Tackling consumer information asymmetry and perceived uncertainty for luxury re-commerce through seller signals

• Published in: Journal of retailing and consumer services 2024-07, Vol.79, p.103736, Article 103736
• Main Authors: Pandey, Shweta, Mittal, Sheetal, Chawla, Deepak
• Format: Article
• Language: English
• Subjects: Luxury; Principal-agent theory; Second-hand; Signaling theory
• ISSN: 0969-6989; 1873-1384
• DOI: 10.1016/j.jretconser.2024.103736

Online retailers struggle with consumers' information asymmetry and perceived uncertainty due to the virtual nature of shopping that lacks the tangibility of the in-person experience. This issue is especially true for credence/experience goods, such as second-hand luxury items, where the buyers find it difficult to ascertain the authenticity of a seller's offering and claims. The study uses signaling and principal-agent theories to explore strategies luxury re-commerce e-tailers can utilize to address customer uncertainty issues. Data was obtained from 313 Indian consumers and analyzed using partial least squares structural equation modeling. The results establish that perceived product certainty followed by website quality (in that order) positively impacts the purchase intention of online second-hand luxury buyers. Further, website quality positively impacts perceived product and seller certainty. In addition, the study finds that perceived seller certainty indirectly influences purchase intention via perceived product certainty. By encompassing website quality factors such as website aesthetics, authentication process, and return/exchange policy, online e-tailers can leverage the signaling potential of their websites to enhance consumer trust and confidence, resulting in increased purchase intention. Further, perceived seller and buyer certainty should be considered as distinct constructs. The study's implications for the retailers of luxury re-commerce are discussed.