Perceived risk and trust as antecedents of online purchasing behavior in the USA gemstone industry

The purpose of this study is to seek to investigate the impact that perceived risk and trust have on online purchasing behavior, in particular the nature of purchasing associations within the expensive, complex, high risk and credence products such as gemstones. An online survey of purchases of Thai gemstones was used to collect the data. Partial Least Squares was used to test the conceptual model of the study. The results of this study suggest that the type of internet marketing strategy used by the seller (the place strategy) and the buyer's privacy and security practices influence a buyer's perceived risk to purchase gemstones online. Furthermore, the study showed that perceived risk reduces trust and perceived risk reduces online purchases. The implications of these results are that privacy and security concerns of online buyers must be addressed in order to reduce perceived risk and thereby increase trust which is fundamental to the amount purchased online. Online marketers of highly risky products need to consider that policies that promote trust and reduce risk are important means of increasing purchases. In particular, the use of multichannels will reduce perceived risk. This is a rare study which examines purchases of expensive, complex, high risk and credence products such as gemstones. It is also a study which examines the behaviour of organisational buyers. Also actual reported online purchases are investigated rather than just intent.