1. Lund School of Economics and Management
Department of Business Administration
BUSN23 Retailing and Distribution Channels
Reflection paper
How can e-tailers use trust in order to
develop their business?
Supervisor:
Veronika Tarnovskaya
Student:
Alejandro Sánchez Contreras
Date:
2014-12-16
Word count:
2.978

2. Contents
1. Problem definition..................................................................................................................... 1
2. Introduction to the company Årstiderna.................................................................................... 1
3. E-commerce barriers and the element of trust........................................................................... 1
3.1 Why is trust important for e-tailers? Consequences and benefits of trust........................... 2
3.2 How does trust work?.......................................................................................................... 2
3.3 Why is it difficult to build up online trust? ......................................................................... 3
3.4 How to build up online trust? Antecedents/Triggers of trust .............................................. 3
3.4.1 Familiarity.................................................................................................................... 4
3.4.2 Disposition to trust ....................................................................................................... 4
3.4.3 Personality-based trust, cognitive-based trust and institutional-based trust................. 5
4. What is then, the overall picture of online trust? .................................................................. 6
5. Conclusions........................................................................................................................... 7
References................................................................................................................................. 8

3. 1
1. Problem definition
With the development of Internet there has been a growing number of companies that
base their business on the net (Yingchan & Ghose, 2003). Particularly high has been the
increase in online food sales, reaching 30% per year and representing about 6% to 8%
of the total online shopping (Kingham, 2014). However, markets like Sweden are still
below the average (ibid). The reasons for this could be consumers who prefer to see and
touch the products or perhaps others might prefer to talk to the seller in person. In any
case, one of the most important problems that has been addressed in the literature is the
lack of trust when purchasing products online (Gefen, 2000).
Therefore, the topic of this paper explores the concept of trust in online retailing (or e-
tailing) through the question: how can e-tailers use trust in order to develop their
business? To answer this question, an analysis of the difficulties, antecedents,
consequences and benefits of online trust has been done in this paper based on recent
literature. Furthermore, the paper is complemented by the case of the e-commerce
organic food company Årstiderna presented in a lecture at Lund Unversity in Sweden.
In this paper, trust has been studied from the perspective of the consumer rather than
from the business-to-business one.
One of the aims of this paper is to provide a deeper understanding of trust as a key
element that can act as a driver or as a barrier (lack of trust) of e-commerce. Moreover,
it also intends to provide specific actions through examples that can tackle the addressed
problems based on the case of Årstiderna.
2. Introduction to the company Årstiderna
According to Kingham (2014) Årstiderna is an on an online organic food retailer
inspired by the company Riverfood and located in Sweden and Denmark. The orders
from customers are exclusively done online and the food is delivered in boxes directly
to their addresses. The transporters are part of the company and they have the door
codes of some customers’ buildings in order to avoid delivery problems when the
customer is not at home. Årstiderna has no bricks-and-mortar stores and the main
personal interaction with customers is done through promotion campaigns on real
markets in cities. Their main competitors are Ekoladan, Mossagarden (which uses drop-
off points instead of home delivery), COOP online and Ecoviva.
3. E-commerce barriers and the element of trust
E-commerce is a type of “remote ordering channel” (Zentes, Morschett & Schramm-
Klein, 2011, p. 35), meaning that there is usually no direct contact between the
companies and the customers. According to Ha & Stoel (2009) e-commerce has been
growing constantly during the last years, and it is influenced by various factors like
security regarding payments (Gefen, 2000; Allred, Smith, & Swinyard, 2006), privacy

4. 2
and reliability (Gefen, 2000) and perceived risk among other factors (Mansour, Kooli,
& Utama, 2014). However, trust (Ha & Stoel, 2009; Gefen, 2000; McKnight, &
Chervany, 2002); Awad, & Ragowsky, 2008) and lack of trust (Bhattacherjee, 2002;
Chen & Barnes, 2007; Kelley, Rhinelander, & DeMoulin, 2001; Kim, & Benbasat,
2003) are of particular importance and have been addressed by many authors in the
literature. These factors, despite they might be also somehow present in the “offline
world” (i.e. traditional retailers), they are more influential for e-tailers as it has been
analyzed in this paper.
3.1 Why is trust important for e-tailers? Consequences and benefits of trust
To answer this question, it is essential to understand the consequences of online trust
(Mansour, Kooli, & Utama, 2014). First of all, the essence of the problem of trust is
directly related to purchase intention (Gefen, 2000; Mansour, Kooli, & Utama, 2014)
and therefore it affects directly the sales of e-tailers. In this line, Isaac and Volle (2013)
point out that, in general, online demand has been below the offer, which means that,
despite the opportunities are easily available on the Internet, many people have still not
stepped forward and there is still place for potential and improvement. For example
only 1% of total Swedish food sales is done online compared to 7% in UK (Kingham,
2014).
A second consequence of online trust has to do with perceived risk (Kim, Ferrin & Rao,
2008; Yoon, 2002), which a customer would calculate based on the probability of losing
(Rousseau, Sitkin, Burt & Camerer, 1998). Therefore, according to Grazioli and
Jarvenpaa (2000) high risk perception means that the customer will be less willing for
example to share their personal information and lastly to purchase.
These two consequences of online trust (purchase intention and perceived risk) have
major consequences for an e-tailer like Årstiderna, since they have almost only online
presence (Kingham, 2014). For this company a big problem could be the lack of
communication regarding the organic procedure of the food, resulting in customers
being not well informed and probably more reluctant to trust the company.
On the other hand, one of the main benefits of trust is that people are willing to
participate in activities even when there is certain risk and to adopt new technologies
(Fukuyama, 1995), which is particularly relevant for e-commerce (Gefen, 2000).
Moreover, trust reduces complexity in interactions, thus facilitating intentions that lead
to behaviors (ibid). In the case of Årstiderna, increasing trust would have a direct impact
on the sales of their organic food from their website.
3.2 How does trust work?
According to Gefen (2000), trust is based on expectations that people create from
passed experiences. So, when a certain behavior is observed in the interactions with an
individual, we automatically expect that the other person will continue to behave in the
same way. Trust can take two different directions. On the one hand, trust is a positive
factor that reduces people’s uncertainty about other people’s actions (Kramer, 1999).

5. 3
On the other hand, lack of trust would lead to people considering multiple scenarios
where the unexpected happens (Gefen, 2000).
In our empirical case, a potential online customer that has already bought organic
products from Årstiderna will expect that the same vegetables he or she bought in the
last purchase will be delivered in the same conditions, with the same quality and within
the same delivery time. The lack of trust would make customers afraid of vegetables
delivered in bad conditions or not in time, which would make the online purchasing
more complex and would result in customers deciding not to buy online. Moreover,
since Årstiderna positions its products as not having neither pesticides nor any other
hazardous chemicals, lack of trust could be based on the belief that its products are not
as organic as they promote.
3.3 Why is it difficult to build up online trust?
One of the problems of trust in e-commerce is that continuous (and personal)
interactions usually do not take place on the virtual world, unlike in the real one,
making it difficult to build up trust (Gefen, 2000). For example, Årstiderna operates
online and almost the only regular personal interaction the customer has with the
company is with the transporters that deliver the food.
To overcome this problem, Årstiderna is actually planning to try door-selling in the city
of Lund (Kingham, 2014), which, despite meaning higher costs, will probably have a
positive impact on customers’ trust. Also, Årstiderna currently do events on the streets
(the so called street kitchens) so that people can get to know them and try samples of
their products (ibid). Another solution with relatively low cost could be doing phone-
selling and satisfaction calls in which there is certain level of human interaction. A more
costly option could be opening a store where people could receive information about the
products, see and touch them, ask questions and in general interact with the personnel.
The aim would be to create those personal interactions that people sometimes need in
order to trust a company before purchasing online, as well as to build up the brand
around a physical store (Andersson, 2014). In fact, they could use the store as a drop-off
point, somehow similar to what their competitor Mossagarden do. This delivery system
has the advantage (regarding trust) that customers do not have to share their address and
they can interact more with the company in the drop-off point, as well as with other
customers. Moreover, it could be interesting in order to raise the awareness of the
company through “offline” presence.
3.4 How to build up online trust? Antecedents/Triggers of trust
Building up trust is a complicated process, since it requires considering a variety of
factors that have been analyzed below. Hence, it is necessary to know what the
antecedents or triggers of trust are (Mansour, Kooli, & Utama, 2014), so that e-tailers
can take actions that gain trust from potential and current customers.

6. 4
3.4.1 Familiarity
Familiarity, which is a positive factor and a precondition for building up trust, does not
require personal interactions and it is therefore more suitable to be exploited in e-
commerce (Luhmann, 1979). To understand familiarity, Gefen (2000) explains it as “an
understanding of the current actions of other people”, unlike trust, which relates to
“beliefs about the future actions of other people” (p.3). Despite being different, as the
author explains, both elements are related and influence each other, but trust is normally
more important for e-commerce since it concerns risk and security. Nonetheless,
familiarity has also a negative side that can jeopardize trust if the customer had a
negative experience (Gefen, 2000).
Applying this to our case, for instance, a potential customer of Årstiderna who has
entered their website a few times will have more familiarity (knowledge) about how to
look for the different organic food, prices and how to order it on their website; and trust
would be represented by the belief that ordering a box of organic food with a credit card
will not imply the risk of someone misusing his or her bank information or personal
data like the door code they share with Årstiderna to deliver the food into the buildings.
An example of negative familiarity can be a customer who finds Årstiderna’s online
catalogue difficult to understand. Knowing this, Årstiderna could design their website in
a format that people already know, like a big player (e.g. how do people order products
from Amazon?) or a successful company within the sector (e.g. Riverfood). A good
alternative could be to sell their food through a big player like Google shopping,
Amazon or Alibaba, since they are worldwide recognized, they have a good reputation
and they have very good processes (Andersson, 2014). These initiatives could increase
familiarity and trust, leading to people being more willing to purchase the food online
and even attracting customers from the competence.
3.4.2 Disposition to trust
It is also necessary to know that disposition to trust is another trigger (or antecedent) of
trust (Gefen, 2000). This trigger is said to be present in people after many years of
experience (Rotter, 1971) and is related to the general concept of trusting humanity
(McKnight, Cummings & Chervany, 1998). It therefore relates to the concept of societal
trust (in contrast with individual trust) in which people and institutions are related
(Mansour, Kooli, & Utama, 2014). This suggests that a customer’s trust is not only the
result of his or her own experience, but also an outcome from the society he or she lives
in. So, despite the efforts of some e-tailers to gain trust from customers, if they already
have a preconception of trust learnt in their society, it will be harder for e-tailers to be
perceived as trustworthy.
In the case of Årstiderna, it would be sensible to research Swedish and Danish
customers’ willingness to trust online companies as well as search what institutions
support the development of e-commerce. However, disposition to trust seems to be a
factor difficult to influence by a single company.

7. 5
3.4.3 Personality-based trust, cognitive-based trust and institutional-based trust
Mansour, Kooli, & Utama, (2014) collect from the literature various antecedents of trust
and classifies them into “personality-based trust, cognition-based trust, and institutional-
based trust” (p.4). Each of these three factors has one or more dimensions that are
explained below and applied to the case of Årstiderna in order to show how the
company can face them.
a) The first antecedent, personality-based trust, has three dimensions and these can be
easier understood from the perspective of the online customer and applied directly to
e-commerce through questions:
i. Credibility: do I believe that the company has the expertise to respond my
order?
ii. Integrity: is the company interested in my welfare and is looking for a common
goal?
iii. Benevolence: will the company respect the confidentiality of information and
ensure the safety of the transaction?
Firstly, regarding credibility, Årstiderna could emphasize on their website values like
professionalism, dedication, service and the experience of their employees. Moreover, if
they manage to be selected as a best practice in the industry and receive an award for
that, it could be used as a driver of credibility and consequently of trust.
To tackle integrity, Årstiderna could be promoted with a slogan that addresses their
concern for their customers’ health and welfare, and even include these values in their
mission. Furthermore, they could promote interaction among customers on their website
through blogs and forums, so that they could write each other, share experiences and
even suggestions for making recipes, therefore showing interest in them. In fact,
Årstiderna currently sends a newsletter with recommendations to their customers via e-
mail. In other words, they could further develop their virtual community for customers
and the company (Kingham, 2014).
The benevolence dimension about confidentiality and safety could be faced, for
instance, by showing on their website that they comply with certain online payment and
information security procedures (for example, including a recognized system like
PayPal as a possibility to pay). Moreover, they could share comments and videos from
real customers on their website stating how the overall experience with ordering the
food was, so that people feel that the company is trustable. This latter suggestion is
related to the so called word-of-mouth, which is a driver of online trust (Fingar, Kumar
& Sharma, 2000; McWilliams, 2000). Therefore, to overcome the benevolence
dimension, it is important to offer good and clear information (Andersson, 2014). For
example, the website could briefly explain the steps to follow in order to purchase the
food, how the process of delivery looks like, send a confirmation e-mail and offer to
follow up or track the delivery until it reaches the customer.
b) The second antecedent of trust is cognitive-based trust and is based on the knowledge
people have or get from friends or family before buying online (Li, Hess & Valacich,

8. 6
2008). Furthermore it is said to be affected by the reputation of an e-tailer (ibid;
McKnight, Choudhury & Kacmar, 2002; Jarvenpa, Tractinsky & Saarinen, 1999),
which is also formed by experiences and information coming from close friends or
relatives (Li, Hess & Valacich, 2008). Moreover, cognitive-based trust is also related
to the costs generated if the company deceives the customer (Shapiro, Sheppard &
Cheraskin, 1992), meaning that the customer calculates the possible costs if this
situation occurs.
The former initiative of word-of-mouth would also help to build up reputation,
especially for new customers who have no information and depend on third-people’s
opinions and experiences. To tackle the problem of customers thinking of the possible
costs of being cheated, it could be helpful to include some guarantee in their offer. For
example, “If your food is not delivered on time, get 50% off in your next order”.
Nonetheless, this is an example and a clear cost calculation should be properly made
beforehand by the company.
c) The third antecedent of trust is institutional-based trust, which means institutions
providing trust through legal conditions and norms (Bachmann and Inkpen, 2011).
This is related to Gefen’s (2000) statement that rules reduce complexity and
therefore increase trust. According to Mansour, Kooli, & Utama, (2014),
institutional-based trust encompasses situation normality as an influential factor of
trust that refers to people’s belief that the situation (in this case, the online purchase)
has an appropriate order or is normal (Baier, 1986).
To improve trust based on rules, procedures and legislation it could be sensible for
Årstiderna to follow certain quality processes established by recognized organizations
(e.g. European Union) to ensure that the food Årstiderna sells is organic and safe. Then,
these certifications could be shown on labels stuck to the products. However, it would
be necessary to show the certifications on both the website and on the products
delivered.
Summarizing, it is important to use these triggers to build up trust, since a relevant
observed online consumer behavior is that they search on the Internet but most of them
do not buy due to a lack of trust (Johnson, 2007).
4. What is then, the overall picture of online trust?
The consequences and antecedents of trust have been analyzed, obtaining an overall
picture of this factor. Figure 1 shows how combining these elements it is possible to
increase online trust.

9. 7
5. Conclusions
Online trust is a vital element to develop e-tailers’ business since it directly relates to
purchase intention. One of the main problems of building up online trust is the general
lack of personal interactions, which can be somehow overcome. However, if trust is
achieved it will reduce the complexity of the online interaction for the customers,
reduce their perceived risk and facilitate their final purchase decision. So, responding to
how can e-tailers use trust in order to develop their business?, first it is essential to
know and understand the antecedents or triggers of trust and their dimensions, as well as
implement specific actions that deal with them. Moreover, combining these actions in
an overall trust strategy will probably have a higher impact on trust than just facing
them separately. Lastly, it is important to create a long-term strategy that maintains and
increases trust gradually.
ANTECEDENTS/TRIGGERS OF
ONLINE TRUST
ACTIONS TO INCREASE
ONLINE TRUST
CONSEQUENCES OF
ONLINE TRUST
Familiarity
Disposition to trust
Personality-based trust
Cognitive-based trust
Institutional-based trust/
rules
· Design an easy website familiar to
customers (e.g. similar to a big player)
· Open a store
· Do street events
· Sell through big player (e.g. Amazon)
· Sell through phone and do satisfaction calls
· Show expertise/experience
· Build up a strong virtual community
· Rely on popular/recognized security And
payment Systems (e.g. PayPal)
· Build up reputation (word-of-mouth)
· Share customers’ experiences through
videos and comments
· Offer guarantee
· Use recognized quality processes
· Gain certifications or industry awards
· Show labels complying with legislation
· Study people’s general willingness to trust
Reduced complexity
for the customer
Reduced perceived
risk for the customer
Increased purchase
intention
Source: Bachmann and Inkpen (2011); Fingar, Kumar & Sharma (2000); Greffen (2000); Jarvenpa, Tractinsky & Saarinen (1999); Kim, Ferrin & Rao (2008); Li, Hess & Valacich
(2008); Luhmann (1979); Mansour, Kooli, & Utama (2014); McKnight, Choudhury & Kacmar (2002); McKnight, Cummings & Chervany (1998); McWilliams (2000); Shapiro,
Sheppard & Cheraskin (1992); Yoon (2002).
Figure 1. The Process of Building up Trust

10. 8
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