The Value of Online Trust Seals: Evidence from Online Retailing

32 Pages Posted: 20 Apr 2010  

Koray Özpolat

University of Rhode Island - College of Business Administration

Guodong (Gordon) Gao

University of Maryland - R.H. Smith School of Business

Wolfgang Jank

University of Maryland - Decision and Information Technologies Department

Siva Viswanathan

University of Maryland - Robert H. Smith School of Business

Date Written: April 19, 2010

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

Suggested Citation

Özpolat, Koray and Gao, Guodong (Gordon) and Jank, Wolfgang and Viswanathan, Siva, The Value of Online Trust Seals: Evidence from Online Retailing (April 19, 2010). Available at SSRN: https://ssrn.com/abstract=1592480 or http://dx.doi.org/10.2139/ssrn.1592480

Koray Ozpolat

University of Rhode Island - College of Business Administration ( email )

Kingston, RI 02881
United States
401-874-5750 (Phone)

HOME PAGE: http://www.cba.uri.edu/ozpolat

Guodong (Gordon) Gao (Contact Author)

University of Maryland - R.H. Smith School of Business ( email )

4325 Van Munching Hall
College Park, MD 20742
United States

HOME PAGE: http://www.rhsmith.umd.edu/faculty/ggao/

Wolfgang Jank

University of Maryland - Decision and Information Technologies Department ( email )

Robert H. Smith School of Business
4300 Van Munching Hall
College Park, MD 20742
United States
301-405-1118 (Phone)

HOME PAGE: http://www.smith.umd.edu/faculty/wjank/

Siva Viswanathan

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

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