Trustmarks: Strategies for exploiting their full potential in e-commerce

BUSHOR-1534; No. of Pages 11 Business Horizons (2018) xxx, xxx—xxx

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Trustmarks: Strategies for exploiting their full potential in e-commerce Frauke Mattison Thompson a,*, Sven Tuzovic b, Corina Braun c a

Amsterdam Business School, University of Amsterdam, Amsterdam, Netherlands QUT Business School, Queensland University of Technology, Australia c School of Business, Economics, & Social Sciences, University of Hohenheim, Stuttgart, Germany b

KEYWORDS Trustmark; E-commerce; Willingness to purchase; Customer trust

Abstract Internet-based commerce has undergone explosive growth over the past decade and is expected to keep growing. With the increasing popularity of online marketplaces, trust is seen as a key foundation for consumers’ willingness to purchase, in particular, from unknown sellers. While trust has been examined in various contexts, limited focus has been placed on the importance of displaying institutional trust assurances such as trustmarks on retailers’ websites. We conducted two studies into how the use of trustmarks impacts consumer trust, consumer risk perceptions, and, consequently, influences consumer purchase intentions. The results of the two studies suggest that the use of trustmarks increases consumer online trust and purchase intentions, as well as reducing their perceived risk. We use these results to inform managerial decision making in e-commerce, particularly for marketers and e-retailers. We provide three important managerial lessons to be learned from our insights. Our implications are important not only for mature ecommerce markets to create a competitive advantage but also for growing and emerging e-commerce markets, where new retailers are trying to establish trust among their consumers to increase market share. # 2018 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.

1. Succeeding in e-markets * Corresponding author E-mail addresses: [email protected] (F. Mattison Thompson), [email protected] (S. Tuzovic), [email protected] (C. Braun)

According to eMarketer, e-commerce sales worldwide will increase to $3.5 trillion within the next 5 years, accounting for more than 12% of global sales

https://doi.org/10.1016/j.bushor.2018.09.004 0007-6813/# 2018 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.

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2 (Lindner, 2015). With the increasing popularity of online shopping, the need for consumer protection and security has gained considerable attention (Hong & Cha, 2013). A major issue in business to consumer (B2C) e-commerce is developing consumer trust (Gefen, Karahanna, & Straub, 2003; McKnight, Choudhury, & Kacmar, 2002). Research shows that the trustworthiness of online retailers is important to consumers, especially when dealing with unfamiliar or unknown sellers (Zhang, Wang, Zhang, & Lim, 2015). For example, a study found that approximately 70% of online shoppers abandon their online orders because they do not trust the retailer (Rampton, 2014). The lack of familiarity with an online retailer can lead to a lack of trust among consumers toward that retailer (Brandt, 2015). Especially for smaller, unknown, and foreign online stores, it is difficult to generate initial trust and purchase intentions among consumers, as a result of a lack of brand exposure and knowledge about the retailer on the part of the consumer (Brandt, 2015). As the online channel becomes an integral part of the multichannel strategy for most retailers, consumer trust in the electronic marketplace becomes vital to increase willingness to purchase. Perceived risk associated with online retailing is also a significant barrier to the growth of e-commerce (Choi & Nazareth, 2014; Gefen et al., 2003; Jarvenpaa, Tractinsky, & Vitale, 2000; Kim, Ferrin, & Rao, 2008). This perceived risk can be attributed to the absence of a brick-and-mortar store, as well as the distance and lack of direct interaction between buyers and sellers (Ba & Pavlou, 2002; Kim et al., 2008). Furthermore, issues such as the covert collection of personal data and/or consumers’ credit card information–—which may be used for other purposes than originally intended–—also contribute to an increased risk perception and lack of trust (Allen & Peloza, 2015; Pavlou & Fygenson, 2006). Providing credible signs and information to promote trust and confidence in electronic retailers may be a viable strategy to overcome such issues (Karimov & Brengman, 2014; Wells, Valacich, & Hess, 2011). In sum, the trustworthiness of retailers and the perceived risk involved are two critically important aspects to consumers, especially with regard to unfamiliar or unknown sellers (Zhang et al., 2015). To tackle negative consumer perceptions of limited online security, the loss and/or lack of direct and personal interaction with the retailer, as well as issues of trustworthiness of the e-retailer, numerous intermediaries of trust assurance have been created (Gefen et al., 2003; McKnight et al., 2002). The most significant, externally provided intermediary of e-assurance are trustmarks, which are used by online retailers to support the promotion of trust

F. Mattison Thompson et al. and reduce perceived risk (Kim et al., 2008). Trustmarks are electronic labels–—consisting of logos, pictures, and symbols–—that indicate the e-merchant conforms to specific standards (e.g., transaction security, privacy laws, integrity of business practices; Aiken & Boush, 2006; Allen & Peloza, 2015; EEC-Net, 2013; Luo, 2002). Despite the recent introduction of such trust indicators, evidence suggests that marketers and e-commerce managers are still struggling to implement and reap the benefits of these mechanisms. For example, the most important e-commerce trustmarks are still barely noticed by consumers (Rüdiger & Rodríguez, 2013). A staggering 76% of consumers report having opted against an online purchase because they did not recognize the trust logo (Niederberger, 2011). Furthermore, trustmark usage varies tremendously among retailer and countries; in developed e-commerce markets such as the U.K., just 22% of homepages use or display a trust seal (Digital Marketing Magazine, 2015). Furthermore, although a handful of studies have investigated the impact of trustmarks on customers’ perceived trust in e-commerce (Miyazaki & Fernandez, 2000; Nöteberg, Chistiaanse, & Wallage, 2003; Rifon, LaRose, & Choi, 2005), there is still no overarching agreement on the function and relevance of trustmarks in e-commerce. Similarly, it remains unclear how trustmarks influence the level of consumers’ perceived trust and perceived risk over time, and how consumer recognition and knowledge of trustmarks impact these relationships. Further, there is also still a lack of empirical evidence with regard to the impact of trustmarks on consumers’ willingness to purchase. To address this knowledge gap, we conducted an online survey, which we repeated 3 years later. We use the results of these two cross-sectional studies to inform managerial decision making on matters related to the effects and use of trustmarks in ecommerce. Briefly, the studies investigated whether trustmarks displayed in e-commerce influence consumers’ online formation of trust, their risk perceptions, and increase their willingness to purchase, and whether customer recognition and knowledge levels of trustmarks have changed over time. Our study, therefore, adds to the body of marketing literature on trustmarks by providing important insights into how consumer recognition and knowledge of trustmarks have influences their effectiveness over the last 3 years, and how the display of trustmarks in e-commerce influences consumers’ online formation of trust and their risk perceptions. Furthermore, we provide evidence that trustmarks have a significant impact on consumers’ willingness to purchase in e-commerce.

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Trustmarks: Strategies for exploiting their full potential in e-commerce From the results, we draw three evidence-based managerial lessons for marketers and e-retailers on how to improve their e-business. The insights we provide are especially relevant and important for growing and emerging e-commerce markets in which new retailers are trying to establish themselves and want to gain market share, yet may not have the strategic insight into how to use trustmarks. Our insights are also important in mature e-markets where competition is fierce. Here, marketers and managers may learn how to adjust and optimize their use of trustmarks online to influence consumer behavior. Against the backdrop that marketers and managers are still struggling to implement these mechanisms correctly (e.g., Digital Marketing Magazine, 2015; Niederberger, 2011; NTIA, 2016), our study and comprehensive lessons are particularly relevant and timely. We begin by reviewing the literature related to trust and perceived risk in ecommerce as well as prior research related to trustmarks. Then, we provide a managerially relevant overview of our study and the results. Finally, we link the results from our two studies to extant literature and present three lessons that will help managers and e-marketers use trustmarks successfully.

2. The role of trust and perceived risk in e-commerce E-commerce is an important business model and sales channel for many firms. Over the last few years, the online market environment has substantially changed: (1) The total number of internet users and the frequency of internet usage have significantly increased; (2) the number of online shoppers has grown tremendously; and (3) online retail sales have become profitable for firms (Li, Pienkowski, Van Moorsel, & Smith, 2012). According to Forrester research, online retail sales in the U.S. will account for 17% of retail sales by 2022, up from a projected 13% in 2017 (Forrester, 2017b). In comparison, e-commerce in Western Europe will grow at an average of 11.3% per year over the next 5 years, reaching almost 14% of total retail sales by 2022 (Forrester, 2017a).

2.1. Trust in e-commerce Trust is defined as a partner’s willingness to rely on an exchange partner in the face of risk (Aiken & Boush, 2006; Doney & Cannon, 1997; Mayer, Davis, & Schoorman, 1995). It is considered to be critical in facilitating e-commerce (Fang et al., 2014; Kim, Yim, Sugumaran, & Rao, 2016; Kim & Peterson,

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2017) as it presents a key determinant of consumer behavior (Morgan & Hunt, 1994; Schurr & Ozanne, 1985). Research has found that trust is positively linked to consumers’ willingness to buy (Gefen, 2002; Jarvenpaa et al., 2000) and consumer loyalty behavior (Hong & Cho, 2011). In the context of ecommerce, trust is essential not only as part of the interaction between the customer and the retailer but also as part of the interaction between the customer and the e-commerce system through which monetary transactions are executed (Kim, 2014; Teo & Liu, 2007). Against this background, an online retailer’s reputation (Jarvenpaa et al., 2000; McKnight et al., 2004) and its assurance (Mayer et al., 1995; Palvia, 2009) are two important factors that influence consumers’ trust perceptions. The reputation of a retailer is defined as the extent of consumer belief in a vendor to act competently and honestly (Doney & Cannon, 1997), while assurance represents the reliability and security of a retailer, which warrants a secure and successful transaction with the vendor via the internet (Teo & Liu, 2007). Reputation and assurance of an online retailer are intangible assets that require long-lasting investments and expenditures of resources in building customer relationships (Teo & Liu, 2007). Research indicates that a retailer with a positive reputation is regarded as more trustworthy (McCole, Ramsey, & Williams, 2010). Trust assurances can be further differentiated into two categories: (1) self-proclaimed assurances provided by online retailers themselves (e.g., warranty and return policy) and (2) third-party web assurances (also referred to as structural assurances) that establish institutional trust in the marketplace. While much research has focused on interpersonal trust in a business relationship, the issue of building institutional trust is still underexplored (Lu, Zeng, & Fan, 2016).

2.2. Perceived risk in e-commerce Consumers perceive risk when they face uncertainty and potentially undesirable consequences in light of a transaction (Hong & Cha, 2013; Mayer et al., 1995). Perceived risk is an important determinant of both initial purchase intention and repeat purchase intention (Chiu, Wang, Fang, & Huang, 2014). Empirical studies found that perceived risk has a direct negative effect on transaction intentions in e-commerce (e.g., Hong & Cha, 2013; Pavlou, 2003; Teo & Liu, 2007). Compared to traditional commerce, online shopping entails higher risks and creates more opportunities for fraud and abuse (Lowry, Vance, Moody, Beckman, & Read, 2008; Yoon, 2002).

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4 A key source of perceived risk is uncertainty (Hong & Cha, 2013), which consists of two dimensions: environmental uncertainty from the technical environment of online transactions and behavioral uncertainty from the transaction partner (Bélanger & Carter, 2008; Pavlou, 2003). For instance, the anonymity in online transactions and the absence of spatial proximity causes uncertainties about the identity of the online retailer and the quality of the products and services offered (Ba & Pavlou, 2002). Retailers may behave in an opportunistic way by taking advantage of the impersonal and indirect nature of the online market environment (Pavlou, 2003). This could manifest itself in the covert collection, inappropriate use, or sale of their consumers’ personal data (Pavlou & Fygenson, 2006). Online shoppers are confronted with additional risks compared to traditional commerce. Perceived risk is also closely related to trust. While there is no conclusive answer as to whether risk is an antecedent of trust or an outcome (Hong & Cha, 2013; Mayer et al., 1995), the majority of current studies focus on the effects of trust on perceived risk (e.g., Bélanger & Carter, 2008; Corbitt, Thanasankit, & Yi, 2003; Pavlou, 2003). Findings show that trust can decrease perceived risk and mitigate perceptions of uncertainty (Hsin Chang & Wen Chen, 2008; Kim et al., 2008). To reduce risks or uncertainties associated with online shopping, consumers rely on product-related and nonproductrelated cues (Biswas & Biswas, 2004; Wells et al., 2011). For example, a firm’s reputation might act as a nonproduct-related cue, which reduces consumers’ perceived risk (Rao & Monroe, 1989). Customer reviews or the number of successful past transactions may also be indicators for reducing perceived risk.

3. Trustmarks: A tangible cue to building initial trust Research suggests that trust varies depending on the stage of interaction between buyer and seller (McKnight et al., 2004). While familiar companies can rely on credible, firsthand information about themselves, unfamiliar companies have to build initial trust (Brengman & Karimov, 2012; Stouthuysen, Teunis, Reusen, & Slabbinck, 2018). Initial trust refers to consumers’ beliefs about the online retailer’s capability (e.g., expertise, competence) to provide high-quality products and/or services (Gefen, 2002; Gefen & Straub, 2004). This initial trust is formed from assumptions or inferences made during the first interaction.

F. Mattison Thompson et al. Online retailers have taken steps to promote initial trust that range from offering specific guarantees and information about privacy protection to publishing customer reviews or number of customers and items sold on their websites (Allen & Peloza, 2015; Biswas & Biswas, 2004; Luo, 2002; Stouthuysen et al., 2018). Online retailers also use customer reviews of previous transactions to instill confidence in their products and services. Overall, research recommends companies provide credible signals in order to promote trust (e.g., Ba & Pavlou, 2002; Biswas & Biswas, 2004; Karimov & Brengman, 2014; Wells et al., 2011); these signals may also come in the form of institutional mechanisms and third-party assurances. In recent years, the e-commerce literature has argued that institutional mechanisms and thirdparty assurances are a major antecedent to building initial trust in online marketplaces in which buyers transact with new and unknown sellers (Lu et al., 2016). Institution-based trust refers to structures like regulations, promises, or legal resources that are established and implemented by third parties to generate proper transactional conditions (McKnight et al., 2002). In this context, trustmarks have emerged as a prominent form of institutional mechanisms in online marketplaces. While certification authorities simply authenticate an online retailer’s identity, trustmarks aim to reduce consumers’ perceived risks, assess internal controls, and increase buyers’ confidence or trust in e-transactions (Head & Hassanein, 2002; Kim et al., 2016). In line with cue utilization theory, trustmarks are designed to communicate (i.e., to signal cues) trustworthiness and assurance of an unknown online retailer (McCole et al., 2010; Özpolat & Jank, 2015; Wells et al., 2011). Trustmarks were developed in the late 1990s as an attempt to enhance consumer trust through web signals (Danidou & Schafer, 2012), covering a wide variety of areas including IT security, information privacy, and the disclosure of information. In Germany, the country in which we conducted our study, the most well-known trustmarks are the TÜV s@fer shopping trustmark, the trusted shops guarantee trustmark, the EHI certified online shop trustmark, and the internet privacy standards trustmark. These are illustrated in Figure 1. A small number of studies have previously investigated the impact of trustmarks (e.g., Kim et al., 2008; Miyazaki & Fernandez, 2000; Nöteberg et al., 2003; Rifon et al., 2005); however, the results are not conclusive. While some studies show a significant positive effect of trustmarks on consumer trust perceptions in e-commerce (e.g., Miyazaki & Fernandez, 2000; Nöteberg et al., 2003; Özpolat &

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Trustmarks: Strategies for exploiting their full potential in e-commerce Figure 1.

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Germany’s most well-known trustmarks

Jank, 2015), others do not (e.g., Kim et al., 2008; McKnight et al., 2004). One explanation for these contradictory results could be the plethora of trustmarks (Rüdiger & Rodríguez, 2013). In order for trustmarks to work, two conditions are required (Rüdiger & Rodríguez, 2013). First, consumers need to recognize the trust seals and should be able to distinguish them from other signals on the retailer’s website (Rüdiger, 2008). Second, consumers need to know and understand the trustmark content (Rüdiger & Rodríguez, 2013). Given the prior inconclusive research findings, more comprehensive studies are needed to analyze how the impact of trustmarks on consumer trust perceptions evolves as the recognition and knowledge of trustmarks changes among consumers.

4. Our study We conducted an online survey using MTurk in Germany, which we repeated 3 years later in order to gain insight into how consumer awareness of trustmarks has changed over time, and how this, in turn, has influenced the levels of consumers’ perceived trust, perceived risk, and willingness to purchase. We required participants to be German residents, and the survey was conducted in German. We restricted the sample in this way because Germany is a relatively mature e-commerce market–—e-commerce accounts for 17% of total retail sales–—and more than 67% of the population makes online purchases (Statista, 2015). We collected a total of 447 (175 responses in Study 1 and 272 in Study 2) to test our hypotheses. Our samples both had a near 50/50 split between males and females, who ranged in age between 25 and 65. The majority of respondents were between 18 and 25 years old (60% in Study 1 vs. 47% in Study 2). We drew on existing scales to measure our constructs. Both consumers’ trust and risk perceptions were measured using the scales of Jarvenpaa et al. (2000). Consumers’ willingness to purchase was measured using the scale of Simon, Houghton, and Aquino (2000). We adopted three questions

from Kini and Choobineh (1998) and Teo and Liu (2007) to measure perceived reputation. The scale for assurance was taken from Doney and Cannon (1997) and Teo and Liu (2007). We measured trustmark knowledge levels on a 5-point scale, ranging from “no knowledge at all” to “very good knowledge” in response to the question: “Indicate your knowledge level of trustmarks.” We also exposed participants to the top 25 trustmarks used in Germany and asked them which of these they recognized. Table 1 briefly summarizes the main results from our two studies. The results of Study 1 show that recognition of trustmarks varied significantly among specific trustmarks. The TÜV s@fer shopping trustmark (80%) and the trusted shops guarantee trustmark (55%) were recognized most often. Other trustmarks (e.g., the EHI certified online shop trustmark or the internet privacy standards trustmark) were never, or hardly ever, recognized. In addition, only 8% of the sample had good or very good knowledge of what trustmarks are. By the time Study 2 was conducted, the recognition rate of trustmarks had increased significantly in comparison to Study 1 (91% recognized the TÜV s@fer shopping trustmark and 66% the trusted shops guarantee trustmark). However, still only 8% of the participants had good or very good knowledge of what trustmarks are, and there is no statistically significant difference in knowledge levels between our two samples. We also tested whether higher levels of knowledge lead to higher perceptions of trust, and found that high levels of knowledge have a significant influence on consumers’ perceptions of trust toward the online retailer in both studies. Our results also show that consumer knowledge significantly strengthens the effect of trustmark use on trust, and that trustmark recognition strengthens the effect of trustmark use on perceived trust. Overall, the results reveal that trustmarks perform multiple roles: 1. The use of trustmarks is a strong driver of consumers’ online trust perceptions and has a direct effect on consumers’ online risk perceptions;

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F. Mattison Thompson et al. Table 1.

Results for studies 1 and 2

Effects of trustmarks

Assurance leads to:

Perceived trust leads to: Perceived risk leads to: Note:

***

Study 1 results

Study 2 results

Statistical difference between Study 1 and Study 2

Increase of perceived trust

Yes (.59***)

Yes (.36***)

21.80 ***

Reduction of perceived risk

No ( .27ns)

Yes ( .24***)

10.45 **

Reduction of perceived risk

Yes ( .26**)

Yes ( .24**)

.07ns

Increase of purchase intentions

Yes (.28***)

Yes (.35***)

5.31 *

Reduction of purchase intentions

Yes ( .50***)

Yes ( .15***)

.40ns

p<0.00, **p<0.01, *p<0.05, ns = no significant result

2. Trustmarks have an indirect effect on reducing risk perceptions via building increased levels of trust; and

5.1. Use trustmarks. They are an effective mechanism for building initial trust

3. Trustmarks can lead to an increase in consumers’ willingness to purchase online by increasing perceived trust and reducing perceived risk.

One of the biggest challenges any small or new retailer faces is the development of initial trust between themselves and their potential consumers, as well as the provision of assurances for service and product quality (Brengman & Karimov, 2012). For any business, it is the lack of an assurance with regard to quality and trustworthiness that could lead to consumers deciding against engaging in a transaction. For new retailers, it may further be the lack of an already established positive reputation that hinders their commerce (Gefen & Straub, 2004; McKnight, Cummings, & Chervany, 1998). In an online environment where there is little or no face-to-face contact, restricted direct interaction between the seller and the buyer, and very few tangible cues signaling quality and trustworthiness, this is particularly difficult. Trustmarks provide a very effective alternative to overcome these challenges. Since they are provided by third parties (e.g., an independent institution such as the OECD’s consumer protection in e-commerce section), they represent a seal of approval with regard to reliability and credibility of the e-retailer. And since this approval has come from an independent source, the likelihood that it is believed by the consumer is also higher than had the company tried to simply increase trust through self-promotion (Nielsen, 2015). Further, trustmarks are designed to provide the assurance that the online store fulfils a certain level of security and quality standards (Rüdiger & Rodríguez, 2013). Indeed, we found that trustmarks are an important determinant of

Our results indicate that recognition of trustmarks has significantly increased over the past 3 years, but knowledge of trustmarks has not. Given these results, we have several lessons for marketers and online retailers on how they might affect online consumer behavior.

5. Trustmarks: Three lessons for emarketers The shift from offline to online retailing has been steadily increasing over the past decade, due to better internet accessibility and infrastructure but also because of increased consumer familiarity with this new shopping context. Yet, while several major companies have managed to become successful dominant players in the market (e.g., Amazon, Walmart), smaller, lesser-known companies are still struggling to establish themselves. Since a lack of trust and a relatively high perceived risk in an eretailer appear to play a major part in the consumer’s online shopping journey, trustmarks may help these smaller companies establish a stronger, more successful, and profitable market presence. We suggest three major lessons that can be learned from our study. These insights can be used by marketers and e-retailers to improve their e-commerce activities.

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Trustmarks: Strategies for exploiting their full potential in e-commerce consumer trust in e-commerce and have a significant effect on consumers’ perception of a seller’s reputation. Trustmarks provide higher levels of assurance in the transaction across both of the samples we studied. We further found that, over time, trustmark presence influences consumers’ trust perceptions, suggesting that if new or smaller online retailers use and display their trustmarks, consumer trust in their online store increases. The first thing any e-retailer may want to consider when starting to trade is the use of trustmarks as an initial signal for building consumer trust. Since consumers usually have little or no knowledge regarding the trustworthiness of a small or new online retailer, the use of trustmarks can help increase initial trust and therefore increase the likelihood of consumers’ willingness to purchase. Particularly in established e-commerce markets where competition is fierce and consumers have many alternatives to choose from, using trustmarks may not only be a trust signal but may also provide a competitive edge vis-à-vis other competitors that do not use or display trustmarks. Our results show that for 70% of online shoppers, trustmarks are an essential determinant when making positive online purchasing decisions. This suggests that e-retailers that do not use trustmarks do not only miss a chance to build adequate levels of trust but, as a consequence, also lose out on trade. Overall, though our findings are important for small or new e-retailers in established markets, they are perhaps even more relevant for e-retailers in growing and emerging e-commerce markets such as Russia, Brazil, and Turkey. In these markets, familiarity with e-commerce is relatively low and general trust in online sellers will also be low. In China, 10 years ago, flight tickets purchased online would still be delivered by courier within hours of online purchase as consumers did not trust that a manually printed ticket at home would be valid when flying. Now that China is one of the leading e-commerce markets in the world and trust toward this new shopping environment has changed, this service has all but vanished. In new and emerging ecommerce markets, trustmarks may be a perfect mechanism to instill consumer trust and assurance in the seller during the early stages of the buyer-seller relationship and gradually build the seller’s online reputation. They may also provide a level of competitive advantage to those eretailers acting as early adopters of trustmarks as they will have built trust sooner than competitors that do not use trustmarks.

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5.2. Understand the multiple roles of trustmarks. They reduce consumers’ perceived risk and increase purchase intentions Prior research has shown that consumers’ online concerns play an important role in their purchase decisions (Hong & Cha, 2013). As mentioned earlier, consumers are exposed to various potential risks when they interact with a new and unfamiliar online retailer. Since they cannot rely on prior interpersonal trust at this stage, it is important to provide tangible cues that stimulate consumers’ institutional and competence trust perceptions toward unfamiliar online vendors (Stouthuysen et al., 2018). While shopping in the offline context provides customers with numerous cues such as the appearance and location of the store, the service level of employees, or many other visual and nonvisual cues, there are not as many cues available in an online shopping environment (Biswas & Biswas, 2004). Customers must rely on the few available cues, such as trustmarks, as more accessible and salient information to help their decision making and reduce perceived risk (Li et al., 2012). In line with this, our results reveal that the assurance of the online retailer (i.e., the use of trustmarks) has a direct negative effect on perceived risk. That is, the higher the perceived assurance, the lower the perceived risk. The signaling effect of trustmarks helps consumers reduce perceived risk of online shopping. This means that online retailers using and displaying trustmarks are able to actively reduce perceived consumer risk and increase the likelihood that consumers engage in buyer-seller relationships.1 We recommend that e-retailers display their trustmarks on their home webpage or landing page to reduce potential consumers’ risk perceptions from the start of the online shopping experience. Our results also reveal that trust, created through the perceived assurances given by trustmarks, allows for a significant reduction in perceived risk.2 This, in turn, leads to an increase in consumers’ purchase intentions. In fact, both of our studies indicate a significant direct and indirect effect (via perceived risk) of trust created through the display and usage of trustmarks on purchase intentions (see Table 1). Online retailers should pay close attention to using and prominently displaying trustmarks, leveraging their power to

This is in line with our finding that reduced risk perceptions lead to higher/increased purchase intentions. 2 In line with Hsin Chang and Wen Chen, 2008; Kim et al., 2008 1

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8 increase consumer purchase intentions. Since trustmarks function as a mechanism to reduce perceived risk and increase purchase intentions, they may also act as important differentiators between two unknown online vendors. Faced with the choice of trading with an unknown retailer with a seal of assurances–—and an unknown retailer without–—first-time buyers may be more inclined to trade with the first retailer as a result of their trustmark usage and the impact they have on purchase intentions. If the impact of trustmarks on perceived risk, initial perceived trust, and purchase intentions are measureable in the context of a mature e-commerce market (i.e., Germany in our case), the implications for emerging e-commerce markets may be even more significant. From a cultural makeup perspective, emerging e-commerce markets tend to be relatively high in risk aversion compared to established e-commerce markets (see Hofstede, 1980, 2018). Trustmarks may be particularly significant and useful in helping to reduce perceived risk, as consumers in these markets require more information and persuasion to overcome their risk perceptions (Hofstede, 1980, 2018).

5.3. Recognition matters. Educate your customers Having trustmarks on a website to signal quality assurance is not as powerful in creating and enhancing initial and perceived trust as when consumers have high levels of knowledge of what trustmarks represent. Our results suggest that consumer knowledge of trustmarks has a significant positive effect on the relationship between displaying a trustmark and consumers’ perceived trust toward the e-retailer. This suggests that the higher a consumer’s knowledge of trustmarks, the higher their levels of trust. Therefore, we argue that eretailers should provide more and detailed information about the function of trustmarks to educate potential consumers. By explaining the meaning of trustmarks, e-retailers can increase consumer knowledge and therefore also their perceived trust in web assurances. This, in turn, has a positive effect on perceived trust and also on purchase intentions, as also discussed in Lessons 1 and 2. Yet, our results suggest that expert knowledge of trustmarks (i.e. high levels of knowledge among consumers) are still relatively low (8% in both of our samples). Although trustmarks, which allows for the increase of trust in e-commerce, are an important tool for marketers and e-commerce managers to understand, this result provides some alarming

F. Mattison Thompson et al. evidence to suggest that marketers and managers are still not doing enough to educate their consumers in what trustmarks stand for, or why they are used. As a result, they are unable to fully take advantage of the benefits that trustmarks provide. From a marketing perspective, the education of consumers on trustmarks may be done through intensive promotional efforts, such as advertising both online and offline, which educate the consumer on what trustmarks represent and why they are used. These promotional efforts may take the form of short pre-roll advertisements (see Campbell, Mattison Thompson, Grimm, & Robson, 2017), used before displaying a feature ad for the e-retailer to signal the use of such assurances by the retailer in the ad, or they may be integrated into the feature ad itself. But, trustmark issuers also ought to promote their services and provide insights into what their trustmarks stand for. By doing so, they make consumers more knowledgeable of their company and increase their trust in the trustmark issuer (see Hoeffler & Keller, 2003), but also, through increased exposure to the brand, make it more recognizable and trustworthy to consumers.3 It may also be important for firms to pay close attention to the type of trustmark they display. Our study shows that there are some trustmarks that are more readily recognized than others (e.g., 91% recognized the TÜV s@fer shopping trustmark and 66% the trusted shops guarantee trustmark, while other trustmarks were barely recognized). Furthermore, our results reveal that trustmark recognition strengthens the effect of trustmark use on perceived trust. This suggests that using or displaying a trustmark that consumers recognize is important for increasing consumers’ perceived trust in the website and, as a result, their willingness to purchase (see Lesson 2). E-retailers, wanting to leverage the positive effect of displaying trustmarks, should not only display their trustmark but also pay attention to which third party issued the trustmark and how well this institution is recognized by consumers. Particularly for consumers with skepticism and high perceived risk regarding e-commerce, selecting a trustmark provider that is recognized by potential consumers is an important consideration, as these consumers are more likely to abandon their online purchases.4 We suggest that third-party trustmark organizations and online retailers need to engage in more promotional activities and advertising, particularly in e-commerce markets with

3 4

In line with our findings, as discussed previously. In line with Niederberger, 2011; NTIA, 2016

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high levels of perceived risk by consumers. Small and unknown e-retailers should educate potential consumers about the uses and benefits of trustmarks. These actions will reduce consumers’ perceived risk, increase their perceived trust, and increase their purchase intentions.

retailers need to understand the power of trustmarks as they are strong persuasive devices that have a significant impact on consumer behavior online.

6. Final thoughts

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Our research demonstrates the significant impact of trustmarks as seals of assurance in e-commerce. They are a powerful mechanism to increase trust, reduce risk perceptions online, and encourage purchase intentions. This is important for marketers and e-retailers to understand as trustmarks have a substantial impact on online consumer behavior. With an increase in competition in mature e-commerce markets and large amounts of perceived risk from e-commerce in emerging online markets, marketers and retailers need to know how they can alleviate some of the negative issues perceived by potential consumers. With roughly 70% of consumers abandoning online items in their carts or even refraining from selecting goods because they do not trust the retailer (Rampton, 2014), providing consumers with quality, security, privacy, and trust assurances online is vital. Our two studies allow us to highlight three important lessons that marketers and retailers in competitive, mature e-commerce markets, as well as those in emerging e-commerce markets, may wish to follow to increase sales. First, since trustmarks work as a signal to increase trust in an eretailer–—in particular, initial trust at the beginning of the consumer journey–—it is important for vendors to seek and display trustmarks. Second, trustmarks also need to be exhibited and the trustmark issuer picked carefully in order to reduce perceived risk and further increase consumers’ purchase intentions. Though we found that all trustmarks displayed had a significant positive effect on purchase intentions, we argue that better-known trustmarks will work more comprehensively. This finding applies across the board in both mature and emerging e-commerce markets. Since consumers will be more aware and knowledgeable about them, these trustmarks will be more likely perceived as assurance cues and therefore work effectively. Finally, it is vital that trustmark providers, marketers, and users educate potential consumers about the benefits of these assurance seals. Education should happen not only on the part of the e-retailer but also through the trustmark issuer. In this way, consumer recognition of different trustmarks will increase. Overall, marketers and online

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