Consumer-perceived risk in e-commerce transactions

A major promise of the Internet is its potential for online shopping and its benefits in the form of cost reduction, for consumers and businesses alike. For example, according to Penton Research (www. penton. com), using the Web site as a marketing tool provides a compelling means for cost reduction in terms of cost per contact statistics (Internet: 0. 98, direct mail: 1. 68, telemarketing: 31. 16, tradeshows: 162). Yet the new medium is far from the true electronic marketplace of the future. This is due largely to the reluctance of consumers to engage in transactions over the Internet. In their study, Hoffman, Novak and Peralta found that consumers, on the Web, may fear providing credit card information to any commercial Web provider and that consumers simply do not trust most Web providers enough to engage in exchange relationships involving money 4. This perceived risk among consumers translates into their reluctance to use debit and/or credit card information over the Internet resulting in their disengagement from electronic transactions. Most sites on the Internet today do not focus on building and nurturing trust as part of an ongoing relationship with their customers 7, 9. Millions of consumers browse thousands of Web