Signaling the trustworthiness of small online retailers

Abstract

One of the major challenges facing all online retailers, especially small online retailers, is how to initiate consumer trust. This study examines the nature of this unique type of consumer trust by proposing the concept of “cue-based trust.” It also examines the signaling role of various cues in building initial trust and the behavioral consequences involved. A 2 5–1 factorial experiment was conducted with sample size of 402 to explore the signaling effects of five cues of interest in this study: seals of approval, return policy, awards from neutral sources, security disclosures, and privacy disclosures. The online study supported the signaling roles of most of these cues. Findings can be summarized as follows: (a) security disclosures and awards from neutral sources were found to enhance cue-based trust which, in turn, positively influenced two behavioral responses—bookmarking intentions and willingness to provide personal information, and (b) seals of approval and privacy disclosures were found to directly encourage consumers’ willingness to provide personal information while awards from neutral sources were found to directly encourage bookmarking intentions. Implications for online retailers and future theoretical studies are discussed.