E-commerce and Consumer Trust

1. E-commerce and Consumer Trust Problems with Engagement and Some Potential Solutions Jason RutterESRC Centre for Research on Innovation & CompetitionUniversity of ManchesterJason.Rutter@manchester.ac.uk

2. Overview • The numbers bit. • Why should we trust the internet? • What is trust anyway? • OK, so what does that mean for users? • So any good news?

3. Number of Online Shoppers Base:All e-shoppers (c.600 per wave) Source: BMRB Internet Monitor

4. E-Commerce spend forecast for 2008 Billions of Euros Source: Jupiter Research 2003

5. Who shops online? • 74% of ‘active’ UK internet users bought products online in in last 6 months • 47% have a household income between £25k and £50k. • 41% are aged between 18 and 35. • 46% have been online for over 5 years. • 38% have shopped online more than ten times in the past six months. • The proportion of online buyers with less than two years’ experience is under 10%.

6. Most research explores • Trust and ecommerce engagement • Building trust for legitimate sites • Assumes trust is a good thing. • …but are there broader issues?

7. Reasons for NOT Trusting E-commerce • Scam & Spam • Identity Theft (Phishing/Page-jacking) • Advertising creating distrust

8. Spam and Scam • 23% of UK internet users received obscene or abusive emails • 18% received a virus • 17% had been sent a get-rich-quick email • Counterfeit software & pharmaceuticals Source: Oxford Internet Institute (Hutton & Shepherd, 2004)

9. Unique New Unsolicited E-mail Messages Source: Commtouch Software Online Lab

10. The Advertising Paradox • Credit card companies stand to gain from increased ecommerce… • …but also use safety fears to develop USPs

11. Barclaycard

12. Capital One

13. “Security” • The level of security websites can offer for online transactions is still very important to online shoppers. • 66% of them rate ‘level of security’ as a very important factor when choosing a website to buy from. • Concern over security is also the top reason given for not having bought a product over the internet (cited by 25%) • 72% of users believe using credit card online is ‘safe’ Source: BMRB’s Internet Monitor

14. Agreement that “Credit card use on internet is very or fairly secure” Base:All GB Internet Users Aged 15+ (c 1,000 per wave) Source: BMRB’s Internet Monitor

15. Definitions of Trust include… • Management of: • Expectations • Information • Knowledge • Risk/vulnerability • Potential benefit • Uncertainty • Complexity • Lack of control • Asymmetries of disclosure • In order to make decisions about possible action(s)

16. What Is Trust? • Garfinkel’s “experiments” in trust • Trust is manifest in the actions of individuals • That we judge how to act based upon the trust we have in others • Trust is used to the benefit of both parties involved in an action • Where trust is offered is it generally expected in return • That trust is offered based upon “expectancies” of other’s behaviour • That trust is used to define one’s relationship to others

17. Trust in Interaction • Everyday routines – Goffman, Blumer, etc • We show we are“alive” to the situation • Routines/rules are: “tacit or taken-for-granted qualities [which] form the essential condition which allows actors to concentrate on tasks in hand.” (Giddens, 1991: 36) • Mutuality  Garfinkel’s experiments

18. Selling & Data Collection Shopping & Working The E-C Breakdown in Mutuality • E-commerce “is more like typing than shopping.” Vs

19. An “Experiment”… Imagine going into a bricks-and-mortar bookshop. As you walk through the door you are met by a insistent member of staff who asks you for your name, address and daytime phone number and refuses you entry into the store before you provide those details. No ifs, no buts, no, “I’m only looking,” the rule is absolute: no personal details, no entry. Having had these details recorded and probably been added to the bookshops prolific mailing list you begin to wander around the store. However, you soon begin to notice that you are being followed around the store by what appears to be a store detective. This person watches everything you look at, notes down how long you look at it, whether you put it in a shopping basket and even tries to take a peak at our other shopping bag in an attempt to find out what store we’d just come from. You put up with this strange behaviour and eventually find a book you are interested in buying. This, unfortunately, has not been as easy as you thought as although the shop has an excellent stock, only the top selling books are easily found and others available not by browsing the shelf but by asking an assistant to bring you a list of all the books they can sell you (both in stock and available on order) that have a particular keyword in the title. While you are waiting for the list you are encouraged to take a look at a number of advertisements for this bookshop and other companies. The only snag now is that there is no price on the item you want to buy. You again return to the assistant who is more than happy to help you but only if you provide the company with your credit card details for their records first. However, the assistant assures you that once they have your details on file then shopping with them will be a lot simpler and quicker and that, in order to further tailor your shopping needs, would you mind completing this short questionnaire about you interests, income, shopping routine and details of why you chose this particular bookshop?

20. Key Trust Factors • Experience of using the Internet • Higher level of formal education • Both these strongly linked to socio-economic status. • Not correlated with merely being more trusting.

21. Trust Issues • Users cannot distinguish between real and deceptive sites • Priming increases perception of deception – not accuracy • User evaluation of trust signs (seals, warranties, location, etc.) is key rather than the signs themselves Source: Grazioli, 2004

22. A Graphical Model Increasingtolerance Regulation most important Successful interaction Mutuality low & potential for mistrust high Easy to jeopardise relationship

23. Ways to Foster Trust? • Addressing the asymmetries • Brand identity • Social presence • Trust services

24. Addressing Asymmetries of Disclosure • Risk appears greater to user than retailer • Clear warranty and returns policy • Upfront info on postage costs, delivery times, stock, etc. • ‘About us’ - inc. address • Highlighting of bricks-and-click organisation

25. Brand Identity • As trust is fostered through relationship ecommerce users favour familiar brands • More users visiting less sites • Perceived reputation correlated with willingness to trust (Jarvenpaa et al., Ruyter, etc.) • Trust positively linked to purchase intention (Gefen & Straub) • Trust in institution not linked to adoption of ecommerce (Kim & Prabhaker)

26. Social Presence • Product reviews • Independent reviews: • Adds value to products • Increases “stickiness” • Little cost to retailer • Kudos & cultural capital of membership • Sustained advertising and awareness campaigns • Personal narratives have profound importance to development of trust … no matter how unrepresentative

27. Trust Services • Safety nets are the product of distrust • Why trust trust services? • Still reliant of relationships • Where trust exists trust, services re-establish mutuality – we know how business is to be done • Like being introduced to a friend of a friend

28. Conclusions? • E-trust no different from trust • Trust is local and negotiated • Based around relationship and personal experience • Trust is a cyclic process: “community depends on trust, and trust in turn is culturally determined” (Fukuyama 1995) • Still a need to explore using social science • Still a need to explore in practice

29. E-commerce and Consumer Trust Problems with Engagement and Some Potential Solutions Jason RutterESRC Centre for Research on Innovation & CompetitionUniversity of ManchesterJason.Rutter@manchester.ac.uk