How to increase global consumer trust in online shopping Research Paper Example

How to increase global consumer trust in online shopping? Paper Abstract Online shopping or e-commerce is developed rapidly and has a gigantic impact in globalization. Many consumers around the world start to trade products or do business using this system. The most crucial factor for consumer who shops online is trust. Grabber-Quarter (1989 p. 43) states Trust can serve as mechanism to reduce the complexity of human conduct in situations where people have to cope with uncertainty. This paper tries to analyze that which method can be use by online merchants to increase their consumer trust. Various action and tools are introduced o increasing customers trust and verify the website information. Amazon. Com is chosen to be the case study. The reason behind this Is the popularity and reliably of the website and It Is ranked in the top website In the world. Introduction Figure: E-commerce market size from 2004 to 2014 Source: Remuneration, International Telecommunication Union; A. T. Carney analysis E-commerce is now widely used and has a huge impact in globalization The graph above shows the upward trend of e-commerce market size which increasing respectively since 2004 and from now on the trend Is also estimated to be rising due o the benefits of It. There are significant reasons behind that why majority of people use this method of trading. First of all, consumers can trade goods easier than by traditional shopping. Consumers can obviously gain convenience when they shop online since they can purchase or sell products without driving to their favorite stores. 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For example, online merchant needs to discount the price of products to promote the website, which attract buyers and make your business more popular with your lower price. On the other hand, there are some drawbacks for online shopping. First of all, sometimes the trading can be misleading; for example, consumers receive low quality of products because they TLD test the product before buying and also returning product Is very complicated. The following have not good enough security and consumers want to ensure their safety before riding. The time lag between buying and receiving products is also a big annoyance. Due to the item being sent from overseas, it may take up to a month to get the products. According to Amazon. Mom, standard shipping day to United States is 7-12 days, to Thailand is 17-26 business days, and United Kingdom is 18-26 days as can seen that the length of time depends on the distance of each country. However, the advantages of online shopping outweigh the disadvantages. So the majority of consumers are prefer making transaction in the internet process instead of shopping in the stores. Each consumer has dissimilar behavior but most of them consider that trust is the major factor to choosing website because trust can influence the consumers decision directly and indirectly (alley, 2013). Hence, internet merchants should generate trust to their customers in their own website, which lead to the successful of their business. This paper consists of five parts. In the first part is about trust and its impact to e-commerce. Secondly, perceived risk on e-commerce, which is the problem of online shopping. Following by procedures to develop trust in e- commerce that discuss about the solution. Third part is the case of Amazon. Com which is one of the famous online shopping website in the world. The last part is conclusion. Trust as a crucial factor The most crucial factor for consumers who shop online is trust. Trust can serve as mechanism to reduce the complexity of human conduct in situations where people have to cope with uncertainty (Grabber-Quarter, 1989, p. 43). Trust can influence the transactions decision of consumers in e-commerce directly and indirectly through mediators. For the direct effect, there are numerous reasons that why purchasers rust and concerning the online selling website is an essential factor of their willingness to buy. For example, many online transactions are managed across the countries and consumers could not know standard of products. So, trust or belief in the online shopping website delights consumers to take part in online trading regardless of the risk. Furthermore, trust also has indirect impact via two mediating variables, which consist of perceived risk and perceived benefit. Perceived risk can illustrated as the nature and amount of risk perceived by a consumer in contemplating a particular purchase decision (Hong and Chaw, 2013, p. 28). This is a significant variable mediating trust in the website because it is level of consumers uncertainty concerning the result of a purchase decision. Especially in online shopping, consumers always face the risk due to the uncertainty of the shopping website. Perceived risk about shopping online is negatively related to a consumers trust (Hong and Chaw, 2013, p. 929). In contrast, perceived benefit is can illustrate as the knowledge of the positive worth for online customers. A consumers perceived benefit of e-commerce has a positive relationship to a consumers trust. To measure bevel of consumers trust, studying the effect without mediation and examining mediation effect are the key method. This paper will focus solely about perceived risk commerce is to mitigate the lack of consumer confidence (Martin and Cameron, 2009, p. 629). Online merchants should concern about the reliability of their websites (product quality, period of time for shipping and online payment) to improve consumer trust and raise the number of consumers to buy online. For example, Amazon. Com is a business-to-consumer (BBC) company, which sells products to customers by internet directly. The meaning of mediating factor or mediating variable of trust and risk can describe that trust abates the perceived risk. Therefore, perceived risk has a straight negative impact on consumers purpose and trust is the main factor that subtracts the level of consumers perceived risk in online shopping. This paper will find out the mediating role of consumer trust in online shopping like the perceived risk and analyze the method that online merchants increase their consumer trust. Various action and tools are expressed that internet firms can use to verify and keep up trust. The main example is based on Amazon. M because Amazon. Com is one of the reliable online shopping website since this website give precedence to consumers trust. Perceived risk on e-commerce The severe problem for online shopping is the greater risk which leads to less trust as the quality of products are unnoticed since buyers can not touch or see the product (pre-purchase uncertainties and post-purchase uncertaint ies), lack of sellers recommendation (sellers dont provide enough products information to buyers), and the payment method which is influenced by security (input users data) and privacy issues (credit card details). These mean there is the higher asymmetric information about goods and enterprise in online shopping than traditional shopping. This asymmetric information is can illustrated as the case that seller perceives more information than purchaser and vice versa, This problem leads to greater perceived risk for buyers and also results in adverse selection problem. Adverse selection problems occur when one party is unsure about the claims that the other party makes (Eisenhower, 1989; Mishear, 1998). Perceived risk can described as unanticipated outcomes a purchaser dreads may occur as a result of making bad decision. Hence, its hard for consumers to separate between sellers with dissimilar levels of product quality. From the past study it showed that perceived risk reduces the willingness of consumers to buy goods over the Internet and perceived risk is a crucial factor mediating trust in the online shopping (Martin and Cameron, 2009, p. 631). Procedures to develop trust in e-commerce Consumers with high-perceived risk are influenced to keep away from the online shopping as they face the problem of asymmetric information. So internet seller must reduce risk or maintain trust in online shopping in order to attract consumers. There are various useful procedures to build and maintain customers trust. These policies, and reputation policies. Information policies aim at decreasing asymmetric information from customers through the communications such as advertising or get the online website listed on high people-reviewed directory. Get a good-looking web presentation design is also the information policies since the logo, design, and layout can lead too first impression for consumers. Guarantee policies contain many kinds of instrument that certify payments in a case of harm. These procedures give nonusers confidence that if there is an obstacle with a purchase, the retailer assures that consumers will get the product they ordered or get their refund. The third policy is reputation policies, which are the tools for supporting trustworthiness in purchases. Reputation is the result of trustworthy behavior and plays an important part in determining the willingness of others to enter into an exchange with a given actor (Grabber-Quarter, 1989, p. 8). For example, online merchants with better reputation have more advantages when compare with newcomer merchants since consumers are prefer popular website than other. Another way to improve the reputation is to form the community like a group of websites that related to their goods or services. This can make the base for trustworthy communication (Webber and Meyer, 2000). Case of Amazon. Com Amazon is an American e-commerce company which the initiation as online bookstore which attract customers by provide cheap price and free delivery fare. Nowadays, Amazon sell widely kind of products like books, DVDs, MPH, computer software, furniture, food, Jewelry and electronic devices. It is one of the largest online shopping website which has developed a purchaser base of around million people ever the last 10 years. This website gain income by small percentage of the products price that is sold in Amazon. Com and also the advertisement from other firms in its website. Amazon is totally reliable and most powerful businesses in the world. The reason behind that is Amazon provides abundant of information and data, which other sellers may not inform. Amazon has customer services centers around the worlds across North American, Latin America, Europe, Africa, and Asia. The delivery is quick and accurate. For the payment method, if customers dont want to give credit rd number or bank account number to website, they can choose another method which is mail the money to Amazon but take a risk to be stolen. Amazon also allows customers to rate and review the products in the website which is helpful to other customers. There are other two significant policies in Amazon, which are returns/ refunds policies and exchange items policy. Returns/refunds policies are kind of guarantee policies, which contain many kinds of instrument that certify payments in a case of damage. Exchange policy is for consumers who need to change for a different size or color. If buyers are changing for a dissimilar size, it will cover any cost increase. But if the exchanged item costs more, it will charge the difference in price. Furthermore, it helps consumers to order some products from other sellers.