Academic journal article JITTA : Journal of Information Technology Theory and Application

Trust-Promoting Seals in Electronic Markets: Impact on Online Shopping Decisions

Academic journal article JITTA : Journal of Information Technology Theory and Application

Trust-Promoting Seals in Electronic Markets: Impact on Online Shopping Decisions

Article excerpt

ABSTRACT

Many business-to-consumer online merchants display trust-promoting seals on their websites to build consumer trust. Previous research confirms that some trust-promoting seals promote web sales. However, whether different types of trust-promoting seals are equally effective for different product categories and whether these seals have the same impact among different consumer segments has not yet been determined. Using experiments conducted on undergraduate students, this study empirically examines the influence of trust-promoting seals on consumers ' online shopping decisions. The results show that trust-promoting seals are generally effective at increasing consumers' willingness to buy (WTB) from online storefronts. In particular, information-assurance seals effectively promote consumers' WTB for commodity products, and reliability-assurance seals effectively promote consumers' WTB for commodity and look-and-feel products. Moreover, reliability-assurance seals increase online consumers ' WTB more effectively than information-assurance seals for both product categories. Two interesting results are found with respect to the effectiveness of trust-promoting seals: (1) in general, trust-promoting seals are most salient to inexperienced online consumers; (2) the influence of trust-promoting seals on consumers' shopping intentions is independent of their familiarity with the seals.

INTRODUCTION

Despite the recent economic slowdown, electronic commerce sales have shown strong growth in the last several years, climbing from $28 billion in 2000 to 56 billion by 2003 (US Census 2004). However, asymmetric information (Akerlof 1970) on the Internet creates a crisis of trust for online consumers (Kollock 1999; Ba, Whinston, and Zhang 2000; Jarvenpaa, Tractinsky, and Vitale 2000). Trading parties do not share the same information about product quality, transaction security, and individual trustworthiness. This lack of consumer trust could be a long-term barrier for reaching electronic commerce's full potential (Jarvenpaa, Tractinsky, and Vitale 2000).

According to the Internet Fraud Watch (IFW), the amount of money consumers are losing to Internet fraud is increasing. The total loss reported to the IFW for all categories of Internet fraud was $3.4 million in 2000, $6.2 million in 2001, and $14.6 million in 2002 (Internet Fraud Watch 2001, Internet Fraud Watch 2002). In light of these losses, the first Internet tip offered by the IFW is to "know who you're dealing with" (Internet Fraud Watch 2004). Small companies, especially new and unknown online merchants, face significant disadvantages compared to their well-established competitors and must effectively promote customer trust to succeed.

Online merchants without established reputations have tried promoting consumer trust in various ways. Some merchants list their stores on shopping portals such as Yahoo! and Amazon; others offer various warranties or satisfaction guarantees. Presently, one important strategy for gaming trust is to display trust-promoting seals on websites. A trust-promoting seal is any sign, logo, tag or seal attached to an online storefront that seeks to encourage consumer trust. Some lesser-known online stores use the seals provided by different third parties to help assure consumers that they are honest online merchants. However, the practice of placing such seals on e-commerce websites is still relatively new, and their effects are not fully explored.

Recent research suggests that popular trust-promoting seals are generally effective at increasing web sales (e.g. Noteberg, Christiaanse, and Wallage 1999; Kimery and McCord 2002; Jarvenpaa, Tractinsky, and Vitale 2000; Hu, Lin, and Zhang 2003). This paper seeks to advance previous research by exploring the following research questions: Are different types of trust-promoting seals equally effective in promoting consumers' trust in a commercial site? Do the effects of trust-promoting seals vary across product categories? …

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