Competitive Price and Trust as Determinants of Purchase Intention in Social Commerce.
| Autor | Maia, Claudia Rodrigues |
Introduction
The evolution of Web 2.0 technologies and social media has changed not only the way people communicate, collaborate, and live, but also how online businesses are being driven. With increasingly popular social networking sites (SNS), the various connections among Internet users emerge as an important source of information, allowing consumers to share their ideas, opinions, or even content on the web without the need for having a high knowledge of technology. This expansion of the use of SNS's has given rise to a new type of electronic commerce, called social commerce or s-commerce, which has modified the way in which online purchases have been made (Lin, Li, & Wang, 2017). Broadly speaking, s-commerce provides a more social and interactive environment to allow customers to share their information (Busalim & Hussin, 2016). Social commerce sites provide social interactions, such as information sharing, networking, and collaborating, to facilitate communication among consumers (Li & Ku, 2018).
The popularity of SNS's such as YouTube, Facebook, Instagram, and Twitter has fundamentally influenced the behavior of consumers, who can now make informed purchases, and obtain better products, services, and prices through the exchange of reliable information with other consumers, characterizing as a unique aspect of s-commerce (S. Kim & Park, 2013). The main purpose of visiting an e-commerce site is to find products users wish to buy, and selecting which vendor to buy from, based mainly on price, reputation, product availability, and service (Manvi & Venkataram, 2005). According to a survey conducted in 2017 by We Are Social, more than half of the global population already uses the Internet, totaling more than 3.75 billion people online. According to the same survey, social networks users sum up 2.18 billion people, which represent 37% of the world's population, growing by more than 20% in the last year alone (Kemp, 2017).
From the perspective of organizations, s-commerce has great potential to generate value from social interactions carried out online with consumers, proving to be an important sales channel. S-commerce is growing rapidly in terms of the number of s-commerce platforms to engage with customers and support the co-creation of their brand value co-creation (Wang, Tajvidi, Lin, & Hajli, 2019). More and more followers around the world have taken advantage of s-commerce tools (e.g., forums, chat rooms, communities, and SNS's) to operationalize their transactions in the virtual universe (B. Lu, Fan, & Zhou, 2016; S. Kim & Park, 2013). A survey conducted by Burson-Marsteller (Campaign Brief, 2012) pointed out that 87% of the largest companies worldwide are present in at least one social network. In China, more than half of online consumers buy their products via social media platforms (PricewaterhouseCoopers, 2013), while in Brazil about 60% of e-commerce sites use social media for sales and marketing (Emarketer, 2016). In academia, s-commerce has become a significant research area, especially in Information Systems (IS) discipline, where academicians have paid attention to this new research topic with a focus on adoption and use of social commerce (Lin et al., 2017). In this context, s-commerce emerges as a phenomenon of global interest for managers and researchers.
On the other hand, such rapid expansion has allowed the entry of small businesses, startups, and entrepreneurs which tend to have limited resources because of the low entry barrier in this market, causing in some cases negative effects such as low services to consumers, frauds, late refunds, and inaccurate or imprecise information (S. Kim & Park, 2013). Consequently, a large number of consumers have become victims of these firms, generating distrust as to the suitability of these companies and even to the advance of s-commerce. Some previous studies have suggested that mistrust is one of the main reasons why consumers hesitate or avoid doing online purchases (Gefen, 2000; Gefen, Karahanna, & Straub, 2003; S. Kim & Park, 2013). However, one of the main advantages of online firms is the possibility of offering products and services at low prices (B. Lu et al., 2016), a fact considered as an important characteristic of s-commerce from the perspective of consumers (Hsiao, Chuan-Chuan, Wang, Lu, & Yu, 2010; Maia, Lunardi, Longaray, & Munhoz, 2018).
H.-W. Kim, Xu, and Gupta (2012) examined the relationship between price and trust in the online purchase decision and found that, by evaluating these two constructs separately, trust is more likely to influence purchase intention than price. Although some previous studies considering different forms of e-commerce have also highlighted the importance of price and trust in online shopping (Gefen, 2000; Gefen et al., 2003), the synergy effect of these two factors on online purchase decision needs more attention by managers and researchers, especially in this new online paradigm and growing phenomenon called s-commerce.
For companies operating in the online market, this topic is a strategic issue, as they must decide whether to compete with their competitors based on price or trust. Assuming that price has long been considered a key predictor in customer choice and that consumers can easily compare prices among vendors over the Internet and select cheaper alternatives, vendors could consider developing competitive pricing strategies. On the other hand, such vendors might consider developing trust-based strategies, whether by investing in building a good reputation, improving service quality, or cultivating customer satisfaction, for example. More specifically in s-commerce, S. Kim and Park (2013) highlight that building trust is more important for this kind of business because s-commerce is built on social networking sites, where consumers not only purchase products and services but also share their shopping experiences and product information.
Therefore, considering these two aspects, s-commerce firms could try to strike a balance between price and trust, pondering different weights on the two factors in their strategies. Therefore, we aim in this study to examine the relationship between prices, trust, and purchase intention in the context of s-commerce by proposing a model that explains and predicts how price advantages and trust affect Brazilian consumers' intentions in s-commerce shopping. We also identify the main antecedents of trust in order to provide new insights about those factors that influence the formation of trust in s-commerce.
This study did not focus on the specific characteristics and components present in s-commerce but in the context of s-commerce, which presupposes the presence of reviews, recommendations, and peer interaction in the websites. Therefore, in this research, we studied the consumers' perception that makes use of s-commerce tools to support their purchase decision. S-commerce, thus, is the main object of this research in which we analyzed some variables commonly used in the e-commerce studies that in the s-commerce context can influence directly or indirectly the perception of consumers about price, trust, and intention to buy on the website.
In this sense, the study contributes to the literature examining the effects of price and trust as important factors that influence online intention to buy in s-commerce. The research also offers practical insights for managers and Internet vendors with some key elements they can use to improve their firm's competitiveness in s-commerce.
The remainder of the paper is organized as follows. In second section, we review the literature on s-commerce, trust, and price (here called competitive price) as antecedents of purchasing intention. We still present some trust-correlated studies, the hypotheses, and the research model of the study. We then present the methodology and, in fourth section, we test the relationships in the model, presenting the data analysis and the main research findings. Finally, in fifth section, we conclude with a discussion of our findings and include implications for theory and practice, limitations, and directions for future research.
Social commerce background
Although there is no standard definition, s-commerce is defined as a subset of e-commerce that involves the use of social media to assist in business transactions and online transactions (Liang & Turban, 2011; Zhang & Benyoucef, 2016). Its main peculiarity is the interaction and social participation--characterized as a place where people can collaborate, obtain advice from other consumers, as well as find and compare goods and services more easily, related to characteristics, prices, and suppliers. S-commerce has three main attributes: (a) it must have social media technologies, (b) it must allow interactions between the community, and (c) it must enable execution of commercial activities (Liang & Turban, 2011; Lin et al., 2017). The presence of SNS has become a success among its users because it enhances customer participation, allows them to collect socially rich information and exchanging knowledge, resulting in a more reliable and sociable online transaction environment (B. Lu et al., 2016).
Through s-commerce, retailers can engage consumers and gather information about new products and services, as well as recommendations and sharing on social media that also affect the purchase habits of consumers. Likewise, consumers have the possibility to compare opinions (S. Kim & Park, 2013), prices, and recommendations, which can influence the decision for the realization or not of a deal. In such situations, different tools and websites for comparison of prices on the Internet have helped consumers to obtain reference prices, allowing them to judge whether the price of the product is high or low (Sullivan & Kim, 2018). Intuitively, transaction utility represents the price advantage or disadvantage of a deal relative to a reference price.
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