Perceived Risks and Risk Reduction Strategies in Online Group-buying

Purpose: The purpose of this research is to examine the relationship between risk perceptions (financial, performance, social, time and privacy risks) and risk reduction strategies (brand loyalty, word of mouth, past experience, money back guarantee, store image, shopping, major brand image, free sample, website reputation, and payment security) in online group buying context. Design/methodology/approach: A questionnaire survey was conducted in campus. There are 212 questionnaires were received, and 198 of them are valid. Findings: The results from current study suggested that when subjects perceived financial risk, the brand loyalty, word of mouth, money back guarantee, website reputation and payment system will be adopted to reduce the risk. In addition, performance risk is related to brand loyalty, word of mouth, money back guarantee, major brand image and free sample. Time risk is related to shopping and website reputation, while privacy risk has significant correlation with shopping. There are no risk-reduction strategies related to social risk. Thus, the practitioner have to try some other ways to reduce social risk. Practical implications: Results from current study provide useful knowledge to help the operators who are running online group business in understanding useful strategies to reduce different risks perceived by their potential customers. For example, building strong brands and store image, encourage consumers to spread positive word of mouth are useful ways to mitigate consumers’ concern about the performance of the product/service. Originality/value: Online group-buying is one of the fasted growing business model. However, knowledge regarding consumers’ concern and possible ways to relief the perceived risks in online group-buying context are limited. Results from current study can contribute to the field by illustrating the useful strategies the e-vendors can use to reduce possible concerns.