The largest problem that Alibaba has had thus far is counterfeiters. During 2009 and 2010 it is believed that around 2,236 fake sellers were actively sending out counterfeit goods to customers. When this was found out it struck a heavy blow to the company’s image. Due to the anonymous nature of the internet, building trust between a business and consumer has an even higher priority than with traditional businesses. When it comes to ecommerce, consumers are looking for three kinds of trusts when they make
the decision to go with one company or another. These types are: process based, institution based and characteristic based trust. Process based trust is built up by building up a history of exchanges with customers in which orders are fulfilled to a customer’s satisfaction. For example, Amazon has a large amount of process based trust with consumers thanks to its track record of fulfilling orders in a short amount of time. Institution based trust is built by associating with a trusted entity within the community such as the government or a trade organization. For example, when a business is associated with a trade organization, they typically are held to certain standards. Regardless of how new or old the business is, It is generally assumed that they will either meet or surpass the standards, with it also being implied that failing to meet those standards would result in losing association with the trade organization. Characteristic based trust is the most simple, being built up by sharing traits that other trustworthy businesses typically would have. An example of this kind of trust would be a small business having a large number of positive reviews. While the business may not have a long history of fulfilling orders like a company with a lot of process based trust would, the general positive reviews of the business gives the customer faith in the business’ ability to fulfill any orders they have for it. When it comes to building trustwith consumers it is harder for businesses to build the first two types of trust. Process based trust takes a long time to build up because the company has to build up a strong reputation of completing orders, both high and low volume, before any real amounts of trust forms. This often takes several years, making older and larger businesses focus more on this type of trust instead of the other two types. Institutional based trust is arguably the most difficult to build. This is because a party is influencing the company acts in different situations. A company may have to pay large fees to become and remain a member of a trade organization. Even then the company has to operate within guidelines given to them by the organization, with failure to do so resulting in either fines or their membership being revoked. In the case of countries influencing a company, the laws and regulatory agencies play a large role. The country and agencies couldpotentially have or pass loose laws that allow for companies to easily sell counterfeit goods with little to no chance of getting caught or being punished for it. Characteristic based trust is not only the easiest to
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- Fall '08
- Alibaba, Counterfeit