The effect of reputation systems and on-line chat services on consumers' responses towards unfamiliar retailers

Graduation date: 2012Creating effective functions in website designs that reduce consumers' anxiety in shopping online is a challenge common to most e-retailers. The present study investigated the roles of online reputation systems and instant chat services in decreasing customer perceived risk and increasing initial trust in unfamiliar e-retailers. Therefore, the reputation system when coupled with live chat service may be an effective external mechanism for providing potential consumers with critical decision making information. The present research focused on examining the respective value of live chat services and reputation systems in reducing potential consumers' perceived risk and simultaneously increasing their initial trust towards an unfamiliar e-retailer. The present research tested an e-retailing trust model based on the consumer decision\ud making process. The model incorporated the following variables: (1) live chat service, and (2) reputation system, and explanatory variables: (1) perceived risk and (2) an initial trust. Customer prediction of purchasing is the response variable. The moderating role of interdependent and independent self-construal on online consumers’ behavior was also examined.\ud Based on the review of literature, the following hypotheses were developed: (H1) Perceived risk associated with an unfamiliar web retailer will vary as a feature of the reputation system feature of a web retailer; where the reputation is positive, perceived risk will decrease. (H2) Perceived risk associated with an unfamiliar web retailer will vary as a feature of the instant chat feature of a web retailer; the mere presence of a live chat feature will decrease perceived risk. (H3) Initial trust associated with an unfamiliar web retailer will vary as a feature of the reputation system feature of a web retailer; where the reputation is viewed as negative, perceived risk will increase. (H4) Initial trust associated with an unfamiliar web retailer will very as a feature of the instant chat feature of a web retailer; the mere absence of a live chat feature will result in an increase in perceived risk. (H5) Purchase Intention will be influenced by the live chat function in the e-retailing website. (H6) Purchase Intention will be influenced by the evaluation system presented in the website. (H7) Purchase Intention will be influenced by the customers' perceived risk. (H8) Purchase intention will be influenced by the customers' initial trust. (H9) There is no interaction effect between the perceived risk and initial trust. (H10) Self-construal will moderate the effects on initial trust and\ud perceived risk. A two by two factorial between-subjects experiment was conducted using a mock retail website design to examine the effect of reputation system and live chat service on customers.\ud The findings demonstrated that the evaluation system significantly influences customers' perceived risk and initial trust, and directly influences customers' purchase intention. Perceived risk and initial trust influence customers' purchase intention independently. For future marketing implications, this research suggests that positive customer reviews, transaction history or other evaluation details in the web presentation is crucial for a starting e-retailer. Although there is no significant direct effect of self-construal on the perceived risk and initial trust, this research demonstrated that female and male have different self-construal and self-construal can be a good mediator to observe its effects on the customers' attitude and behavior. Furthermore, customers' initial trust and perceived risk determine their behavior separately which indicates that customers' initial trust increase doesn’t mean their perceived risk will decrease