An empirical investigation on customer ratings on merchant reputation systems.

• Author: Wang, Ming
• Position: Report

1. INTRODUCTION

   A merchant reputation system is a part of the shopping agent that collects and posts customers' e-satisfaction ratings for online merchants as a third party on the comparative shopping web site. A merchant reputation system is also known as a merchant reputation system. Customers making purchases with the merchants on the shopping agent websites rate the merchants' e-service quality on an ordinal scale and leave text comments on its merchant reputation system. The merchant reputation system then posts the customer ratings, corresponding comments, and averaged ratings of individual customer e-satisfaction ratings online. These e-satisfaction ratings parallel word-of mouth merchant recommendations and often become a part of the consumers' purchase decision as they shop on these comparative shopping agent web sites. According to recent research (Fu & Kumar, 2008), the merchant reputation system can increase customers' decision-making accuracy and make them more confident about their choices.

   As increasing numbers of online shoppers post their e-satisfaction ratings on merchant reputation systems, a study of rating consistency becomes crucial for both online shoppers and merchants. Merchants may come and go from the merchant reputation systems and merchant service quality may fluctuate over time. In order to provide the most accurate customer feedback, PriceGrabber posts the average e-satisfaction over successive time intervals: the past three months, the past six months and overall time.

   This paper conducts a longitudinal study on customer e-satisfaction data collected from the PriceGrabber's merchant reputation system. The paper investigates the average e-satisfaction ratings of 124 merchants over successive time intervals on the PriceGrabber merchant reputation system. These average ratings are compiled from more than 5 million customer e-satisfaction ratings over ten years.

   This paper first reviews the concepts and research related to the ratings of merchant reputation systems, then investigates the consistency of customer e-satisfaction ratings for each merchant on the PriceGrabber merchant reputation system during successive time intervals over a long period of time, and finally concludes the study by discussing the findings and implications. The purpose of the study is to give insight into e-satisfaction rating scores over different time intervals.

2. BACKGROUND STUDY

   Research on merchant reputation systems can be traced to Friedman and Resnick (1998) who studied risks related to the merchant reputation system. According to Resnick et al. (2000), a merchant reputation system collects aggregates and distributes feedback about participants' past behavior. Though few e-service raters know one another, the systems help prospective customers decide where to shop. These merchant reputation systems were created to establish trust by using the digital word of mouth from previous customers for quality merchant services.

   Trust is an essential concept for e-commerce and is considered a relationship building block that strengthens relationships between customers and merchants. In the business to customer (B2C) e-commerce environment, trust is more difficult to establish and even more critical for success than in a traditional business. The merchant down the street will likely be there tomorrow, but the merchant that exists in cyberspace is often not real in the customer's eyes (Head & Hassanein, 2002). Traditional customers can pay at the counter and take the products home immediately, online shoppers do not directly observe vendors nor do they directly view the actual products they purchase (Li & Thatcher, 2009). Given the high uncertainty and anonymity of transactions in online environments, the customers' lack of inherent trust in cyberspace stores is logical and to be expected (Kollock, 1999). If an Internet store wants to do business, it has to prove its trustworthiness by satisfying customers for many years as it grows (Schneider, 2009). The merchant reputation system is best known as a technology for building trust and encouraging trustworthiness in e-commerce transactions by using past behavior as a publicly available predictor of likely future behavior (Dellarocas, 2003). The merchant reputation system is one mechanism currently being used to build trust between unknown parties on the Internet (Gershoff, et al., 2003). Yang et al. (2009) indicate in their recent study that customers will trust a website if they feel the site follows good e-commerce ethical practices such as transparent privacy policies and accurate descriptions of products and services.

   The consistency of the averaged satisfaction rating for each merchant is an important measure of the merchant's...