Journal of Retailing and Consumer Services

Critical review on how to reduce perceived risk when buying online: The interactions between intangibility, product knowledge, brand familiarity, privacy and security concerns

Authors: Marcelo Vinhal Nepomuceno, Michel Laroche and Marie-Odile Richard

Reviewed by: Emi Ilori

Journal of Retailing and Consumer Services

Introduction

This Journal focuses on how product intangibility and its moderators affect perceived risk in online shopping settings. These moderators are brand familiarity, product knowledge, privacy concern and security concerns. This Journal is mainly about online shopping which is the process consumers go through to purchase products or services over the Internet.

Summary

Perceived risk plays an important role when transacting online because some consumers feel insecure about their purchase decisions. The authors defined perceived risk as the subjective expectation of loss. According to the authors, risk is a consumer’s perceptions of the uncertainty and adverse consequences of engaging in an activity.

They also quoted from a source stating the following: “online tangible products might be perceived as intangible products because consumers have no direct contact with the goods being purchased”. Therefore, privacy and security worries might discourage consumers from buying online. Due to perceive risk uncertainties, some consumers have decided not to partake in online transactions.

The authors are of the opinion that many factors explain consumers’ resistance to online shopping. First, the writers believe risk comes handy in the online purchase setting because consumers have no direct contact with goods being purchased. Second, there are issues of privacy and security concerns, which discourage consumers as well.

However, the authors also stated the factors put in place to allay the perceived risk (PR) in online shopping environment as thus:

• Consumers who are highly informed about a product are more confident to buy online.

• Given compensation to consumers for lack of contact with products that doesn’t suit their expectation reduces the risk consumers might have in transacting online.

• Brand familiarity and product knowledge is evidently available online because the consumers have a level of assurance on the goods being purchased. Buying a product from a familiar brand might reduce the perceive risk of buying online as consumers know what to expect from a familiar brand. Based on the factors that exist in consumers’ minds on intangibility and perceived risk, the authors decided to text which dimension is more relevant and how they interact.