Online consumer market inefficiencies and intermediation

Abstract

This paper seeks to empirically unravel why consumers sometimes need to trust intermediaries in online markets. Notwithstanding assertions that online markets will eventually eliminate the need for intermediaries, intermediaries remain an active part of the online market landscape. This paper tries to understand this phenomenon from a view of a consumer lack of trust in online markets and seeks to unearth what ultimately causes a lack of consumer trust in online markets and the role played by intermediaries in the mix. The paper proposes a model and empirically validates it. Findings suggest that inherent inefficiencies in online markets lead to consumer uncertainty. Perceptions of uncertainty lead to a lack of consumer trust in online markets. Consumer trust in online markets is restored only by placing trust in intermediaries.