Can Web Seals Work Wonders for Small E-Vendors in the Online Trading Environment? A Theoretical Approach

Xiaorui Hu and Yuhong Wu
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Xiaorui Hu: Saint Louis University, USA
Yuhong Wu: William Paterson University, USA

International Journal of E-Business Research (IJEBR), 2008, vol. 4, issue 3, 20-39

Abstract: Trust is a major issue in e-markets. It is an even more prominent issue when online shoppers trade with small, less-established e-vendors. Empirical studies on Web seals show that small e-vendors could promote consumers’ trust and increase Web sales by displaying Web seals of approval. This article takes a theoretical approach to examine online trading when seals are used in e-markets. We establish an online shopper’s decision-making model to reveal the online shopper’s decision-making criteria. Criteria include when to trade with a well-established e-vendor and when to trade with a small, less-established e-vendor, with or without a Web seal. Based on our analysis of the research results, we reveal the price effect, the seal effect, the reputation effect, and their impact on a shopper’s decision-making process. Meanwhile, a social welfare analysis is conducted to further demonstrate the positive impact of Web seals on small, less-established e-vendors.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jebr00:v:4:y:2008:i:3:p:20-39

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