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Saturday, 30 November 2013
Sunday, 2 June 2013
CASE STUDY : INVESTIGATING TRUST IN E-COMMERCE : A LITERATURE REVIEW AND A MODEL FOR ITS FORMATION IN CUSTOMER RELATIONSHIPS
JTU396E E COMMERCE ASSIGNMENT 2
As a
matter of fact, trust is the essential element in customer point of view. Any
company would be undoubtedly believed it is slowly getting the momentum and
coming through the selected e-commerce application and tools. Trust by
definition[1] in
a social context, has several connotations. Definitions of trust typically
refer to a situation characterized by the following aspects: One party
(trustor) is willing to rely on the actions of another party (trustee); the
situation is directed to the future. In addition, the trustor (voluntarily or
forcedly) abandons control over the actions performed by the trustee. As a
consequence, the trustor is uncertain about the outcome of the other's actions;
he can only develop and evaluate expectations. The uncertainty involves the risk
of failure or harm to the trustor if the trustee will not behave as desired.
According to (Lewis and Weigert, 1985; Butler, 1991; Barber, 1983) trust is a
highly complex, multi-dimensional and (Luhmann, 1979) stated that it is
context-specific phenomenon. Papadopoulou, Kanellis and Martakos (2001) stated
in their case study, trust is fast becoming the focus of many Information
Systems researcher and that trust and relationship building can be proposed by
a theoretical model for the formation of trust in the customer-business
relationship. Five categories of trust in e-commerce was identified, and
analyzed into three major dimensions, namely determinants, approaches and
consequences. (Please refer to Appendix :
Table 1). According to Papadopoulou, Kanellis and Martakos (2001), the five
categories of trust types as presented in Table 1 indicate that research on
e-commerce trust is associated with the online system/application, the vendor,
the Internet shopping process, people at both intra[2]organizational
and inter[3]organizational
level and firm trust in e-business.
Determinant
factors (Papadopoulou, Kanellis and Martakos, 2001) represent factors that
influence trust in e-commerce or the lack of it. The factors proposed to have an impact on
trust are associated with the personality of the online consumer, the system,
the information, the vendor, the transaction, the business stakeholders, and
the external environment.
The
approaches proposed to address the problem of lack of trust are mainly
recommendations and suggested guidelines to designers of Information Systems (Shneiderman,
2000) and Internet companies towards establishing partial dimensions of trust
in various contexts and do not include specific methods or processes for the
formation of trust. They involve the design of the e-commerce system interface
(Egger, 2000), the content and the range of information provided (Urban et al.,
2000) and the way it is organized and displayed, security and privacy issues
(Hoffman et al., 1999), the provision of services, fulfillment, and the
business strategy in general (Urban et al., 2000; Einwiller et al., 2000).
The
consequence of trust is clearly reflected by the diversity of determinants and
approaches suggested in the case study. It is depending on the trust type questionable
and the purpose of the case study. Furthermore, trust has been considered as a
requirement that may result in reducing consumers’ perceived risk (Cheung and
Lee, 2000; Einwiller et al., 2000).
There
are numbers of researchers that highlighted and define the categorization of
trust models namely Egger, Chung & Lee, Ambrose and Johnson, Kini &
Choobineh and Tan & Thoen ( please
refer to appendix : Table 2 ) based on four main predecessors, namely
consumer characteristic, vendor related believes, environmental characteristics
and application related characteristics. According to Papadopoulou, Kanellis
and Martakos (2001), the findings of the trust models in the Table 2, showed
that the models they describe are limited to presenting the determinants of
trust and the way they interrelate and influence its creation. As a result,
they do not propose specific methods or processes for trust formation. This is
the main reason this case study is written to address the needs of the
conceptual model for the formation of trust in business-to-consumer e-commerce
relationships. The three aspect of trust, representing its constituents, its
determinants and its development modes, have been synthesized and theoretically
interrelated, resulting in an integrated model and a vertical understanding of
how trust is formed in a relational exchange between two parties ( Please refer
to Appendix : Table 3 ).
Papadopoulou,
Kanellis and Martakos (2001) model of trust formation ( Please refer to
Appendix : Figure 1 ) has been build based on the assumption that a repetition
interaction with promise made, enabled and kept within an electronic
servicescape. According to Wanninger’s et al. (1997), a servicescape is one of
the three primary components that comprise an e-commerce information system.
The other two are the supporting infrastructure and customer database &
analytical tools to support the relationship marketing.
The
model introduced in the case study indicated that a transference process
consists of disposition to trust, institution-based trust (McKnight and
Chervany, 1996) and initial trusting beliefs. Initially, customer has a tendency
to trust others based on personality and cultural factors which is called ‘disposition
to trust’, enhanced by the situations related which is called ‘institution-based
trust’, which involves legal aspects associated with e-commerce and perceptions
regarding the security and privacy offered by the business. According to Doney
and Cannon (1997), the customer has initial trusting beliefs that have been
formed through the transference process. As a result of this, the customer is
being open to promises made by the business. Then the customer is interested
and forms a trusting intention towards it and anticipates the promise to be
enabled.
When
the servicescape allow the promise, the trusting intention need to be manifested
and this will cause the customer to accept the risk inherent in the situation
and actually depend on the promise, thus act in a trusting behavior. The
positive impact on the customer’s perceptions by keeping the promise will
definitely cause the customer to actively interact with the servicescape
considering the quality of the interaction taking place and future expectation
by the customer towards the model. According to Carlzon (1987), this is call
“moment of truth”. The service encounter is evaluated by the customer and
comparison is made by the service expected and currently received. The process
would include customer satisfaction element and reflected in the customer’s
trusting beliefs (McKnight and Chervany, 1996). ( Please refer to Appendix :
Figure 2 ).
Papadopoulou,
Kanellis and Martakos (2001) stated that trust evolves over time as the
customer engages in repeated interactions with promises being fulfilled within
the servicescape. Each time a promise is made, enabled and kept, it is
evaluated with the intentionality, the capability and the credibility process
confirming customer’s trusting beliefs in the business benevolence, competence
and credibility. Trust[4]
can be attributed to relationships between people. It can be demonstrated that
humans have a natural disposition to trust and to judge trustworthiness that
can be traced to the neurobiological structure and activity of a human brain.
The
research paper is not fully completed and need to be revised again in the
future specially in the categorization part. A further research need to be done
and gain more inputs as the research goes on continuously.
As the
time goes by, the model introduced by the case study writer would be definitely
assisting and supporting its entity discussed. The trust concept on customer
would reflected the business as a whole and the firm accordingly.
Appendix
Table 1
Table 2
Table 3
Figure 1
Figure 2
My Regional Center, Pulau Pinang
My Regional Center, Pulau Pinang
My Regional Center, Pulau Pinang is located
within the main campus of ‘Universiti Sains Malaysia’ (USM). It is a
‘huge place’ but always congested specifically traffic jam during intensive
weeks. Parking space was limited for
student. The provided transportation via the
main campus from any hostel within or outside the campus is slow service.
The Pulau Pinang regional center is become overcrowded
during intensive weeks and the same problem repeating itself time after time.
Such a big place but no one is controlling the
traffic during intensive week. All the security guards station only at the post
of entry and no one dare to play their role during traffic. Security guards is
no where to be seen patrolling the area when trouble occur. Lack of security
guards to assist a large number of students during peak time. It is always a
problem when student attending the intensive weeks where location of lectures
is congested and crowded.
Student would find it hard to park their own
vehicle because of the limited parking space. The over crowded student mostly
used their own vehicles to move around within the campus and causing chaos
situation when it related to parking time. The location of the lectures always
plays a big role as everybody tends to park as near as they can to the
location. The irresponsibility motorcyclist is taking the car parking space
which added more woes to the problem. Therefore, parking space is a big
headache during intensive weeks.
The alternative transportation was the bus and
student seldom use it as it is poor in service. Sometime it is not practical
just to bring a number of student to some location which is why the driver
always wanted to fill in at least three quarter of the bus capacity to fully
utilize the facility provided by the university. At some other time, the bus
just arrived and will not moving to its destination until the other bus arrive.
The time taken to the location intended is slightly slow as compared if the
student walk on foot. It is clear that the transportation is very poor in
service.
As we can see, my regional center, Pulau Pinang
is very congested during intensive weeks. It is a big place but not fully utillized. Parking
space is still the main problem. The alternative
transportation is not helping to solve the matter. Someone or somebody need to be looking in this matter
seriously in order to solve the problem before it getting worst.
JUE 200 USM
JUE 200 USM
CASE STUDY : ONLINE PAYMENT MARKETPLACE : GOAT RODEO
JTU 396E E-Commerce
– Assignment 1
The case study as selected above is
about online payment issues for any business transaction concerns. The so
called ‘big players’ in this payment marketplace are Apple, Google, Facebook
and Amazon which provided their respective customer with their own version of
future payment system. An alternative popular online payment surely goes to PayPal.
This entire provider objective is to provide their customer a way to pay for
the goods or services purchases online with a small fee charges. PayPal for
example, deals with the customer request by processing the transaction jointly with
the credit card companies which approaching 70% of online payments worldwide.
But the most important factor of the involvement of this big company to
participate in online marketing is the emergence of the mobile platforms of
smartphones and tablets based on the newer technologies explosion experience.
Based on the case study, it stated
that the value of online payment is about $310 billion in 2011 alone and an
increment at 12% a year is such a persuasive temptation to resist by any.
Nowadays, all are eyeing the mobile commerce[1]
which started to show impact in the United States in 2011 ignited the
fast-growing segment of the larger online payment marketplace. It’s a good
indication of how small devices can produce a big influence in the future
related transaction online. Neither cash money, credit card nor debit card
should be present in the wallet anymore as digital wallet is on its way to
break the conventional method of paying for goods and services. The revenue produced by the mobile commerce
is reaching a whooping $22 billion from the overall online payment sum stated
above and growing at 20% per year. For the customer point of view, this means a
new dimension of shopping spree is available and it is going to be much easier,
quick and safer way of implementing in the routine day. No more complicated and
fussy approach to follow such as filling name, credit card number, pin number,
address, office number and so on when a one time registration give the
solution.
It is found that mobile payment is
agreed as the best solution of keeping out any cash or card ever needed to be
brought along during any transaction done but there is not yet a mobile payment
system that are really secure and reliable to replace the conventional method.
Namely, customers still have to give all the information by entering it into a
tiny screen on their mobile phone. This is not a practical approach to cut the
time short but ones need to use PayPal to solve the problem. PayPal will
collect and save all the information and manage the transaction later on behalf
of its customer. Therefore, customer can just verify the transaction easily
without experiencing the complicated moments. The facts that PayPal controlling
almost 78% of the alternative online payment and involving itself in nearly $2
billion in mobile commerce, even without the strength of monopoly any hardware
or software used in the smartphones or android technology like Apple, Google
and RIM, it can be said that they are the front-runners in this business
worldwide. The only creditable PayPal have is the 98 million active users on
their database which others do not posses. Such as Apple, Google and RIM ( the
manufacturer of BlackBerry), their online payment system is way outdated and
uncompetitive for the customer to choose from. This is because, like Google,
they provide Google Checkout which is grown at 7% of the alternative payment
market or in other words, not popular by demand and used; Apple used Apple’s
iTunes Store which is a closed type environment of online payment available
only to iPhone or iPad registered user; and RIM have nothing similar to any of
online payment applications. Somehow, customer does not have many choices upon
accessing any online transaction by subscription nor registering to any of the
entity mention above except PayPal. Same issue goes to Amazon.com even it is
slightly differs from the three company, where they were collecting almost $1
billion in goods from their customer based online in 2010. Recently, a major
concerns floating around the business online transaction regarding the process
of providing information online at the Amazon.com into a tiny screen of mobile
devices. This is not good and perhaps could lead to decreasing revenues in the
future because customers are looking at other options or alternative available.
One of the project involving Google,
Citigroup and MasterCard are embedded NFC ( Near Field Communication[2] )
into Android Mobile Devices that would allow consumers or customers to pay
merchants by waving their smartphones in front of a reader provided by the
Verifone, the largest manufacturer of credit card readers for cash registers in
the world. The problem is, how can this solve the security measures in the
mobile commerce environment? The waving motion took place and follow ups by
entering some sort of PIN code to approve the payment which is very unsecure
method of payment online because nothing else is related to the transaction
occurred. Somebody or someone might have misuse or decoding the PIN code
easily. However, Google do not plan to implement the method in the near future
because they are concentrating of placing more ads to their registered mobile
users.
Social website such as Facebook and
twitter also in the process of creating some sort of similar application of
mobile online payment. Facebook called it Facebook credits which it can be
purchased by using the credit card, while twitter are considering their user to
frequently used their two system called Twippr or Twitpay. Both of the twitter
based application functioning by downloading the message first, and then
acknowledged the recipient, the amount and most importantly, the currency
identification before the recipient is notified regarding the transaction.
Nevertheless, both twitter systems rely heavily on PayPal to complete the life-cycle.
Again, PayPal superior influence onto mobile commerce is beyond doubt.
Even though, cell phone carrier such
as Verizon, AT&T, T-Mobile and others around the world did try to persuade
consumers to fully utilize the Isis system, which appeared to be bypassing the
credit card companies entirely, it is widely known that it is been used all
around the world respectively. However, this might threaten the credit card
business in the future if it is fully implemented.
One company called Obopay, allowing
their customer to purchase or transfer money by using mobile phone. Users can
send money to anyone with a cell phone on any wireless network. Obopay have set
a deal with Verizon, Nokia, BlackBerry, Citigroup and MasterCard. Currently,
consumers need to load their account at the Obopay website complete with the
credit card and debit card information to proceed. However, it is not practical
to worldwide because Obopay accepting only consumers from United States, India,
Kenya and Senegal. The idea is to eliminating credit cards loops so that it can
reduce transaction cost for merchants and customers and making it easier to use
the service.
According to the case study, the
future of wireless payments is assured. The prediction is within five years
from now, smartphones will replace the conventional method of carrying cash in
the wallet, for an item less than $100, and will be the prefer choice of
payment application soon. Android NFC devices show highly potential as online
payment application while PayPal remain among the big player to improve once new
technology built in the smartphones taking place.
Whatever the decision taken by the big
player mentioned in the case study, the mobile commerce would be a hit in the
near future. Anything related with the technology, software, hardware,
carriers, merchant roles or even Isis system, would be a catalyses to generate
a highly revenues to them. Consumers would be benefited by fast, convenient,
secure and reliable mobile commerce application to purchase goods or services
online. Absolutely, no complicated procedures, no waiting time, reduction cost
at the maximum level, and perhaps no more roles played by the credit card
companies in the future for any online payment in the marketplace. Anything
related with the weaknesses of the implementation of mobile commerce would have
been reduced and improved rapidly along with the emergence of new technology
which may shrinked the widely boundary marketplace into a consumer-friendly
environment sooner or later. In other words, the gap of online payment
marketplace and mobile commerce is narrowed, the system is applicable to all
and consumers will benefited from it integration.
[1] the use of cell phones to purchase
goods and services online
[2] is a set of
standards for smartphones and similar devices to establish radio communication
with each other by touching them together or bringing them into close
proximity, usually no more than a few centimeters. Present and anticipated
applications include contactless transactions, data exchange, and simplified
setup of more complex communications such as Wi-Fi. Communication is also
possible between an NFC device and an unpowered NFC chip, called a
"tag". (From Wikipedia, the free encyclopedia)
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