Online Trust: An International Study Of Subjects’ Willingness to Shop at Online Merchants, Including The Effects of Promises and of Third Party Guarantees
We have conducted a study of consumers’ atti-tudes towards the risks of online shopping. Under-standing trust remains essential to understanding the growth of and limits to online shopping, and under-standing national differences is critical as companies attempt to globalize their more localized online retail-ing strategies.
The study was conducted simultaneous-ly, in four nations that we thought were representative of different shopping traditions; we believe this to be the first paper to explore systematic differences in consumers’ trust of online shopping across four coun-tries at the same time. The United States has the most mature and most advanced e-commerce marketplace. Germany is representative of a large portion of e-commerce in the EU and in much of the developed world. We believed that China might be an outlier for two reasons. It is both the largest and the fastest grow-ing online marketplace in the world, which might be indicative of teething problems of various sorts. And it has the highest incidence of product tampering, product fraud, and product counterfeiting of any major economy, which might have led to consumer concerns about the online marketplace. And we studied Singa-pore. Since the vast majority of Singapore’s popula-tion is ethnically Chinese, we used Singapore in prior studies to see if it exhibits online behavior more simi-lar to Chinese or more similar to Western behavior . However, since consumer protection laws and rule of law in general are much more advanced in Singapore than in China, we felt that Singapore might exhibit behavior that was significantly different from China, and that it might do so without actually repro-ducing the behavior of consumers elsewhere. All of these assumptions and intuitions can be tested, and our experiments were designed to test them. Our study involved three independent variables. One independent variable was the reputation of the online seller. Reputation varied from the buyer’s per-sonal favorite shopping site to unknown and unrated. A second variable was the assurances that the online sellers offered the buyers. Assurances ranged from no assurances, through simple promises, to promises backed up by third party guarantees. The third is the product type. We explored a range of product types, including food and beverage items, clothing, sporting goods, and electronics. The dependent variable was the customer’s WTP for the specific product, from the specified merchants, with the specified assurances. Our study involved exposing all subjects to two of three treatments. One group was exposed to no assur-ances and to promises only (the MIN-MID Group). The second group was exposed to no assurances and to promises backed by third party guarantees (the MIN-MAX Group). The final group was exposed to prom-ises alone and to promises backed up by third party guarantees (the MID-MAX Group). Each subject made purchase decisions for the full range of products. Exposing subjects to two treatments introduces complexity into the data analysis. But it also allows us to control for group heterogeneity in an important way.
3.1. Differences between China And Other E-commerce Markets Several papers have studied e-commerce in China and have identified the factors that have increased trust; most find the same factors that increase trust in the United States [12, 22]. Some studies discuss the severity of trust issues in China, and ways in which factors differ in importance in creating trust in e-commerce in China compared to other markets [25, 33]. The entrepreneurs with whom we spoke believed that Chinese consumers had stronger concerns about quality, but they didn’t have concrete data to support this; we used their beliefs as a starting point for this research. We know no other 52205221studies that quantifies differences between trust among Chinese consumers and trust among consumers elsewhere. We chose U.S., Germany, Singapore, and China, as the four markets for our study because of the varying degrees of online maturity and legal protections in these markets. 3.2. Case Methodology in the Development Of our Hypotheses This research started with a small number of semantically rich case studies to explore a theory of trust development in e-commerce in China. The general validity and challenges of this method are explained by Eisenhardt and Dyer [7, 9]. The application of case study methodology in Management Information System is explored by Galliards and Land, and Lee [11, 21]. We conducted several rounds of interviews with three large online shopping sites in China, 360buy, Taobao, and YiHaoDian (The Store), in order to assess how three very different businesses dealt with the problems of information asymmetry and lack of trust among Chinese online shoppers. These discussions helped us understand how each company addressed the problems of building, preserving, and profiting from consumer confidence. These studies suggested that the reputation of an online vendor was vitally important to the vendor’s success. We operationalized this by suggesting that reputation would be directly reflected in consumers’ WTP for products. Our cases, and their contribution to the formulation of our hypotheses, is described in detail elsewhere. Click More