A study of the significant factors affecting trust in electronic commerce

E-commerce is the process of buying and selling products and services on the internet. This type of transaction is such that customers are able to see the virtual appearance through images, technical information, and video clips of products/services, but cannot obtain the actual experience of face-to-face touch, smell, and visualization. Such virtual experience coupled with the absence of a seller may create a sense of unreliability and vulnerability in the minds of the customers. Moreover, due to the nature of the internet, users are being susceptible to online frauds arising out of the activities of unscrupulous third parties. All these affect the trust of customers in online transactions and thereby affect online purchase decisions. A number of studies have been conducted to identify the factors that affect trust in e- commerce. However, none of these studies have been able to provide a comprehensive list of the factors that affect trust. Moreover, some of the studies had problems relating to use of inappropriate sampling techniques and using student samples and hence, raising issues of representativeness and affecting generalizability of the findings. Some studies also had also problems relating to the statistical techniques being used to analyze the data. Considering these limitations, the present study is undertaken. This present study is complementary to previous studies and aims at answering the following questions: How do we measure trust in online transactions? What are the factors that affect trust in e- commerce? How do the factors affecting trust relate and inter-relate to each other? To answer these questions, a review of the existing literature on factors affecting trust is conducted. This enables to develop the theoretical framework of the study having a number of hypotheses culminating in the development of a model for trust in e- commerce. For the study, a normative survey technique was used. An online questionnaire made it possible to enumerate 789 respondents, responses of 703 were usable. The data collected was screened and pre-tested to see whether they qualify for multivariate data analysis. Once this was ensured, statistical techniques such as exploratory factor analysis using principal component analysis, confirmatory factor analysis (CFA), and structural equation modelling (SEM) were applied to test the hypotheses. The findings of the study show that the factors directly affecting trust in e-commerce are market orientation, perceived security and technological trustworthiness, and relational benefit. Moreover, the findings show that user interface quality affects relational benefit. The two factors, 'importance of websites' reputation' and 'social presence' affect trust indirectly with perceived security and technological trustworthiness playing the mediating role. Another factor, 'perceived product and service information quality’ proved to have no relationship with relational benefit. The analysis of the results explaining the inter-relationships led to the confirmation of the model for trust in e-commerce. This model was further tested across samples with differing web experience, age, gender, and income. There were no significant differences in the parameter estimates of the relationships in the model. This indicates that the model is generalizable across different populations. In conclusion, the research has certain contributions to existing knowledge. These include - The development of a comprehensive model explaining the dependence and interdependence of the factors affecting trust in e-commerce. Understanding of trust in e-commerce as a multi-dimensional construct consisting of four dimensions― ability, benevolence, integrity, and predictability. Understanding the role of the direct and indirect influence of the factors affecting trust that led to reduction in risk perceptions. Additionally, the research contributes to certain managerial and business practices. Online businesses need to develop their websites to enable convenience in navigation by improving layout and design features of the websites. Moreover, to cater to the tastes and preferences of customers, e-commerce websites need to provide products and service desired suitable by customers. To attract customers, a sense of warmth and human touch need to be introduced in the websites. Coupled with this, there is the need to improve security features and privacy issues.