Abstract
The buyer's trust in seller in consumer to consumer e-commerce plays a critical role in consumer purchase decisions. Thus, this paper aims at analyzing the relationships between buyer's trust in seller, price discount, and price premium by using product price as a moderator variable. A trust function for sellers was calculated through a questionnaire, by using the feedback mechanism and by applying Analytical Hierarchy Process. Our empirical study, using historical transaction data, indicates that buyer's trust in seller in the case of an expensive product is more important than that in an inexpensive product. Buyers' behavior when purchasing a higher-priced product was more sensitive to the buyer's trust in seller than to product price. Product price played the role of a moderator variable in the relationship between buyer's trust in seller and price discount. However, there was no evidence that product price performs the function of a moderator variable in the relationship between buyer's trust in seller and price premium.
Highlights
This study regarding trust in e-commerce distinguishes C2C (Consumer to Consumer) e-commerce from B2C (Business to Consumer) e-commerce with merchandisers
Increased institutional-based trust can reduce perceived risk [35], and if a critical level of institution-based trust is established, buyers are less sensitive to prices of inexpensive products. [30] argued that trust in the intermediary, the perceived effectiveness of feedback mechanisms, and the perceived effectiveness of escrow services can build buyer’s trust in seller
This indicates that institution-based trust built from laws related to e-commerce, escrow services, feedback systems, and assurance seals issued by third-party can play an important role in inducing customer participation in C2C e-commerce
Summary
This study regarding trust in e-commerce distinguishes C2C (Consumer to Consumer) e-commerce from B2C (Business to Consumer) e-commerce with merchandisers. Merchandisers of B2C e-commerce are responsible for their management, ranging from product sourcing to marketing and after-service. B2C intermediaries charge of responsibilities for quality assurance, payments, transportation, and returns/refunds, among others, whereas individual sellers of C2C e-commerce are directly responsible for those. C2C intermediaries only offer secure trading environments for sellers and buyers who take charge of transactions. The buyer’s trust in the seller in C2C e-commerce plays a critical role in consumer purchase decisions. C2C e-commerce is classified into posted-price model and auction model in accordance with their price-making mechanisms. The posted-price model uses a fixed-price mechanism that is typical of catalog purchasing, whereas a dynamic pricing mechanism (or auction price mechanism) is generally employed in the auction model. In the case of Korea, the posted-price model accounts for a large share of C2C e-commerce
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