Predicting Consumer Trust in an Intermediary in B2C Online Marketplaces: Insights From the Korean Experience

Predicting Consumer Trust in an Intermediary in B2C Online Marketplaces: Insights From the Korean Experience

Ilyoo Barry Hong (Chung-Ang University, South Korea)
DOI: 10.4018/978-1-7998-1786-4.ch006

Abstract

Trust is a central element in online transactions in B2C e-marketplaces where a buyer needs to evaluate intermediary trust as well as seller trust to make a purchase decision. The authors develop and test a consumer trust model to predict first-time buyer's trust in an intermediary in Korean online marketplaces. Data were collected via a questionnaire survey using 218 respondents. Results from an empirical analysis indicate that while all the three factors of trustworthiness were found to be a predictor of overall initial trust in the intermediary, ‘integrity' turned out to have the strongest association with overall trust. The findings suggest that trustworthiness beliefs and trust are conceptually distinct from each other and that the former is a predictor of the latter. The chapter offers implications for both academics and practitioners of online marketplaces.
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Introduction

An electronic marketplace (or e-marketplace) is an interorganizational information system that allows the participating buyers and sellers in some market to exchange information about prices and product offerings (Bakos, 1997; Hong, 2018). It is an intermediary that brings together sellers and buyers by providing an online marketplace. Buyers in an e-marketplace are exposed to an even greater risk of opportunistic seller behaviour than those in an online storefront. In fact, the Internet Crime Complaint Centre (2018) received 26,967 consumer auction fraud complaints between May 2014 and December 2017 with an adjusted dollar loss of $54,032,396. The reasons that online marketplaces are riskier than digital storefronts are twofold. Foremost, e-marketplaces typically consist of SOHO (small office home office) sellers who process a limited volume of transactions daily and handle returns or exchanges with limited manpower resources. Moreover, e-marketplace buyers routinely engage in transactions with a community of unknown sellers within the marketplace with whom they have little or no prior interaction, whereas buyers on a digital storefront develop business relationships with the single seller over time to the extent that they get to place trust in the e-commerce firm. Therefore, trust remains a key to the success of online marketplaces today. From the standpoint of consumers, buying from an online store that is not trustworthy is like accepting foreseen risks of financial or other possible losses. For that reason, it is critical for vendors to successfully build trust to overcome consumer perceptions of uncertainty and risk. Likewise, it is important to understand how a consumer places trust in an online marketplace.

The literature on consumer trust in electronic commerce reveals a rich body of knowledge on the antecedents of trust, which predominantly focuses on the context of digital storefronts. However, little work has been dedicated to understanding what affects consumer’s trustworthiness beliefs in an intermediary in an online marketplace especially when a consumer has no buying experience with that e-marketplace. While Kim & Ahn(2001) investigated the antecedents of trust in an online marketplace, their study is not applicable to a situation where a consumer has no transactional experience to form trusting beliefs concerning the e-marketplace. A trust model for an online storefront is distinct from that for an e-marketplace. While trust in a single vendor is of importance in an online storefront, consumers in an e-marketplace have a prime concern with trust in the marketplace intermediary. Thus consumer trust in an intermediary will be first formed, and then trust is transferred from the intermediary to the vendors selling within the marketplace (Hong & Cho, 2011). To help online marketplaces successfully build consumer trust, a consumer trust model specifically tailored to e-marketplaces that articulates the sources of trust for this particular type of e-commerce firm is needed. In particular, the way initial trust is formed in online marketplaces differs from the way subsequent trust is developed; development of subsequent trust can be importantly influenced by consumer’s buying experience (i.e., length of relationship). In order to examine how trust is formed with first-time buyers, this paper will focus on initial trust that consumers have to deal with who have not yet shopped in a given e-marketplace.

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