The Effect of Service Recovery in Lazada Indonesia towards Customer Satisfaction
The Effect of Service
Recovery Strategy in
Lazada Indonesia towards
Nindya Harum Solicha
School of Business and Management
Bandung Institute of Technology
Table of Content
Chapter 1: Introduction
1.2 Problem Statements
1.3 Research Objective
1.4 Research Questions
Chapter 2: Literature Review
2.1 Service Failure
2.2 Service Recovery
2.1.1 The Stages of Service Recovery Maturity
2.3 Customer Satisfaction
Chapter 3: Methodology
3.1 Customer Solicitation
Chapter 4: Lazada Indonesia Service
4.1 Service of Lazada Indonesia
4.2 Service Recovery of Lazada Indonesia
Chapter 5: Research Findings
5.1 Customer Solicitation
5.2 Lost Customer
Chapter 6: Conclusion and Recommendation
Nowadays, Indonesia online users has increase and it will give benefit to an
e-commerce and online transaction. Electronic commerce, commonly known as
E-commerce becomes popular in Asia especially in Indonesia. Indonesia netizen
tend to buy online for fashion, gadget, and personal care. Many people with
limited time to go shop prefer to spend their time to browse several e-commerce
shop in internet, one of them is lazada.co.id.
Lazada Indonesia is online shopping center offering a wide range of products
from electronics, books, toys, baby equipment, medical devices, beauty products,
household appliances, traveling equipment and sports equipment. Lazada
Indonesia was established in 2012 and is one of the branch network of online retail
Lazada in Southeast Asia. Southeast Asia Lazada International Group consisting of
Lazada Indonesia, Lazada Malaysia, Lazada Vietnam, Lazada Thailand, Lazada
Philippines. Network Lazada Southeast Asia is a subsidiary branch network of the
German Internet company, Rocket Internet.
Although, Lazada Indonesia is one of e-commerce business that is branch
network of Rocket Internet that have many experiences in this business but it
doesn’t proof that Lazada doesn’t have any service failures. Service failures will
lead to dissatisfied customer. Dissatisfied customer will impact to their loyalty.
Service failures can be minimized with do some service recovery strategy that will
impact customer satisfaction. Customer satisfaction will lead them to customer
1.2 Problem Statements
Dissatisfied customer because of service failure from Lazada Indonesia
expects to have effective service recovery. Although, they have try to give the
best service recovery after the service failure but we don’t know the effectiveness
of their service recovery toward the customer satisfaction in Lazada Indonesia.
1.3 Research Objectives
To examine the effects of service recovery on customer loyalty in e-
commerce services. Specifically, it examines the perception of “justice” in service
recovery and how it affects the level of satisfaction and behavioural outcomes.
1.4 Research Questions
1. How is the effectiveness of service recovery strategy of Lazada Indonesia?
2. How is the impact of service recovery strategy towards customer satisfaction?
2.1 Service Failures
Service failures happens when the service provider cannot satisfy customer
needs or the service provided is below customer expectations. Service failures can
lead to negative disconfirmation and ultimately dissatisfaction, though
appropriate service recovery efforts may restore a dissatisfied customer to a state
of satisfaction (Bitner et al., 1990). Although some researchers have argued that
the best strategy is to fail-safe the original service delivery, it is nearly impossible to
eliminate all failures. Thus, firms with the ability to react to service failures effectively
and implement some form of service recovery will be in a much better position to
retain profitable customers.
2.2 Service Recovery
Service recovery is defined as the responses and actions service provider
adopted to make a remedy of the service incident so as to regain customer
loyalty. Service recovery has received considerable attention in the academic
literature (Davidow, 2003; McCullough et al. 2000; Tax et al., 1998; Parasuraman,
2006) because effective recovery management has been shown to have a
significant positive effect on customers who have reacted adversely to a service
failure (Berry and Parasuraman, 1991). An understanding of effective recovery
management is particularly relevant for service providers because the distinctive
characteristics of services (especially the inseparability of production and
consumption) make it impossible to ensure 100% error-free service (Fisk et al., 1993).
With regard to services provided on the Internet, effective service recovery is
essential because online customers are difficult to attract and retain (Srinivasan et
al., 2002), and it is easy for them to switch their online providers (Reichheld &
Schefter, 2000; Semeijn et al., 2005). It is therefore extremely important that service
providers on the Internet know how to improve loyalty levels and repeat
purchasing decisions among their customers (Anderson & Srinivasan, 2003; Doong
et al., 2008; Semeijn et al., 2005; Shamdasani et al., 2008; Srinivasan et al., 2002;
Wang et al., 2006; Yang & Peterson, 2004). Effective service recovery plays an
important role in ensuring such loyalty. Of course, it is preferable that e-providers
deliver a service without failures (McCollough et al., 2000)—because, in general,
providers fare better in the eyes of consumers by avoiding service failure than by
responding to failure with superior recovery. However, when a failure has
occurred, effective service recovery is considered essential to business survival in
general (Berry & Parasuraman, 1991), and in the context of e-commerce in
particular (Reichheld & Schefter, 2000).
Effective service recovery increases not only overall satisfaction, but also
positive word of mouth (Spreng et al., 1995, Swanson and Kelley, 2001). For
example, one study shows strong links between satisfaction with complaint
handling and word-of-mouth behaviour (Oliver and Swan, 1989). That is,
successfully recovered customers recommend the company to others or
“demonstrate a strong propensity to share positive information about the
experience” (Swanson and Kelley, 2001). In Maxham’s (2001) study, a very good
service recovery, compared with a good recovery, had a stronger impact on
word of mouth than on satisfaction or repurchase intention.
2.2.1 The Stages of Service Recovery Maturity
Service Recovery in an organization progresses through a series of
stages, shown in the nearby diagram.
Stage 1, Moribund. There is no complaint handling. Angry customers are
Stage 2: Reactive. Customer complaints are heard, and a response is made.
But it's a haphazard process with no defined goals for the response and no
one owning this business process.
Stage 3: Active Listening. At this stage, the response to issues voiced by
customers is structured. Specific people have the responsibility to respond to
complaints and guidelines are in place for the response. However, it is still
Stage 4. Solicitous. The critical change from Stage 3 to 4 is the move from
reactive to proactive solicitation of customers with issues. The reason this is so
important is that most customers don't bother to complain. They just move on
to other suppliers of products.
The solicitous role is accomplished by encouraging customer to voice their
complaints. Event surveys (also known as transactional or transaction-driven
survey) are a commonly used technique to get issues voiced. The survey
design must be such that more than just high level measurement of customer
satisfaction is captured. The design must allow for action to be taken. The
desire for anonymity complicates the task. (Our Survey Workshops help
attendees create such actionable survey instruments.)
Stage 5: Infused. The pinnacle of Service Recovery Practices is achieved
when the complaint identification merges with business process improvement
or six sigma programs to support root cause identification and resolution. The
owners of business processes that cause customer issues are notified of the
occurrences to prompt reexamination of the process design.
2.3 Customer Satisfaction
Customer satisfaction is an important factor of customer loyalty. Previous
research confirmed the significant positive correlation between postrecovery
satisfaction and customer loyalty. Maxham III and Netemeyer also found that
postrecovery satisfaction has direct impact on repeated purchase of customers as
well as positive word-of-mouth effect by customers. Collier and Bienstock found
that if customer loyalty will be negatively impacted if they are not satisfied with
service recovery outcome in online retailing, such as switching and negative word-
of-mouth effect. However, if a customer is satisfied with service recovery efforts by
online retailers, they will actively involved in positive word-of-mouth behavior and
strong repeated purchase intention in the future.
3.1 Sample and Data Collection
A combination of paper-based and Web-based survey was used for data
collection. Paper- based survey was conducted among college students and
enior high school students in several university in Indonesia and also housewives in
Bandung. Web-based survey was conducted through Kompas forum, detik forum
and individual blog that con taint of negative complaint for Lazada Indonesia. The
subject was asked to imaging oneself as the customer in the scenario who
experienced the service incident and then indicate their responses. I choose
sampling randomly. I receive a total of 35 responses, 30 responses of questionnaire
and 5 responses of complaint solicitation.
3.1 Complaint Solicitation
Using complaints as research collect and document them, then use the
information to identify dissatisfied customer, correct individual problems, where
possible and identify common service failures points. To be effective, complaint
solicitation requires rigorous recording of numbers and types of complaints through
many channel and then working to eliminate the most frequent problems.
The questionnaire of the effectiveness of service recovery strategy of Lazada
Indonesia contain of several question of the respondents experience when they
buy product in Lazada Indonesia.
Lazada Indonesia Service
4.1 Service provide Lazada Indonesia
COD (Cash on Delivery)
a method of payment services where customers can pay for product ordered to
the courier when they receive their ordered goods. COD can be done just in
several major cities in Indonesia and can only use for purchase under IDR
Returns/Refund within 14 days
Indonesian LAZADA give 14 days to the customer to exchange the goods or
refund money if there is damage or mismatch items ordered. Returns of goods is
done by filling out an online form on the website Lazada Indonesia then returns will
be processed further.
LAZADA Indonesia provides free shipping just in several area in Indonesia, western
and central Indonesia, with a minimum accumulated purchase of IDR 200,000,00.
% instalment program
LAZADA offer instalment systems with interest 0% on shopping products. This system
has a period of instalment payments for 3 months and 6 months for all the products
exist in Lazada with a minimum purchase of IDR 1,000,000,00. Partnership bank are
BCA, Bank Danamon, BII and Standard Chartered Bank. Every customer who pay
using a credit card from a partnership bank can follow this instalment program.
LAZADA selling some products with high demand even before the product is
released with pre-order method. This product is already popular and eagerly
awaited by many buyers in Indonesia , and Lazada provide a pre-order facility so
that customers can have this product first time without the hassle of waiting in line
or scrambling with other buyers .
LAZADA have weekly promotional program called Mastercard Monday. In this
program, every customer who has a MasterCard credit card will receive a 10%
discount for any kind of goods in various categories. This discount is only on
Monday when conducting transactions using MasterCard credit card with a
minimum purchase of IDR 800,000,00. Spending on LAZADA using MasterCard
credit card also earn instalments with interest 0%.
Online Revolution 12:12:12
LAZADA discount event held on December 12, 2012 ( 12:12:12 ). In every hour,
LAZADA discount offers and announce the discount product through Lazada
Indonesia’s social media like Facebook and Twitter with hashtag #1212Sale so
customers are advised to constantly monitor social media channels belonging
Lazada to follow their discount products.
Other Promotional Programs
LAZADA also hold a thematic promotional programs on a weekly basis, on
holidays, national holidays, or special events such as Christmas Sale, New Look
New Year, Chinese New Year Sale, Net - net Flood, Flash Sale, and Shopping
Weekend ( BAM ! )
No limit quantity order
The customer can order will unlimited amount of product
Special price offers
Lazada Indonesia offers many special prices for their products with competitive
price than product that selling by others
Flexible payment terms
Lazada Indonesia provides some payment term such as Cash on Delivery, bank
transfer (BCA, Mandiri, CIMB Niaga, BNI) and credit card (MasterCard and Visa)
100% product warranty
Assistance during the whole process from choosing the right items to payment
Selling top brands
Shipping all over area in Indonesia
Very competitive shipping price
Lazada handling from door to door
full shipment done by Lazada
4.2 Service Recovery Lazada Indonesia
Kind of service recovery that given by Lazada Indonesia to their dissatisfied
customer are actually no addition bonus like others company outside e-
commerce business after service failure. Lazada Indonesia just try to handle and
manage the process of how their dissatisfied customer refund and return their
incorrect/broken goods to Lazada Indonesia properly and clearly. Even they are
not give any bonus to the customer they don’t charge shipping and handling
costs while the incorrect/broken product send to Lazada Indonesia, instead of
they pick the product up in the customer’s address. These kind of responses and
actions of Lazada Indonesia to make a remedy of the service incident to regain
their loyal customer.
The Mechanism of return the incorrect/broken product:
1. The customer filling out the return online form in http://www.lazada.co.id/
pengembalian_barang/ and follow the instructions for further processing.
2. After Team validation validate the incorrect/faulty product there are 2 option
for send the product to Lazada Indonesia. First, the customer can send the
product to Kaprlindo Warehouse or the product is picked up by courier
3. Then, after the product receive in Lazada Indonesia, Return team will check
4. There are two ways that can be chosen by customer after return team decide
that the product is incorrect/broken customer, these are refund to finance
division in Lazada Indonesia or exchange the product if the stock is available
and if the product is sold out, Lazada Indonesia offer refund with several
methods are bank transfer/COD/Credit Card/store credit.
Term and condition for return/refund product:
1. if within 14 days after product is receipt by customer is damage, customer can
return it to Lazada and Lazada will refund customer’s money or give them store
credit. Store credit is a mechanism to recover the goods in which you are
getting the same kind of voucher that is worth the price of goods ordered. The
customer can use the store credit to purchase any item. If the price of good
purchase exceeds the value of store credit, customer can pay the addition
price with available payment method such as bank transfer or cash on
delivery. Refunds can not be made if the price of the good’s price is lower than
the store credit that customer have. Store credit is a unique code that can only
be used for one -time purchase and is only valid for a year.
2. Warranty product will apply in accordance with the period specified in the
warranty paper. For products with official warranty, customer can return the
product to the producer (manufacturer / distributor) or through Lazada
Indonesia, complete with all original packaging and return forms.
3. For not defective product returns or refunds are on customer initiative, Lazada
Indonesia will only offer store credit
4. For malfunction products (not work properly / damaged), Lazada Indonesia
suggest customer to immediately contact customer service for these products
in order to direct the handling of refund if a period of 14 days has passed
5. Returns that do not include a reason / info obvious damage and / or no picture
will not be processed
6. Make sure the customer include a account number for the return shipping
The cancellation of the purchase undefective product as listed above do not
apply to the following types of products:
• Books, magazines, newspapers and magazines;
• Audio or video recordings (i.e. CDs or DVDs) or computer software (i.e. computer
games) that have been opened;
• Foodstuffs, beverages or other goods intended for everyday consumption;
• Flowers and other products that tend to be broken or expired; and
• Products that basically can not be returned (which includes eBooks, eMagazines,
electronic vouchers, and for reasons of hygiene, iPods, bathing suits and earrings.
5.1 Complaint Solicitation
For this method of research, i use 5 sampling of negative complaints that i
find in several forum in internet so i choose the sampling randomly.
Herwin told in their kaskus account about their shopping experience in Lazada
Indonesia. And he give some comment there about the service in Lazada
Indonesia. If Lazada Indonesia want to refund the product but there is mistaken
data input as soon as possible they should confirm it to the customer from email or
telephone. And also for the payment method of Lazada Indonesia have to be
more professional in the future. Faster update stock product in website so there is
no misunderstanding availability product. And he feel satisfied after get calling
from customer service Lazada Indonesia about refund process.
Muhammad Zacky (http://www1.kompas.com/suratpembaca/read/38541)
Muhammad Zacky tells his story after buying a product in Lazada Indonesia in the
kompas forum. He feels disappointed buy product in Lazada Indonesia because of
unprofessionally response from the customer service and admin in the social
media, website also customer service of Lazada Indonesia. Conversly, when he
order the product, he always get the email confirmation status in email but when
he refunds the product is nothing at all.Because of long time response of return
product form them, he decides to refund the product and also get the long time
response from them. Finally after his hard work write in this forum, he get response
from Lazada Indonesia about the refund.
From eros experience shopping in Lazada Indonesia, he and his family very
satisfied with the service of Lazada Indonesia because even they get the wrong
order product and has been open the packaging, courier still let them to return
the product because the product is wrong. after that, he decides to reorder the
same product in August, 25th and the product is accepted on August 30th, 5 days
after order to Surabaya from Jakarta.
Sampai tulisan ini saya edit dan posting per 25, Agustus order yang saya pesan belum datang. Saya bisa
maklum karena memang bertepatan dengan libur Ramadhan dan Idul Fitri, baik itu Lazada maupun kurir
pengiriman. Sehingga segala transaksi pemesanan dan pengiriman sedikit terganggu, kemungkinan
besar mulai lancar dan normal nanti Senin, 27 Agustus.
Saya order ulang per tanggal 25 Agustus dengan produk dan jumlah yang sama. Dapet nomer order
Akhirnya.. malam ini Kamis, 30 Agustus 2012 usai sholat isya kurir Lazada yaitu First Logistik mengantar
pesanan 2 hape Samsung pesanan istri dan tante. Gak percaya? ini penampakannya :
2 Penampakan HP Samsung yang order di Lazada
Dari tanggal 5, nyampe tanggal 30 Agustus, butuh waktu 5 hari untuk sampai ke Surabaya. Kalao ditotal
order sejak tanggal 9, butuh waktu 21 untuk pemesanan 2 hp di Lazada tersebut, mantebb dah.
T e g u h S a n t o s o ( h t t p : / / s u a r a p e m b a c a . d e t i k . c o m / r e a d /
Teguh Santoso has been transfer his payment to Lazada Indonesia but more than
7 days after he paid the notebook, there is no notebook comes in his house. he
being so angry at that day, then he call the customer service about his order at
August 21st. Unfortunately, he got the information that Asus Slimbook that he
ordered is out of stock but he has been paid it. Finally, he get response from Edy
Junaedi, Head of Customer Service of Lazada Indonesia if the product has been
send to him on Sept 4th 2013. And he become satisfy at all after that.
Nike want to buy sandwich maker for her friends wedding gift. Because of the
laziness and limited time, she choose to buy it in Lazada Indonesia. But after the
confirmation from Lazada Indonesia, evidently the product is sold out and Lazada
is on their way to order the product to the distributor. She feels so disappointed
about that. Maybe if there is no product, Lazada Indonesia should write sold out in
their website, get the confirmation if the product is sold out before they send the
payment confirmation so it can minimised service failure. Finally, Lazada Indonesia
decide to refund the Nike’s money but it’s still a long wait to transfer. In her blog, i
can conclude that Nike feel dissatisfied with Lazada Indonesia even Lazada
Indonesia do their recovery after because of refund method that still need a long
time until the payment is received by Nike.
From this result, i can conclude that from 5 negative complaint to Lazada
Indonesia even after they do service recovery, 4 of 5 customers feel satisfied
with the service of Lazada Indonesia and the rest feel unsatisfied because of
failure in service recovery.
This research is conducted on 30 respondents that are from students in several high
school and university in Indonesia and also a little housewives in Bandung.
Customer Satisfaction after
<15 years old 15-23 years old
24-40 years old <45 years old
From 30 respondent, 17
respondents are female and 13
respondents are male.
From 30 respondent, 25 respondent
are 15-23 years old, 3 respondents
a r e 2 4 - 4 0 y e a r s o l d a n d 2
respondents are above 45 years old.
Ever shopping in Lazada
From 30 respondent, 20 respondents
never shopping in Lazada Indonesia
and the rest, 10 respondents ever buy a
product in Lazada Indonesia. So, we
know that a little respondents that ever
been shop there.
Ever feel service failures
From 10 person that ever been shop
there, 2 of 10 respondents ever feel
service failure in Lazada Indonesia
and 8 respondents never feel the
Do you know service
recovery strategy of Lazada
From 10 respondents that ever
shopping in Lazada Indonesia, 10 of 10
know the service recovery strategy of
Do you think that Lazada
recovery is effective?
1 2 3 4 5
From 30 respondents, 12 respondent
think that service recovery in Lazada
Indonesia enough good followed by so
so service recovery with 9 respondents,
very effective service recovery with 6
respondents and 3 respondents think
that service recovery of Lazada
Indonesia is ineffective.
From this result, we know that effectiveness of service recovery strategy of
Lazada Indonesia will lead to customer satisfaction. Proof with from 12 respondents
feel service recovery from Lazada Indonesia is effective and 2 of them ever feel
service failure in Lazada Indonesia satisfy with Lazada Indonesia’s service recovery.
Are you satisﬁed with
Lazada Indonesia Service
1 2 3 4 5
2 of 10 respondents ever feel service
failure in Lazada Indonesia, all of them
depict that they satisfy with service
recovery in Lazada Indonesia (4th
Conclusion and Recommendation
From this research, i can conclude several conclusion about service recovery in
1. From the effective service recovery, will lead the customer satisfaction in the case of
Herwin, Zaki, Eros, and Teguh Santoso
2. It’s different from Nike that feel unsatisfied of service recovery of Lazada Indonesia
because of ineffective service recovery.
1. The effectiveness of service recovery strategy of Lazada Indonesia will lead the
customer to be satisfy to Lazada Indonesia.
I don’t give any recommendation for any service recovery of Lazada Indonesia just for the
ineffective service recovery strategy. They should improve in several things, such as:
1. If Lazada Indonesia want to refund the product because there is a mistaken data input
as soon as possible they should confirm it to the customer from email or telephone.
2. For the payment method of Lazada Indonesia have to be more professional in the
3. Faster update stock product in website so there is no misunderstanding availability
4. Increase the confirmation method in refund and return product with the dissatisfied
customer directly get the email or telephone after failure product has been receive by
Lazada Indonesia without checking by yourself in Lazada Indonesia, not only
confirmation method in initial purchasing so the customer feel safe to return/refund the
product because they know the status of product
5. Don’t give any confirmation if the product still unready. If better for Lazada Indonesia
to just show on website the ready stock product that readily order by customer and
show the pre order product if the product Give the confirmation about the product
status if the product is not ready
• lazada.co.id. Accesed on 29April-1 May 2014
• Marimin, Frederic. March 2011. “Impact of Service Recovery on Customer
Loyalty: A Study of E-Banking in Spain” Review of International Comparative
Management. http://www.rmci.ase.ro/no12vol1/04.pdf. March 1 2011.
• Jin Qin, Qi Chen, Yun Wan.“The Effects of Service Recovery Justice and
Perceived Switching Costs on Customer Loyalty in E-tailing” POMS 23
FullPaper_files/025-1295.pdf. 20-23 April 2012.
• Nike. (August 6th, 2012. Kecewa dengan Lazada. Accessed in May 1st
2014 from http://catatannike.blogspot.com/2012/08/kecewa-dengan-
• Teguh Santoso. (August 30th, 2013). Belanja di Lazada.com Kecewa yang
Didapat. Accessed in May 1st 2014 from http://suarapembaca.detik.com/read/
• Edy Junaedi. (September 19th, 2013). Tanggapan Lazada.co.id Atas Keluhan
Bapak Teguh Santoso. Accessed in May 1st 2014 from http://
• Eros. (August 11th, 2012). Lazada Penipuan? Tidak, Tapi Mengecewakan!!!.
Accessed in May 1st 2014 from http://www.ingateros.com/2012/08/kupon-
• Muhammad Zacky. (March 23rd, 2013). Pengalaman Buruk Belanja di Lazada.
Accesed in May 1st 2014 from http://www1.kompas.com/suratpembaca/read/
• Herwin. Keluhan Belanja di Lazada.co.id? Silakan masuk. Accesed in May 1st
2014 from http://www.kaskus.co.id/thread/000000000000000016410261/keluhan-
Service Recovery Questionnaire of Lazada Indonesia!
Kuisioner ini dibuat untuk mengetahui keefektifan dari upaya pembenahan kesalahan
pelayanan yang dilakukan oleh Lazada Indonesia.!
26-45 tahun !
1. Pernahkan Anda berbelanja di Lazada.co.id?!
2. Tahukan Anda upaya Lazada Indonesia untuk membenahi kesalahan pelayanan?
(seperti bagaimana mekanisme menukar barang/menukar barang jika barang yang dikirim
3. Apakah menurut Anda sudah efektif upaya pembenahan kesalahan pelayanan
4. Apakah Anda pernah mengalami kesalahan dalam pelayanan? (seperti tidak mendapat
konﬁrmasi barang, barang yang dikirim tak kunjung tiba dari waktu seharusnya, barang
yang dikirim rusak/tidak sesuai)!
5. Bagi Anda yang pernah mengalami kesalahan dalam pelayanan, apakah Anda puas
dengan upaya pembenahan yang dilakukan oleh Lazada Indonesia?!