The impact of country of origin on consumers' pricing judgments in ecommerce settings

Abstract

PurposeThe purpose of this paper is to assess the impact of country-of-origin (COO) cues and pricing perspective based on the third-party seller's name, intermediary, on consumers' purchasing decisions on e-commerce sites. A model was proposed to investigate consumers' perception toward sellers' online reputation, the mediating role of trust between the reputation of third-party sellers and attitude toward e-commerce as an intermediary, and attitude toward third-party sellers. In addition, this study also looks at the pricing threshold of consumers who are willing to buy from a third-party seller that has a negative COO cue, which is an area that has received limited attention in e-commerce studies.Design/methodology/approachThe paper opted for an experimental study using survey data gathered from general American consumers. Two studies were conducted. One hundred seventy surveys were gathered for study 1, and 171 surveys were gathered for study 2. The two studies had two product snippets which showed an Amazon product page with a list of third-party sellers. For study 2, all variables were kept the same – reviews and ratings for both products and sellers, delivery time, descriptions, e-commerce as an intermediary and brand of a bag – except for the price.FindingsThe findings showed that consumers' perceived reputation of a third-party seller has a positive impact on their attitude toward the seller and toward the e-commerce intermediary. In addition, the role of a positive COO influences attitudes and intentions. However, this influence is moderated by price when price is noticeably higher when compared to an alternative option provided by a seller from a country with a lower COO evaluation. This study suggests that the benefits of a positive COO diminish when a seller with a lower COO evaluation is able to provide a lower price for the product. In study 1, the results show that positive COO trumps negative COO. In study 2, the result shows that consumers lean toward a lower-price product and disregard their evaluation toward the COO. Furthermore, in study 2, results show that in order for the pricing to offset the negative COO attributes of a third-party seller, the price needs to be within 22–30% lower than the American seller's product pricing.Research limitations/implicationsWith the chosen research approach, the research results may lack generalizability for the other markets (e.g. Asian consumer market). Therefore, researchers are encouraged to test the proposed propositions further.Originality/valueThis study highlights the implications of COO cues such as sellers' names and how they impact consumers' willingness to purchase a product. The second study investigates consumers' willingness to purchase when the pricing for a product sold by a negative COO seller versus a positive COO seller is different in an e-commerce environment. In addition, the second study determines that the role of trust has more impact on consumers' attitude toward a third-party seller than it has on their attitude toward the e-commerce intermediary.