Abstract
Electronic markets have successfully adopted third party trust seals as a self-regulatory mechanism to enhance consumer trust. While there exist many papers supporting the effectiveness of trust signals, interaction between trusts seals and contextual factors in e-commerce (e.g., value of shopping carts, number of trust seals displayed, shopper experience and retailer's sales volume) is an underexplored area. In this study, we exploit a dataset of over a quarter million of online transactions across 493 online retailers collected from randomized field experiments. A large trust seal provider conducted the experiments and subsequently shared the dataset with us. Our main contribution is the demonstration of four variables moderating the effectiveness of trust seals on the likelihood of purchase completion. More specifically, our work shows that trust seals are more effective for small online retailers and new shoppers, thus serving as partial substitutes for both shopper experience and seller's sales volume. Interestingly, we find that the presence of too many (i.e., more than two) seals can lower the likelihood of purchase completion. Our findings also show that trust seals are more effective for higher value shopping carts but only in the latter stages of the shopping cycle. Finally, we discuss the implications of our findings for online retailers, third party certifiers, as well as for policy makers.
Highlights
Share of e-commerce in total U.S retail sales has steadily increased to 6.4% as of the first quarter of2014 [1]
We find that the trust seal works better for, (i) low-volume online retailers, (ii) less-experienced shoppers, and (iii) high value shopping carts when the shopper is at a later stage of the shopping cycle
As high value purchases are more risky, we suggest that the trust seal could work better for completing high-value shopping carts by providing more information and reducing the risks perceived by shoppers
Summary
Share of e-commerce in total U.S retail sales has steadily increased to 6.4% as of the first quarter of2014 [1]. Selling products of well-known brands or displaying reputable companies as technology providers (e.g., Microsoft, VeriSign) can help small online retailers persuade nervous customers Relying on this notion of trust transfer, third party trust seals (to be called “trust seals” in the rest of the paper) may help new shoppers develop initial trust in the online retailer without prior transaction history at the retailer’s website [9]. In this mechanism, an independent third party verifies the reliability and trustworthiness claims of the online retailer and allows its trust seal logo to be displayed at the retailer’s website as a proof of endorsement. Clicking this trust seal logo takes the customer to the certification information at the seal provider’s website
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