The Value of Online Trust Seals: Evidence from Online Retailing

Abstract

Although third-party trust seals have been in use for long by online retailers, systematic studies of the effectiveness of these trust signaling mechanisms are scarce. Using a unique dataset of over a quarter million online transactions across 493 online retailers, this study seeks to empirically measure the value and effectiveness of trust seals on the likelihood of purchase by shoppers. The dataset is collected from a randomized field experiment by a large trust seal provider, which enables us to infer the causal impacts of the presence of an online trust seal. We find that the presence of the online trust seal increases the odds of completion of purchase. We further find that online trust seals serve as partial substitutes for both shopper experience and seller size. Interestingly, the effect of the number of trust seals is not linear – we find that the presence of too many seals lower completion rates. We discuss the implication of our findings for online retailers, third-party certifiers, as well as for policy makers.

Keywords: Electronic commerce, Online Certification, Online Trust Seals, Information Asymmetry