The Determination of Customer Purchasing Decision through

E-Business Model in Online Marketplaces

Berlian Karlina , Indah Rahayu Lestari, Anita Wahyu Indrasti, Dewi Puspaningtyas Faeni

Universitas Budi Luhur

Keywords: Customer Purchasing Decision, E-Business Model, Online Marketplace

Abstract: The objective of this research is to analyze factors that influence customer purchasing decision through e-

business model in some online market places in Indonesia. The e-Businesss model includes four aspects:

product innovation, infrastructure management, customer relationship, and financial aspects. Each aspect

consists of some critical element. Product innovation consists of value proposition target customer, and

capabilities. Infrastructure management consists of activity configuration, networking link among partners,

and any resources to produce the product or services. While customer relationship includes information

strategy, trust, and loyalty. Financial aspect consist of the revenue model, and cost structure. In this study,

the authors used the data obtained from questionnaires, and quantitative approach was used. A questionnaire

distributed to 100 customers of the online marketplace in Indonesia such as Shopee, Tokopedia, and

Bukalapak. The results found that product innovation, infrastructure management, and customer relationship

have significantly and positively influence customer purchasing decision in the online marketplace. While

the financial aspect does not contribute to the customer purchasing decision in the online marketplace.

1 INTRODUCTION

From the definition, a business model is a

conceptual tool that contained a set of objects,

includes concepts and their relationships to express

the business logic of a specific firm. The concept

and relationships are critical provided by the firm to

represent the value for customers include through

products or services provided along with a financial

consequence (Osterwalder A. & Yves P., 2005).

Therefore, it is important to set a business model for

any business activities for companies because the

business model not only consists of business logic

but also consist set of activities which a firm

performs. The performance of a firm can be

determined on how they perform it and when they

perform it in order to offer their customers benefits

with main objective to earn a profit.

Analyzing the business models of digital

marketplaces further requires an understanding of

the business model as a unit of analysis. A business

model itself does not only consist of the social

system but also actors, relations and processes.

Instead, it describes the logic of a "business system"

for creating value, that lies behind the actual

processes (Petrovic et al., 2001).

Description of the value of the company that

provides several segments of customers that include

designing, selling, and delivering the value in order

to generate profit is set of a business model that is

needed to be created by the company. Therefore, a

business model is critical for a business process

because it is a conceptual and architectural

implementation of a business strategy. While E-

business model is a new method that provided by the

organization that used information technology to

sustain in the market, particularly the Internet. The

e-business model is the same concept as existing

business model canvas, the different only in its

innovation. The value proposition for partners and

customers as well as its revenue streams are a

critical element established by e-business model

(Strauss and Frost, 2014; Baltzan, 2014). Therefore,

the e-business model is essential in today's

competitive business environment. E-business model

itself can define and understand the relevant

elements in a specific domain and the relationships

between them, and to help managers easily

communicate and share their understanding of e-

business among other stakeholders (Osterwalder

2002).

We were adopting a definition which emphasizes

the issues that a business model has to address: (1)

166

Karlina, B., Lestari, I., Indrasti, A. and Faeni, D.

The Determination of Customer Purchasing Decision through E-Business Model in Online Marketplaces.

DOI: 10.5220/0008931201660171

In Proceedings of the 1st International Conference on IT, Communication and Technology for Better Life (ICT4BL 2019), pages 166-171

ISBN: 978-989-758-429-9

Product innovation. It is more about what the

company in, consist of product innovation and the

value proposition offered on the market, (2)

Customer relationship. In this pillar, firm need to

set target customers and how they deliver them the

products, and also the after-sales services on how to

maintain a good relationship between sellers and

customers (3) Infrastructure management. Consist of

how the firm able to answer to any challenge on

logistics and infrastructure as part of delivering

product to customers (4) Financials. Consist of any

revenue that the firm get from any business

activities. It may include the transaction of selling,

advertising, membership, commission, and also any

cost that might occurred in business activities that

include the cost of goods sold, or any operating

expenses.

As one of the media in digital business, the

online market place has to become popular. The

most famous player of the online market place in

Indonesia such as Shopee, Tokopedia, Bukalapak,

Lazada, and Berrybenka, contribute to the national

economy. As the number of user in online

marketplaces is increased significantly in a few

years back, many start-ups have entered the market

to gain profit and use the business opportunity. As

the most significant online market place, Shopee

started their business activities as consumer-to-

consumer (C2C) marketplace but after the increasing

of users in a few years back, shopee expand the

business activities to both a C2C and business-to-

consumer (B2C) hybrid model. The additional

advantage of shopee for both sellers and buyer, they

do not charge sellers fees/commissions and listing

fees but provide a free postal fee to attract many

buyers and sellers getting experience shop through

Shopee.

By the existing of online marketplaces, its

answer to the customer’s expectations. Therefore,

the number of Online marketplaces have proliferated

over the past decade, that increase business

competitiveness that never happened before (Luca

Michael 2016). Online marketplaces can reduce

transaction costs and facilitate transactions to

become more accessible and efficient. As the market

becomes more competitive, the adjustment of

business model is necessary to sustain in the market,

since a business model is set of implementation for

business strategy and as the foundation for the

implementation of business processes. As shown in

Figure 1.1, the business logic triangle consist of

strategy, business model, and business processes. In

business models, there might occur the opportunities

and change that causes by the changing of

customer's expectation.

Figure 1

2 METHODOLOGY

2.1 E-Business Model

There are several methodologies to describe the

business models of the company. The term business

model identification includes many aspects of the

business activities of a firm. Business activity

includes goal or objective of the firm, a business

process that was converting raw materials to set off

good that delivered to customers, target customer,

business strategies in selling, infrastructure, trading

practice process and also operational processes that

include culture of the firm (George,G and Bock AJ,

2011). A business model able to identify the logic

on how durable designs product, delivers products,

and gain value from custome, in economic, social,

cultural or other contexts (Alexander Osterwalder,

Yves Pigneur, Alan Smith 2010).

Each industry might have different business

model depends on the organization and the

development of the technology trend. E-business

model is a dimension taken by the company to make

a profit on the Internet. The primary function of e-

business model is to identify the business processes

and business strategies of a company that includes

positioning of suppliers and customers, identify the

business environment that becomes more

competitive, understand the customers value

proposition, and forecast the cost structure and

potential revenue and profit through it (Sudrajat

Darjat 2016). Figure 2.1 shows the e-business model

pillars that consist of four elements: product

innovation, infrastructure management, customer

relationship, and financial aspects.

The Determination of Customer Purchasing Decision through E-Business Model in Online Marketplaces

167

2.2 Customer Purchasing Decision

Customers' satisfaction can be seen by how the

company provides their customized product and how

the product delivers benefit to them (Kotler, Keller,

Koshy, and Jha (2008). Customer behavior studies

individuals and groups before making decision oh

how they select, purchase, use, and dispose of

products, ideas, services, or experiences. There are

stages of buying decision; problem recognition,

looking for alternatives, purchase, and post-purchase

behavior.

The product offered through digital platform

affecting the consumer buying decision. It is because

of some information given by customers as feedback

or sellers as communication contribute to a customer

buying decision. For example; post-purchase

behavior will become more critical after online

purchase. Feedback after-sales will encourage or

discourage others from buying the product since

online purchase based on trust that can be seen

through customer feedback.

2.3 Online Marketplace

The online marketplace is where sellers and buyers

are met, and they seek for a different purpose to

provide or to get product needed through Intenet and

the information provided by third parties. Online

marketplaces are the primary type of multichannel e-

commerce and can be a way to streamline the

production process.

Central decision taken by online marketplaces is

necessary. One of the critical factors is what we

called system identification to review that allow

buyers and sellers to review each other that product

or service being transacted. In this case, any

information is published to show others about the

sellers’ and buyer’s experience. Others factor is the

supply of information about buyers and sellers in

deciding to make transaction by exploring each

parties’ information about the product or services

offered.

Business based e-commerce not only rely on the

strength of the product but also excellent service to

customers, good organizational structure,

infrastructure and security networks, and attractive

website design. Thus, the business model has to

adjust to the need of customers in the online

marketplace.

Indonesia’s e-commerce participants have been

the top numbers for years as many businesses are

interested in its enormous potential. A large number

of population and along with the digital exploration,

Indonesia become the most wanted country that

might offer a business potential return. Many local

and foreign companies, including investors, have

come to launch their business, especially business

that runs through e-commerce websites,

applications, and marketplaces. Some of them have

become very successful, with millions of visitors

every month, and the number keep increasing as the

digital world become more popular. The top three

online marketplaces include Bukalapak, Shopee, and

Tokopedia.

2.4 Requirement Analysis Methodology

The approach used in this study is quantitative. This

method is called quantitative because of the research

data in the form of figures and statistical analysis

used (Sugiyono, 2013). The quantitative approach

itself is data that can be presented numerically or

classified by some numerical value. A quantitative

approach is always present in the form of numbers.

This method also analyzed data using basic

statistical techniques to test validity and reliability.

When comparing to the qualitative approach,

quantitative becomes the most scientific and

objective result since it used numerical data to

analyze.

The quantitative approach used in this study to

identify the relationship between four aspects:

product innovation, infrastructure management,

customer relationship, and financial aspects. Each

aspect consists of some of the critical element.

Product innovation consists of value proposition

target customer, and capabilities. Infrastructure

management consists of activity configuration,

partner network, and resources and assets, while

customer relationship includes information strategy,

trust, and loyalty — financial aspect consist of the

revenue model, and cost structure.

Data obtained in this study used by spreading

questionnaires through the Internet by using Google

Form to any customers that have experience shop

through at least one online market places in

Indonesia. There is a five-point Likert Scale range

by one as "strongly disagree" to 5 as "strongly

agree" in every question. Thus, to make this research

more reliable and valid, the respondents only

allowed choosing the given options (scale 1 to 5 ). In

this study, the author used the Statistical Package for

Social Sciences (SPSS) to run the data.

This research contains five variables, which are

product innovation, infrastructure management,

customer relationship, financial aspect, and customer

purchasing decision. Product innovation,

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168

infrastructure management, customer relationship,

financial aspect are independent variables that

denoted by X, and its presence is not affected by

the other variables. While customer purchasing

decision is a dependent variable that denoted by Y

and its presence is affected by other variables.

Furthermore, based on the research framework, the

five variables have its indicators, as stated below:

a. Product Innovation (X_1)

Product innovation is the first pillar of the

framework, which has the central and significant

product-related aspect. The value proposition is the

critical factor in product innovation pillar since the

firm has to identify the target customer segments

and also to understand the firm capabilities to

deliver the products or services offered.

(Osterwalder 2002).

b. Infrastructure Management (X_2)

The infrastructure management element is the

second pillar of the framework, identify the value

configuration to deliver products or services offered

(Gordijn et al., 2000). Infrastructure management id

essential to assure that firm deliver an appropriate

value proposition. The configuration might include

establishing the process from selling, delivering, and

after-sales services to customers.

c. Customer Relationship (X_3)

The experience becomes the next critical element

hat firm has to consider in providing goods or

services. To make customers having a good

experience, the firm has to established customer

relationship through the use of the online

marketplace. Identifying customer's information is

the first important in customer relationship. The

information can be a taste of customer based on

actual purchase. Second is on how to deliver value

in effective and efficient. Last is maintaining

customer’s trust is very critical in any business

world (Osterwalder, 2002).

Table 2.1 Variables and Indicators

Variable Indicators Questionnaire Items

Product Innovation

1. Customized Offering

1. I can quickly recall the online marketplace for

the product need

2. Competitive Price

2. I know that the online marketplace is the

answer for any need of a product

3. Customer Service Level

3. I prefer to shop in the online marketplace than

other platform e-commerce business

4. Design Product

4. The price of the product is the reason to shop

through an online marketplace

5. Brand/ Status

Infrastructure

Management

1. Personal Assistance 1. The easiness of the online marketplace makes

me shop more

2. User-Friendly of the Platform

2. I can give honest feedback to sellers through

the online marketplace

3. Automated Service

3. The communication between seller, buyer, and

online marketplace as the third party is important

4. After Sales Service

4. I am satisfied shopping through an online

marketplace with the services given by the seller

5. Communication

1. Information Strategy Given 1. I always shop through online marketplace

because the detail of the information given

Customer

Relationship 2. Delivering Value

2. I can give honest feedback to sellers through

the online marketplace

3. Trust and Loyalty

3. The time required to deliver a product is the

main reason to shop

4. Delivery Time

4. I trust to shop through online marketplace

because of the honest reviews from other buyers

Financial Aspect

1. Seller's Value 1. I shop through online marketplace because of

online advertisement

2. Online Advertisement

2. I shop because I saw that products sold in

massive through the online marketplace

3. Quantity Sold

3. I shop through online marketplace because of

the seller's reputation

The Determination of Customer Purchasing Decision through E-Business Model in Online Marketplaces

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d. Financial Aspect

The financial aspect is the fourth pillar of our

framework that consist of any revenue and cost

structure occurred in a firm. The firm seeks to have

the lowest cost structure and higher revenue to

sustain in the business environment. Thus, grabbing

potential customers is critical to increasing the

number of revenue.

3 RESULT

In this study, validity and reliability are being tested

using SPSS. Variable Y in this study is customer

purchasing decision, and variable X1, X2, X3, and

X4 include product innovation, infrastructure

management, customer relationship, and financial

aspects. Based on table 3.1 below the validity test

measurement on all questions are declared valid

because as shown in the table, the value of r count is

higher than r table, which is 0.195. The significance

level fr validity test is lower than 0.01 so that there

is no need to do a re-test of validity, variables used

in the study can be used for further research activity.

Table 3.1 Output of Validity

Variable R Table

(α=5%)

Pearson

Correlation Sig.

Result

Product Innovation

(X1.1)

.195 .546 .00 Valid

Product Innovation

(X1.2)

.195 .612 .00 Valid

Product Innovation

(X1.3)

.195 .846 .00 Valid

Product Innovation

(X1.4)

.195 .481 .00 Valid

Infrastrusture

Management (X2.1)

.195

.718

.00 Valid

Infrastrusture

Management (X2.2)

.195 .618 .00 Valid

Infrastrusture

Management (X2.3)

.195 .512 .00 Valid

Infrastrusture

Management (X2.4)

.195 .729 .00 Valid

Customer

Relationship (X3.1)

.195 .412 .00 Valid

Customer

Relationship (X3.2)

.195 .543 .

Valid

Customer

Relationship (X3.3)

.195 .512 .

Valid

Financial Aspect

(X4.1)

.195 .654 .

Valid

Financial Aspect

(X4.2)

.195 .623 .

Valid

Financial Aspect

(X4.3)

.195 .713 .

Valid

Result of reliability test from above table, it

shows that product innovation, infratructure

management, customer relationship, and financial

aspect are reliable. The result of Cronbach’s Alpha

for each variable is .836, .823, .816, .845, and .803

respectively. Test result of all variables presented

that all variables Cronbach’s Alpha values more than

(>) 0.60. It indicates that questions asked in the

questionnaiere is reliable for further research

analysis.

Table 3.2 Output Reliability

Variable Number of

Questions

Cronbach’s

Alpha

Result

Product Innovation

(X1)

5 .836 Reliable

Infrastructure

Management (X2)

5 .823 Reliable

Customer

Relationship (X3)

4 .816 Reliable

Financial Aspect

(X4)

4 .845 Reliable

Customer

Purchasing

Decision (Y)

5 .803 Reliable

The result of hypothesis test shown in table 3.3,

product innovation, infrastructure management,

customer relationship, partially give positive effects

to a customer purchasing decision, and only

financial aspect that not give significant relationship

to a customer purchasing decision. As shown form

the table that variable product innovation and

customer relationship have the most significant

influence on customer purchasing decision customer

where T count > T table (4.762 > 1.983) and (4.918

> 1.983).

Table 3.3 Test of Hypothesis

Model Unstandardized

Coefficients

Standardized

Coefficient

Beta

T Sig.

B Std.

Error

(Constant) -.172 .211 -.627 .413

Product

Innovation

.367 .083 .347 4.762 .000

Infrastructure

Management

.256 .072 .267 3.781 .000

Customer

Relationship

.382 .051 .467 4.918 .000

Financial

Aspect

.218 .621 .219 1.672 .000

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4 CONCLUSION

The results showed that the e-businesss model

influences the customer purchasing decision.

Product Innovation as answering customer need,

giving the most satisfactory service to the customers

through e-commerce. The second factor is customer

relationship that contributes significantly and

positively be an as significant variable that

influences the customer purchasing decision. The

target segmentation should be clearly defined to

answer customers need. As the development of

technology, it creates a new market demand due to

ease and efficiencies. Infrastructure management is

designed to communicate between companies as a

seller with customers Through e-commerce as

media. A financial aspect that sets the appropriate

price for customers has to suit the customer segment.

Based on this study, the financial aspect does not

significantly affect the customer purchasing

decision.

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