Trust in the Services Marketplace

The online marketplace has evolved rapidly in recent years. In the past, online marketplaces like Ebay and Amazon only sold physical products. In contrast, today’s online marketplaces offer anything that you can imagine, from accommodations (Airbnb), drivers (Uber) to home services (HomeAdvisor). All online marketplaces, no matter what they offer, share the same core concept of providing a platform to connect sellers with buyers and vice-versa. However, the dynamics are quite different in an online marketplace for services. In particular, unlike the online marketplace for products, the online marketplace for services usually involves physical interaction between the buyer and seller. Safety and risk concerns are magnified when physical interaction is involved. 

It should not come as a surprise that buyers are more wary when shopping for services in an online marketplace. To succeed selling in the services marketplace, the seller must instill confidence in the buyers and allay their concerns. How can the seller accomplish this?  It’s all about gaining trust from the buyers. Below are some of the key ways that sellers can gain the trust from the buyers in an online marketplace for services. 

1.    Reviews

Seller reviews from past customers provide the best tool for buyers to gauge the credibility of the seller. Valuable insight about the seller can be obtained from the reviews, such as the seller’s quality of the work, relative cost, communication and punctuality. Besides striving to get positive reviews, the seller should try to get as many reviews as possible. A seller with a high number of reviews provides assurance to the buyers that the ratings are representative. For example, if two sellers both have 4 star ratings but one has 100 user reviews versus 10 reviews for the other, buyers would tend to buy from the seller with 100 user reviews if all things are equal. Just as important as the quantity of reviews is the quality of reviews, especially in light of the complaints about fake reviews on some websites. However, the quality of the reviews are harder for buyers to judge. Buyers would have to investigate into the website’s policy regarding the ability for users to post fake reviews as well as the website’s practice of posting reviews (i.e. selectively posting reviews, removing reviews), among other things. 

2.    References

A seller can gain trust from the buyers by providing references from previous customers. Providing references are especially important for a seller that has no reviews, few reviews or mixed reviews as they provide another way for sellers to instill confidence in the buyers. As an example, I was interested in booking online a short term rental apartment from a owner with only three reviews. Everything about the apartment, such as the location, condition and cost matched my criteria. However, the small number of reviews made me nervous about the owner. Fortunately, the owner was able to provide me references from previous renters. I was able to email the previous renters about their experience with the apartment and with the owner. The references provided me the confidence to book the apartment.  (Side note: I had a great stay at the apartment and the transaction went smoothly).  

3.    Background Check, License and Business Verification

Buyers in certain online marketplaces, such as child care and home services, may prefer to see background checks of the seller and/or verification of license(s) and business. Background checks and license/business verification provide legitimacy and credibility of the seller.

4.    Communication 

The ability for buyers to communicate with the seller is important in the online marketplace for services. Transactions involving services usually involve a lot of details and may require communication between the buyers and sellers. In addition to ironing out the details, the communication allows the opportunity for buyers to evaluate the credibility of the seller. In the conversations, buyers will look for key traits of the seller such as promptness and openness.  How well the seller communicates will impact the buyer’s decision on whether to make the purchase.  

5.    Description and Pictures

Buyers can learn a lot about the seller from the listing's description. A listing that has a short and/or vague description may make the seller appear insincere and deceitful. On the other hand, a description that is is detailed and honest will help the seller gain credibility. In addition to the description, pictures in the listing can help the seller gain trust from the buyers. Buyers can get a lot of information from the pictures alone, such as the details, scope, quality and condition of what’s being offered.

6.    Platform 

Besides focusing on the seller, buyers are also concerned with the trustworthiness of the platform (i.e. website) that the seller is using. Platform trust is usually not an issue for buyers making transactions from popular sites such as Amazon.com because of the established reputation. Buyers will also trust less well-known platforms, but instead of relying on reputation, buyers will look for specific platform characteristics that will make them comfortable with using the platform. Below are some of these platform characteristics:

• Good overall review/rating of the platform. Buyers may look at the complaints about the website and the Better Business Bureau (BBB) rating if the seller has one.

• Purchase and satisfaction guarantees. This includes having favorable refund policies.

• No/Low Upfront costs and other buyer fees. Buyers will shy away from platforms with exorbitant upfront costs and fees such as membership fees, deposits and buyer transaction fees.  

• Secured Payment Methods. Buyers prefer platforms that offer secured payment methods (major credit cards, PayPal) instead of risky payment forms (bank wiring, cashier/certified checks and MoneyGram).

In an online marketplace for services, the seller's trustworthiness is the deciding factor on whether the buyer will purchase the listing from the seller. The seller must know how to gain the trust from the buyer in order to successfully sell in the services marketplace.