The key to worldwide success for online businesses
Scepticism prevents consumers from buying cheaper goods from online stores in other countries. Getting your site translated is part of the solution.
Although the Internet has wiped out geographical distance to shops in other countries, psychological barriers remain.
Many of us prefer more expensive stores in our own country.
A new Swedish study demonstrates that online stores have much to gain by increasing the confidence of customers in other countries.
Usability and reputation
There is much research on domestic e-commerce. Researchers know what makes a local brand or site appear trustworthy.
But there has been little research on why we trust some foreign online stores and not others. When the consumer considers buying goods from foreign suppliers, other considerations apply.
Psychological distance
Consumers associate purchases from foreign sites with uncertainty. We may refrain from shopping, even though the prices are much lower than on domestic sites.
Business economist Aswo Safari has studied how consumers manage their uncertainty.
In his thesis he describes how consumers learn to deal with uncertainty when they want to order goods from a foreign supplier.
This is based on both knowledge and emotions.
“Known brands will reduce the psychological distance,” Safari says.
“But it does not matter if your store does not seem safe.”
Other laws apply
International online stores operate under laws and rules that may be unfamiliar. The perception of culture, political system, norms and values of the foreign country may also influence the decision.
Safari found that, for a Swedish consumer, the psychological distance to an Australian online store is smaller than to a Russian one.
“The companies cannot change the perception of the country. Therefore, they should focus on reducing customer uncertainty in relation to the company itself,” Safari says.
“They can do this by offering well thought out websites that make the purchase easier”, he adds.
Safari is a doctoral candidate at the business school at Uppsala University.
Secure payments are essential
Unless the company is internationally well known, Swedish consumers are often hesitant to order anything. If the store does not offer safe payment methods – such as credit cards or PayPal, the customer risk losing their money.
“A third party that ensures money transfer is essential for confidence in lesser-known companies”, the researcher explains.
Language is important
The research also revealed that trust increases if sites are in the costumer's own language.
“But it does not help if language is riddled with errors. This increases uncertainty and thus psychological distance”, says Safari.
To provide a phone numbers to a support line is also important, according to Safari. And, of course, that the customers get answers in an understandable language.
Terms of delivery
Consumers need detailed information about products, prices and delivery to develop confidence.
If their expectations are met, they may enter into long-term customer relationships with the online store.
The study was based on interviews, focus group studies and questionnaires.
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Read the Norwegian version of this article at forskning.no
Translated by: Lars Nygaard
