Abstract

Customer acquisition and retention are two phases of an e-commerce life cycle. Switching costs and perceived risks affect both, but in different ways. This study examines these two well known, often contradicting variables in an integrated frame work and asks: Can perceived risks complement switching costs to give rises to new customer loyalty strategies for e-commerce enterprises? That is, do these two negative forces positively reinforce each other’s effects in some manner? This study investigates 516 online consumers in Taiwan to help answer this question. The findings of this study reveal that perceived risks associate negatively with customer loyalty, whereas switching costs associate positively with customer loyalty. In addition, perceived risks and switching costs complement each other to influence customer loyalty from acquisition to retention. The reduction of perceived risk is the force working at the customer acquisition phase for the provider, whereas the increment of switching cost works at the customer retention phase against the competition.

Key words: Switching costs, perceived risks, customer loyalty, complement, e-commerce.