Mitigating risk in ecommerce transactions: perceptions of information credibility and the role of user-generated ratings in product quality and purchase intention

Although extremely popular, electronic commerce environments often lack information that has traditionally served to ensure trust among exchange partners. Digital technologies, however, have created new forms of "electronic word-of-mouth," which offer new potential for gathering credible information that guides consumer behaviors. We conducted a nationally representative survey and a focused experiment to assess how individuals perceive the credibility of online commercial information, particularly as compared to information available through more traditional channels, and to evaluate the specific aspects of ratings information that affect people's attitudes toward ecommerce. Survey results show that consumers rely heavily on web-based information as compared to other channels, and that ratings information is critical in the evaluation of the credibility of online commercial information. Experimental results indicate that ratings are positively associated with perceptions of product quality and purchase intention, but that people attend to average product ratings, but not to the number of ratings or to the combination of the average and the number of ratings together. Thus suggests that in spite of valuing the web and ratings as sources of commercial information, people use ratings information suboptimally by potentially privileging small numbers of ratings that could be idiosyncratic. In addition, product quality is shown to mediate the relationship between user ratings and purchase intention. The practical and theoretical implications of these findings are considered for ecommerce scholars, consumers, and vendors.