Trust transference in brick and click retailers: An investigation of the before-online-visit phase

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Abstract

We examined the formation of online trust encountered by potential customers of a brick and click retailer before they visit its online website; this phase of the purchasing experience has been under-investigated in trust literature. Since a brick and click retailer is eager to attract offline customers to its website based on trust in the brick and mortar stores, our exploratory study investigated, (1) Can customers’ offline trust in a retailer affect their online trust (in the website operations of the retailer)?; (2) What other factors might be influential on online trust? A social relations and networks perspective was adopted to explain customers’ online trust formation during the before-online-visit phase. Findings from a sample of 246 offline customers who had never visited a supermarket's website revealed that word-of-mouth, offline trust, and expected sanctioning power were significant in forming online trust. Furthermore, findings showed that word-of-mouth was more influential than offline trust based on a customers’ personal experience with the supermarket's physical stores. This provided empirical evidence on how and why some pure online retailers outperformed brick and click retailers.

Introduction

A Gartner Consulting survey of brick and click retailing [18] reported that 33% of their respondents had an adoption strategy in place, 27% were in an internal-discussion phase, and 14% had initiated discussions with technology vendors. However, the implementation of this form of retailing did not necessarily warrant online success. It was puzzling why customers felt more comfortable transacting with certain pure online retailers (such as Amazon.com) as opposed to well-known brick and click retailers (such as Barnes and Noble) which had a longer history and possessed a stronger brand image [30]. Other well-known brick and click retailers such as Sears are not experiencing levels of online sales they originally expected either [20].

If the formation of online trust through the offline presence is sufficient for online success, brick and click retailers should excel in their online sales and outperform pure online retailers. However, the examples show that this is not always the case. Therefore, we decided to examine how a customer's trust in the brick and click retailer's physical stores (offline trust) affected the customers’ trust of the retailer's online operations (online trust) and to determine what other factors might influence the formation of online trust in the context of brick and click retailers before the customer has visited the retailer's website.

These two research questions could contribute to trust research in two major ways: First, despite studies citing trust to be central to online purchases [61], [63], many previous studies have identified antecedents of trust, mainly in the context of pure online retailers. Thus, our study bridges the gap of trust research by examining it in the brick and click retailers’ context. Secondly, there has been no study examining online trust of customers towards brick and click retailers before they visit the retailer's website. This is important because it is very likely that a substantial proportion of customers have already formed offline trust (based on their interactions with the retailers’ physical stores) before they visit the retailers’ websites. In addition, by eliminating the effects of any online visits in examining online trust, we can effectively examine whether trust stemming from customers’ interactions with the retailer's physical stores would lead to the formation of online trust.

In order to address these questions, we used the social relations and networks perspective based on social capital theory, since trust is developed through the social relations and networks of an individual especially when he or she has had no interaction with the trustee [28]. Research in other disciplines has shown that trust within the social relations and networks of individuals facilitate economic transactions.

Section snippets

Literature review

Trust has been defined in many ways and there is no universally accepted definition of it [54]. In our study, we consider it to depend on the customer's beliefs about the vendor's attributes of integrity, benevolence, and competence [46], because this articulates the cognitive basis on which people build their trust. We adapted two tables of Komiak and Benbasat's [37] study to provide a systematic way of classifying previous studies on trust (see Table 1). In this, the horizontal axis refers to

Theoretical perspective

Granovetter asserted that trust was generated through the social relations and networks of an individual, especially when he or she has had had no prior interaction with the trustee. Social capital inheres in the structure of relations among actors and was defined as the value of any aspect of an informal social organization that constituted a productive resource for one or more actor [13], [14], [15] that could be accessed and mobilized in a purposive action [44]. Coleman reasoned that other

Model and hypotheses

Based on social capital theory, we constructed our research model and developed hypotheses that are depicted in Fig. 1. The dependent variable of interest to a brick and click retailer is a customer's online purchase intention, which was defined as the likelihood that a customer will purchase from the online operations of the brick and click retailer [21].

In the model, we assumed that online trust was a full mediator between social capital constructs and online intention to purchase. Coleman

Procedure and data collection

We collected our data in May 2005, using a survey administered to real customers within the offline physical stores of a brick and click retailer; customers were selected had never visited the retailer's website. The brick and click retailer in this study was an established supermarket in Asia. Partnering with a nationwide broadband network, this retailer had been the first supermarket (in 1997) in the region to offer its merchandise in cyberspace. The number of regular online customers has

Results and data analysis

With an adequate measurement model, we tested the hypotheses using Partial Least Squares (PLS-Graph Version 3.00). According to Chin, this technique allows latent constructs to be modeled either as formative or reflective indicators and it is suited for theory development.

Fig. 2 shows the results of the analysis. The findings supported most of the hypotheses (H1, H2, H3 and H5). Word-of-mouth of online purchases from the retailer within the social network, expected sanctioning power, and

Discussion and implications

The study has examined the factors that affect the formation of online trust for customers of a brick and click retailer who have never visited its website. First and foremost, word-of-mouth of the retailer's online operations exerts the dominant effect on online trust and the effect was found to be much stronger than offline trust. Secondly, expected sanctioning power occurring through social relations plays a significant but peripheral role in influencing the online trust of customers.

Huei-Huang Kuan is a doctoral candidate and teaching assistant at the Department of Information Systems, National University of Singapore. He holds a BComp with honours from National University of Singapore. His current research interests include online consumer behavior, knowledge management and virtual communities. His work has been published or is forthcoming in Behavior and Information Technology, and top-tier information systems conferences, such as International Conference on Information

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    Huei-Huang Kuan is a doctoral candidate and teaching assistant at the Department of Information Systems, National University of Singapore. He holds a BComp with honours from National University of Singapore. His current research interests include online consumer behavior, knowledge management and virtual communities. His work has been published or is forthcoming in Behavior and Information Technology, and top-tier information systems conferences, such as International Conference on Information Systems (ICIS), European Conference on Information Systems (ECIS), Hawaii International Conference on System Sciences (HICSS) and Pacific Asia Conference on Information Systems (PACIS).

    Gee-Woo Bock is an associate professor in the School of Business Administration in Sungkyungkwan University (SKKU) in Seoul, Korea. Before he joined SKKU he was with the National University of Singapore in Singapore and with the Strategic Management Department in Samsung Economic Research Institute in Seoul, Korea. He received his BA degree (1988) with emphases on Sociology and Business Administration from Yonsei University in Seoul, Korea, and an MBA degree (1991) with emphases on MIS and Consulting Services from the University of Southern California in L.A. He received his PhD (2001) in MIS from the Graduate School of Management of the Korea Advanced Institute of Science and Technology (KAIST) in Seoul, Korea. His research areas are knowledge sharing, community of practice, virtual community, trust in e-commerce and strategic use of IT. He received the Best Case Study Award twice in 1996 and 1999, and the Award for Young Fellow in 2005 at the Annual International Conferences of Korea Management Information System Society. His papers have been accepted or published in MIS Quarterly, International Journal of Electronic Commerce, European Journal of Information Systems, Communications of the ACM and other journals.

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