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Channel: International Journal of Electronic Commerce

Consumer Responses to SMS Advertising: Antecedents and Consequences

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Mobile phone advertisements, in the form of text messages (SMS, or short message service), have been recognized as an important form of product promotion. The purpose of this paper is to investigate factors that influence the effectiveness of SMS advertising by using a hierarchy of effects approach. We employ a simulated experiment with 736 respondents to examine how consumers react to SMS advertisements and identify factors that influence their attitude toward the ad, their attitude toward the brand, and their purchase intention. Perceived ad credibility, attitude toward mobile advertising, message appeal, argument quality, incentive, product involvement, and interactivity were found to be antecedents of the attitude toward the ad. Moreover, there is a clear link between attitude and behavioral intention. The study is among the first to provide an experimental-based assessment and a unified model linking consumer attitudes toward mobile text ads with brand attitudes and purchase intentions.

  • Content Type Journal Article
  • Pages 105-136
  • DOI 10.2753/JEC1086-4415180104
  • Authors
    • Dimitris A. Drossos, Department of Information and Communication Systems Engineering, University of the Aegean, Greece
    • George M. Giaglis, Department of Management Science and Technology, Athens University of Economics and Business, Greece
    • Pavlos A. Vlachos, ALBA Graduate Business School, American College of Greece
    • Efpraxia D. Zamani, Department of Management Science and Technology, Athens University of Economics and Business, Greece
    • George Lekakos, Department of Management Science and Technology, Athens University of Economics and Business, Greece

Introduction to the Special Issue: Business Value Creation Enabled by Social Technology

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Viewing social commerce as settings that offer users an electronic commerce platform to specifically support participation and co-creation activities, we present five rigorously conducted empirical research studies that quantitatively measure business value contributions generated from consumer co-creation activities. The studies are based on business data from five different social commerce settings: a social gaming site, an e-book recommendation system, a social news site, a social network fan page, and a social buying platform. The specific co-creation activities examined consist of, respectively, user collaboration in playing online games, user-driven book recommendations, implicit relationship building in social network communities, online discussions in a consumer brand community, and consumer coordination in social shopping.

  • Content Type Journal Article
  • Pages 5-10
  • DOI 10.2753/JEC1086-4415180200
  • Authors
    • Karl R. Lang, Zicklin School of Business, Baruch College, City College of New York
    • Ting Li, Rotterdam School of Management, Erasmus University, the Netherlands

Valuation of Participation in Social Gaming

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This study examines the value of the time that a user spends to participate in a social game. We focus on how a massive multiplayer online role-playing game (MMORPG) vendor can establish prices to encourage participation and retain its players. We estimate value through an application of the hedonic pricing model and analyze a data set for an MMORPG in Korea. The results permit us to estimate the value of game-playing time in monetary terms. Based on our empirical results, we propose an economic model and conduct numerical simulation to show how a game vendor can apply differential pricing in this context. This enables us to design a pricing scheme to maximize a game vendor's profit. Our study affirms the long-standing finding that building network effects associated with other game players' participation is a critical source of benefits for the vendor. Going beyond this, we also find it is appropriate to use differential pricing, by subsidizing a participant's game play initially and then charging more aggressively to extract the available consumer surplus over the player's life cycle in the game, in order to reinforce a vendor's ability to maintain a healthy number of game participants.

  • Content Type Journal Article
  • Pages 11-50
  • DOI 10.2753/JEC1086-4415180201
  • Authors
    • Kwansoo Kim, Graduate School of Business, Seoul National University
    • Byungjoon Yoo, College of Business Administration, Seoul National University
    • Robert J. Kauffman, School of Information Systems, Singapore Management University

From Accuracy to Diversity in Product Recommendations: Relationship Between Diversity and Customer Retention

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Recommending diverse products to consumers is a new strategy for the next generation of recommender systems. However, no existing studies have empirically identified the impact of product diversity on consumer behavior. The aim of this study is to explain how product category diversity affects customer retention rates. To answer this research question, we examine how the number of product categories purchased by consumers is related to customer retention rates at a large digital content distributor. We use panel data consisting of product characteristics, purchase transactions, and customer retention rates from the company. Through segment-level and individual-level panel data analyses, we find that purchase quantity is positively associated with customer retention rates, and that variety of purchased digital content categories is positively associated with customer retention rates. That is, customers who have purchased digital content from multiple categories are more likely to stay longer than those who purchased digital content from a single category or from fewer categories. Put differently, as a complement to the conventional wisdom that just recommending products with similar features that a customer values highly (i.e., similar content from the same category) is important, our results imply that recommending products with different features (i.e., different content across different categories) is also important.

  • Content Type Journal Article
  • Pages 51-72
  • DOI 10.2753/JEC1086-4415180202
  • Authors
    • Sung-Hyuk Park, New York University's Stern School of Business
    • Sang Pil Han, Information Systems Department, City University of Hong Kong

Identifying Implicit and Explicit Relationships Through User Activities in Social Media

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Social commerce has emerged as a new paradigm of commerce due to the advancement and application of Web 2.0 technologies including social media sites. Social media sites provide a valuable opportunity for social interactions between electronic commerce consumers as well as between consumers and businesses. Although the number of users and interactions is large in social media, the social networks extracted from explicit user interactions are usually sparse. Hence, the result obtained through the analysis of the extracted network is not always useful because many potential ties in the social network are not captured by the explicit interactions between users. In this work, we propose a temporal analysis technique to identify implicit relationships that supplement the explicit relationships identified through the social media interaction functions. Our method is based on the homophily theory developed by McPherson, Smith-Lovin, and Cook [31]. We have conducted experiments to evaluate the effectiveness of the identified implicit relationships and the integration of implicit and explicit relationships. The results indicate that our proposed techniques are effective and achieve a higher accuracy. Our results prove the importance of implicit relationships in deriving complete online social networks that are the foundation for understanding online user communities and social network analysis. Our techniques can be applied to improve effectiveness of product and friend recommendation in social commerce.

  • Content Type Journal Article
  • Pages 73-96
  • DOI 10.2753/JEC1086-4415180203
  • Authors
    • Christopher C. Yang, College of Computing and Informatics, Drexel University
    • Xuning Tang, Drexel University
    • Qizhi Dai, LeBow College of Business, Drexel University
    • Haodong Yang, College of Computing and Informatics, Drexel University
    • Ling Jiang, College of Computing and Informatics, Drexel University

Corporate Twitter Channels: The Impact of Engagement and Informedness on Corporate Reputation

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We examine communication via a corporate Twitter channel and its effects on corporate reputation. We identify the importance of user engagement and informedness in explaining corporate reputation and examine three design factors that likely affect user engagement in a corporate Twitter channel. We conduct an exploratory 2 x 2 x 2 experiment among Twitter users to collect data. We find that the depth of the relationship among users, the level of corporate involvement, and the purpose of the channel interactively influence user engagement. Our findings suggest that deeper relationships among users of a corporate Twitter channel lead to higher user engagement when the level of corporate involvement with the channel is high and when the channel has a specific purpose, but not when the level of corporate involvement is high and the channel has a generic purpose. Surprisingly, when the channel has a generic purpose, a high degree of corporate involvement actually decreases user engagement. This finding implies that, under certain circumstances, a lower degree of corporate involvement in a social media channel may be more desirable. We also find that channel credibility positively influences user informedness. This is the first study that examines the dynamics of communication through a corporate Twitter channel. It contributes to the previous research related to social media by identifying engagement and informedness as two major factors that influence firms' reputation. Our research can help marketing and social media managers to decide on channel design aspects, such as whether to require users to register with an identity or to allow anonymous participation, whether to allocate dedicated employees to respond to user requests, and whether to set up different channels for different purposes.

  • Content Type Journal Article
  • Pages 97-126
  • DOI 10.2753/JEC1086-4415180204
  • Authors
    • Ting Li, Rotterdam School of Management, Erasmus University, the Netherlands
    • Guido Berens, Corporate Communication Centre at Rotterdam School of Management, Erasmus University, the Netherlands
    • Maikel de Maertelaere, Rotterdam School of Management, Erasmus University, the Netherlands

Social Buying: The Effects of Group Size and Communication on Buyer Performance

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Viewing social communication on group-buying platforms as a new form of IT -enabled coordination mechanisms, we examine the impact of group size and communication capacity on buyer performance on group-buying platforms. Using an economic experiment, we found that although larger groups were able to extract moderately higher surplus on average than smaller groups, there was also a negative impact of group size on group coordination for time to task completion. Interestingly, when a private communication channel was introduced for buyers, it actually lowered group surplus. We explain this unexpected finding as caused by the increased task complexity that arises from the additional needs for information processing of the exchanged messages. In general, adding communication capacity slowed down task completion, and this effect was stronger for larger groups than smaller ones. Our study suggests that business managers of group buying sites should be concerned about both the level and the kind of communication tools they want to offer and they need to be mindful that larger buyer groups may need different kinds of communication support from those needed by smaller groups.

  • Content Type Journal Article
  • Pages 127-157
  • DOI 10.2753/JEC1086-4415180205
  • Authors
    • Alexander Pelaez, Zicklin School of Business, Baruch College, City University of New York
    • Martin Y. Yu, IS&M team at the School of Information Systems, Singapore Management University
    • Karl R. Lang, Zicklin School of Business, Baruch College, City University of New York

Editor's Introduction


Search Engine Advertising Effectiveness in a Multimedia Campaign

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Search engine advertising has become a multibillion-dollar business and one of the dominant forms of advertising on the Internet. This study examines the effectiveness of search engine advertising within a multimedia campaign, with explicit consideration of the interaction effects between search engine advertising and television and banner advertising. An advertising tracking study with about 300 respondents interviewed before and about 4,700 respondents interviewed after the advertising campaign examines the effects on four consumer metrics: advertising awareness, brand awareness, brand image, and brand consumption. We estimate advertising effectiveness and control for correlations across the four ordinal response metrics using a multivariate ordered probit model. The results show that search engine advertising has significant effects on several consumer metrics, even among consumers who do not click on the sponsored advertisement. Television advertising also affects the consumer metrics. However, a negative interaction effect emerges between search engine advertising and television advertising. Banner advertising exerts a positive impact, but only in combination with television advertising. These substantial interaction effects indicate that firms must consider the investments in various media channels simultaneously when they design multimedia campaigns.

  • Content Type Journal Article
  • Pages 7-38
  • DOI 10.2753/JEC1086-4415180301
  • Authors
    • German Zenetti, Marketing Institute, Humboldt-University Berlin
    • Tammo H. A. Bijmolt, Faculty of Economics and Business Administration, University of Groningen, the Netherlands
    • Peter S. H. Leeflang, University of Groningen
    • Daniel Klapper, Institute of Marketing at the School of Business and Economics, Humboldt-University Berlin

Budget Planning for Coupled Campaigns in Sponsored Search Auctions

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Budget-related decisions in sponsored search auctions are recognized as a structured decision problem rather than a simple constraint. Budget planning over several coupled campaigns (e.g., substitution and complementarity) remains a challenging but important task for advertisers. In this paper, we propose a dynamic multicampaign budget planning approach using optimal control techniques, with consideration of the substitution relationship between advertising campaigns. A three-dimensional measure of substitution relationships between campaigns is presented, namely, the overlapping degree in terms of campaign contents, promotional periods, and target regions. We also study some desirable properties and possible solutions to our budget model. Computational simulations and experiments are conducted to evaluate our model using real-world data from practical campaigns in sponsored search auctions. Experimental results show that (1) our approach outperforms the baseline strategy that is commonly used in practice; (2) coupled campaigns with a higher overlapping degree in between reduce the optimal total budget level, then reduce the optimal payoff, and reach the budgeting cap earlier than those with a less overlapping degree; and (3) the advertising effort can be seriously weakened by ignoring the degree of overlapping between campaigns.

  • Content Type Journal Article
  • Pages 39-66
  • DOI 10.2753/JEC1086-4415180302
  • Authors
    • Yanwu Yang, Internet Sciences and Economic Computing research group at the School of Management, Huazhong University of Science and Technology, China
    • Rui Qin, State Key Lab of Management and Control for Complex Systems, Institute of Automation, Chinese Academy of Sciences
    • Bernard J. Jansen, College of Information Sciences and Technology, Pennsylvania State University
    • Jie Zhang, State Key Lab of Management and Control for Complex Systems, Institute of Automation, Chinese Academy of Sciences, Beijing
    • Daniel Zeng, Department of Management Information Systems, University of Arizona

Beyond the Credibility of Electronic Word of Mouth: Exploring eWOM Adoption on Social Networking Sites from Affective and Curiosity Perspectives

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Social networking sites (SNSs) are one of the Web 2.0's most utilized services, and the influential force of electronic word of mouth (eWOM) on SNSs deserves our unequivocal attention. This study aims to explore how users of SNSs adopt information embedded in eWOM reviews shared by other users. Using the stimulus-organism-response model and affect-as-information theory, we devised and tested a theoretical framework linking both a cognitive path and an affective path to approach eWOM adoption on SNSs. Two curiosity constructs—informational deprivation epistemic curiosity (D-EC) and interest-type epistemic curiosity (I-EC)—are regarded as moderators of the cognitive path and the affective path, respectively. Data collected from 445 respondents support all of our hypotheses. The results show that beyond the conventional cognitive path (cognitive stimuli and the credibility of eWOM), the affective path (affective stimuli and arousal) can also contribute to eWOM adoption. We also find that SNS users focus on different stimuli of SNSs, depending on their levels of D-EC and I-EC. Our findings provide new perspectives to SNS designers and users on how to manage eWOM reviews on SNSs.

  • Content Type Journal Article
  • Pages 67-102
  • DOI 10.2753/JEC1086-4415180303
  • Authors
    • Yu-Hui Fang, Department of Accounting, Tamkang University, New Taipei City, Taiwan

Assessing Strategic Behavior in Name-Your-Own-Price Markets

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Name your own price (NYOP) is an interactive pricing mechanism in electronic commerce that lets both buyers and sellers influence the selling price of a product. Until now, research has focused mainly on optimizing either the buyer's or the seller's strategy, without considering learning effects or interactions between the two sides in the process. However, these aspects are vital: If participants behaved as game theory suggests (i.e., anticipating their counterpart's actions), buyers would place their bids very close to their assumption about the seller costs. In the long run, this may lead to deals at low prices, leaving sellers little surplus and thus no incentive to sell via NYOP. In this paper, we present a game-theoretical model that incorporates interactions between buyers and sellers as well as learning effects. We assess its applicability in a laboratory experiment simulating a common NYOP design. We find that sellers quickly learn to set lower reservation prices, which ultimately increases the total surplus. Buyers, realizing that they can close deals at lower prices, place lower bids over time. Their bids are based mainly on their knowledge of the seller's costs, not on their own willingness to pay. However, buyers are risk averse in that they prefer to settle a deal rather than break it off. These findings are good news for NYOP sellers and show that NYOP can be a sustainable pricing mechanism even in the long run.

  • Content Type Journal Article
  • Pages 103-124
  • DOI 10.2753/JEC1086-4415180304
  • Authors
    • Sebastian Voigt, Chair of Information Systems—Electronic Markets, TU Darmstadt, Germany
    • Oliver Hinz, Chair of Information Systems—Electronic Markets, TU Darmstadt, Germany

Managing Service Quality in Multiple Outsourcing

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Service operations, such as call centers and various business processes, are often outsourced by e-commerce companies and others to offshore locations for many operational reasons, including cost savings. The trade-off these companies face is lack of control over the service quality, which has affected customer satisfaction in many cases. When a customer's call is routed to a third-party call center rather than handled by the firm itself, the perception of quality loss could be a source of customer dissatisfaction. The problem intensifies when multiple call centers are involved. In our analytical model, the firm uses a contract for the allocation of quantity to motivate the two suppliers to improve their quality. Our results show that such a contract can induce an improvement in service quality in the market. In this way, the outsourcing firm's customers who use the call centers are assured of a higher level of consistent quality even if their calls are routed to one of the third-party call centers. We present analytical results on the optimal policies of both the buyer and the suppliers in a two-supplier market. We also study a more realistic asymmetric information case in which the buyer does not know the value of the suppliers' cost parameter and the buyer has to design a contract under information asymmetry. We also present numerical results. The paper contributes to theory by providing a game-theoretic model for a two-supplier outsourcing case with and without information asymmetry in which a new volume allocation strategy is proposed. The results provide practical guidelines to an outsourcing firm for ways to manipulate market variables to influence the suppliers and obtain higher service quality and profit levels.

  • Content Type Journal Article
  • Pages 125-149
  • DOI 10.2753/JEC1086-4415180305
  • Authors
    • Guangliang Ye, Hanqing Advanced Institute of Economics and Finance, Renmin University of China
    • Xiaowei Zhu, West Chester University of Pennsylvania
    • Samar K. Mukhopadhyay, Graduate School of Business, Sungkyunkwan University, Korea

Introduction to the Special Issue Information Technology in Retail: Toward Omnichannel Retailing

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The increased deployment of new technologies such as smart mobile devices and social networks and the growing importance of in-store technological solutions create new opportunities and challenges for retailers. As the line between online and physical channels is blurred, a new approach to channel integration is emerging—the omnichannel, which aims to deliver a seamless customer experience regardless of the channel. This introduction presents the results of focus group discussions on the role of information technology in retail, new business models, and the future role of traditional stores as e-commerce advances. Key issues that emerged from the discussion include the need for channel integration, the impact of mobile technologies, the growing role of social media, the changing role of physical brick-and-mortar stores, the need to respond to diverse customer requirements, the balance between personalization and privacy, and, finally, supply chain redesign. The four papers in this Special Issue explore these themes further.

  • Content Type Journal Article
  • Pages 5-16
  • DOI 10.2753/JEC1086-4415180400
  • Authors
    • Wojciech Piotrowicz, Faculty of Management, Saïd Business School and Wolfson College, University of Oxford
    • Richard Cuthbertson, Saïd Business School, University of Oxford, UK

Engineering the Value Network of the Customer Interface and Marketing in the Data-Rich Retail Environment

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In this paper we use a mixed-methods engineering approach to analyze how traditional retailers can use mobile commerce services to enable data-driven marketing and thus compete with the pervasive end-customer ownership of companies controlling the mobile channel. The paper provides the first systematic analysis of the implications of the virtual world market players Apple, Google, Facebook, eBay/PayPal, and Amazon on traditional retailers' business. We use case study research to identify the elements that are required for and suitable to such a strategy. In a second step, we use design science in order to identify and develop the necessary value creation roles, their activities, and the value flows between them. The paper provides two major outcomes: (1) a set of 12 building blocks for generating and applying customer data for traditional retailers adding mobile services and (2) a role-based reference model for the value network of the future retail customer interface and marketing (CIM). The reference model is validated with expert interviews. As an exemplary application of the model, we show two extreme scenarios with strong and weak retailer market positions. As an additional contribution to practice, we present a further introspective analysis of the value network's key new role—that of mobile customer relationship management service provider—and propose a corresponding functional component architecture that fulfills the information technology requirements for the role's complex functionality.

  • Content Type Journal Article
  • Pages 17-42
  • DOI 10.2753/JEC1086-4415180401
  • Authors
    • Key Pousttchi, Business School, University of Augsburg
    • Yvonne Hufenbach, Wi-Mobile Research Group

Drivers and Technology-Related Obstacles in Moving to Multichannel Retailing

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Multichannel retailing has emerged as a key strategic issue for most retailers. Yet, while there are many drivers associated with retailers' going multichannel, so too are there technology-related obstacles. By using a multicase approach to understand the key drivers and technology-related obstacles associated with retailers' moving to multichannel retailing, our study makes two key contributions. First, we extend prior theory by providing novel empirical insights into the main drivers underpinning retailers' use of a multichannel strategy. We find that meeting customer needs and increasing sales are the primary drivers behind retailers' use of the strategy, although there is diversity in the way retailers respond to these motives. Second, we provide empirical support for a proposed theoretical framework that summarizes the key technology-related obstacles retailers encounter, by stage of implementation, when going multichannel. The framework reveals that retailers face technology-related obstacles when implementing a multichannel strategy due to the need to switch/acquire resources and achieve channel integration. Furthermore, the framework highlights that these resource and channel integration issues are often interrelated with one another and with other staff engagement and cultural issues, vary by retailer and stage of implementation, and pose greater obstacles to retailers' use of new and multiple channels than the extant literature suggests.

  • Content Type Journal Article
  • Pages 43-68
  • DOI 10.2753/JEC1086-4415180402
  • Authors
    • Julie Lewis, Nottingham Trent University
    • Paul Whysall, Nottingham Business School, Nottingham Trent University
    • Carley Foster, Nottingham Trent University

Business Model Transformation in Moving to a Cross-Channel Retail Strategy: A Case Study

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Although cross-channel retailing has become a game changer for retailers, few previous studies have looked at the problems from the inherently holistic perspective of a business model approach. Using a single case study but multiple data collection methods, including interviews, observations, and document analysis, on the biggest Chinese retailer in consumer electronic appliances, the present study examines how different aspects of the business model changed after the retailer launched its cross-channel strategy. The results identify the major changes on three fronts: redefinition of target clients, a new proposition for shopping value, and redesign of the value chain. Findings suggest that a retailer shifting toward the cross-channel strategy will follow the stage-of-adoption model, which may be in five stages, and that the physical store as a hub linking different channels will become the source of value creation. To facilitate the strategic shift, retailers should optimize rather than merge their activities across channels, reinforce the strengths of the physical store, develop co-creation value with stakeholders, and revamp their organization.

  • Content Type Journal Article
  • Pages 69-96
  • DOI 10.2753/JEC1086-4415180403
  • Authors
    • Lanlan Cao, NEOMA Business School, France

Fashion Shopping in Multichannel Retail: The Role of Technology in Enhancing the Customer Experience

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The difficulty of translating the in-store experience to the online environment is one of the main reasons why the fashion industry has been slower than other sectors to adopt e-commerce. Recently, however, new information technologies (ITs) have enabled consumers to evaluate fashion online, creating an interactive and exciting shopping experience. As a result, clothing has become the fastest-growing online category of goods bought in the United Kingdom. This trend could have serious consequences for brick-and-mortar stores. The aim of this quantitative research is to gain a better understanding of multichannel fashion-shopping experiences, focusing on the role of IT and the crossover effects between channels. In particular, I explore the influence of the level of online experience on the perceptions and motivations of fashion consumers when they buy across multiple channels. The theoretical framework of hedonic and utilitarian shopping values is applied to measure consumers' shopping experiences and shopping motivations to buy in different channels. The results from a quantitative survey of 439 consumers in the United Kingdom suggest the need to redefine the in-store shopping experience, promoting the use of technology as a way to create an engaging and integrated experience among channels. Retailers must think in all channels holistically, boosting interactive and new technologies for the Internet and taking advantage of all touchpoints with the consumer, including mobile devices and social networks.

  • Content Type Journal Article
  • Pages 97-116
  • DOI 10.2753/JEC1086-4415180404
  • Authors
    • Marta Blázquez, University of Manchester

Enhancing Virtual Presence in E-Tail: Dynamics of Cue Multiplicity

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Visual simulation is currently the primary technique used to optimize virtual presence in e-tailing, but it entails high costs. For e-tail companies with limited financial resources, customer-company communications, instead of using visual simulation, are based mostly on text (e.g., product attributes, company information). This study explores the influence of text-based e-tail content on virtual presence and the mechanism underlying this influence by testing (1) the effect of cue multiplicity on telepresence and social presence and (2) the dynamics of how presence perceptions affect decision affirmation. A total of 407 participants in the main experiment were exposed to a fictitious e-tail Web site, and the cue multiplicity of the text-based e-tail content was manipulated. The results supported all the hypotheses but one. First, a greater number of cues led to greater perception of telepresence and social presence, providing support for the hypothesized effect of cue multiplicity in text-based e-tail content on virtual presence. Second, telepresence increased Web site trust, ultimately contributing to shoppers' decision affirmation; however, the effect of telepresence on e-shopping enjoyment was not confirmed. Finally, social presence significantly improved Web site trust, e-shopping enjoyment, and social affirmation, all of which improved decision affirmation. The findings illuminate the role of cue multiplicity in e-tail text as a crucial antecedent to virtual presence and decision affirmation. A strategic manipulation of e-tail text should be further considered by managers of various virtual marketplaces as a cost-efficient and effective way of helping the shopper's decision process.

  • Content Type Journal Article
  • Pages 117-146
  • DOI 10.2753/JEC1086-4415180405
  • Authors
    • Eun-Jung Lee, Kookmin University in Korea
    • Jihye Park, Hankuk University of Foreign Studies, Korea

Index to Volume 18





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