 93 female respondents (42.27%) and 127 male respondents (57.73%). Because of a lack of readily accessible information about the number of building material merchant owners, an online survey was used.

All variables in Table 1 are discriminately valid since their indicator values are more significant than or equal to 0.50. This indicates that the loading value met the measurement model requirements for this investigation. As such, the reliability of internal consistency is frequently evaluated using composite reliability and Cronbach's alpha. Table 2's overall reliability test findings showed that each of the four study variables has a CR value that is more significant than 0.7, indicating that each variable has a statistically significant value. These findings support the assertion that the overall research tool is trustworthy and appropriate for this investigation.

This study's hypothesis 1 demonstrates the connection between CX and CE. The hypothesis testing results are exhibited in Table 3. The projected parameter value for the standardized regression weight coefficient is 0.830, and the critical ratio (CR) value is 11.496, which exceeds the threshold of 1.96. This result illustrates the close relationship between CE and CX. It suggests that as CX improves, so will CE. If there is a direct correlation between CX and CE, the hypothesis (H1) that “CX significantly and favorably affects CE” is validated and stated. The probability value is 0.00 (p 0.05) or less for the test of the link between the two variables. It validates previous hotel industry studies, establishing a favorable correlation between CE and CX [67].

Table 1. Validity test

Table 2. Reliability test

This research's second hypothesis is supported since CX has a favorable and significant impact on CS. In addition, Table 3 shows a significant correlation between CS and CX, with a CR on the impact of 2.645, more significant than 1.96, and an estimated value of 0.612. It backs up prior health insurance industry studies that discovered a connection between happy and satisfied customers [68].

Furthermore, this study's third hypothesis shows that the CX has a positive and significant effect on CL. According to the findings presented in Table 3, the standardized regression weight coefficient is assessed to be -0.710, while the CR value is reported as 3.069, which is more significant than 1.96. This outcome demonstrates the link between CS and CL. It implies comparable findings from the earlier study in the airline business, which states that when CX improves, CL will rise [69].

Table 3. Research hypothesis direct parameter

The fourth hypothesis was confirmed, demonstrating that CE significantly and favorably influences the connection between CX and CL. In this regard, a represents the regression coefficient value of the CX variable on CE of 0,830, and b represents the CE variable's regression coefficient value on CL of 1.442, according to Table 4, which displays the mediation value results from Sobel Test AMOS 26 calculations. While the standard error for the relationship between the CX variable and CE is 0.072, the connection between the CE variable and CL is 0.238. According to the Sobel test calculation, the CE variable's mediation value is 5.363179, and the test of the link between the three variables produces a probability value of 0.00. The variable is regarded as mediating if the Sobel test results in a value more significant than 1.96 at a significance level of 0.05. These findings support the conclusion that CE mediates the link between CL and CX. The results of this study are consistent with those of Tuguinay et al. [50] and Kurniawati and Ariyani, which show that between CX and CL, CE acts as a mediating factor [70].

Table 4. Research hypothesis indirect parameter

The fifth hypothesis verified that the association between CX and CL is favorably and significantly moderated by CS. A represents the CX variable's regression coefficient value on CS of 0.602, and b represents the CE variable's regression coefficient value on CL of 0.513, according to Table 4, which displays the results of the mediation value from Sobel test AMOS 26 calculations. The standard error for CX has a 0.144 correlation with CS, while the standard error for the impact of the variable CS on CL is 0.153. These values are referred to as SEA and SEB, respectively. According to the Sobel test calculation, the CS variable's mediation value is 2.615612, and the test of the connection between the three variables' probability value is 0.004. The variable is regarded as mediating if the Sobel test results in a value more significant than 1.96 at a significance level of 0.05. The results are consistent with earlier research in the retail sector, which shows that the association between CX and CL is influenced by the mediating factor of CS [71].

Additionally, the sixth hypothesis of this study uncovers that CE does not significantly and favorably affect CS. The results presented in Table 4 indicate that the estimated parameter value for the standardized regression weight coefficient is 0.204. Additionally, the critical ratio (CR) value is 1.316, which exceeds the threshold of 1.96. This result shows a poor connection between CE and CS. It suggests that the study's findings do not support earlier studies that CS and CE are positively correlated [72].

Based on the seventh hypothesis, it is posited that the level of CE exerts a positive influence on the degree of CL. The standardized regression weight coefficient is predicted to be 1.442, with a corresponding critical ratio (CR) value of 6.051, above the threshold of 1.96. This result illustrates how closely CE and CL are related. It means that when CE rises, CL will also rise. The study's findings are consistent with other studies that claim loyalty is significantly impacted by CE [73].

Ultimately, this study has determined that CS positively impacts CL. The observed standardized regression weight coefficient is calculated to be 0.513, with a corresponding critical ratio (CR) value of 3.346, exceeding the threshold of 1.96. This result illustrates a robust correlation between CS and CL. It may be inferred that CL and CS are positively correlated, suggesting that an improvement in CS will likely increase CL. This implies that the study's findings align with prior research, which suggests a noteworthy and favorable effect of CS on CL [74].

The objective of this study was to evaluate CX and CL by employing CE and CS components. This article presents three notable contributions. The study has confirmed that the factors leading to CX directly result in the occurrence of CE. The present study has revealed that experience significantly influences the determination of CS within the e-retailer industry.

Furthermore, the research demonstrates that CX indirectly influences CL. The previous study did not investigate or empirically establish CE and CS as a mediating variable. The abovementioned findings expand our comprehension of CE within the CX framework. Moreover, the present study substantiates that CE and CS directly elicit CL within the e-retailer industry. This article posits that the functions related to CX impact CL through the mechanisms of CE and CS. Subsequently, the results of this study provide the impetus for organizations to formulate an effective strategy for cultivating CX, thereby immediately instigating CE and enhancing CS.

Although this study contributes substantially to understanding CX in the e-retailer industry, it is essential to acknowledge its inherent limits. The study was primarily carried out in Indonesia, a nation categorized as a developing country. Notably, the findings acquired in developed countries may exhibit variations compared to the present study's outcomes. Consequently, additional deliberation is necessary. This implies that future research should be undertaken in a developed nation with a distinct cultural context.

Furthermore, it is recommended that future studies validate this conceptual framework by employing various approaches, such as a mixed-method design. By integrating quantitative and qualitative methodologies, the research findings are expected to yield enhanced precision in understanding. In conclusion, including business performance measures such as return on investment, profit loss ratio, and market share inside the conceptual framework would enhance the article's academic and industrial significance.