How to reduce perceived risk when buying online: The interactions between intangibility, product knowledge, brand familiarity, privacy and security concerns

This paper studies how product intangibility and its moderators affect perceived risk in an online shopping setting. The moderators studied were brand familiarity, product knowledge, privacy concerns and security concerns. Student samples performed online experimental tests, wherein product intangibility was manipulated. The findings indicate that both mental intangibility and physical intangibility increased perceived risk. Mental tangibility had more impact over perceived risk than physical tangibility. This study is the first to show how intangibility, product knowledge, brand familiarity, privacy and security concerns interact and affect perceived risk. Previous studies did not have the opportunity to observe the interactions of these relevant dimensions, thus not identifying which one would have a stronger effect over the perceived risk of buying online. In short, we found that when interacting with intangibility security and privacy concerns increase perceived risk to the same degree. On the other hand, product knowledge reduces the perceived risk more than brand familiarity.