1. Trust and e-commerce in Agro business
The Internet is a global and borderless environment, and it will be a challenge having to identify
and trust the other party whom one is transacting with. Developing and communicating
trustworthiness to one’s business partners is crucial at a time when business opportunities in e-
commerce are flourishing. Indeed, knowledge of the role of trust, in its specific dimensions, will
be useful to businesses in meeting the future competitive pressures surrounding it in the
ecommerce context. Furthermore, the dimensions of trading partner trust, keeping
commitments, negotiating honestly and taking advantage, the data suggests that keeping
commitments may comparatively be the more important driving force of trust. Trust is perceived
as a pivotal aspect of business transactions. However, trust is still a concept that needs to be
clarified. Therefore, the purpose is to measure the importance of trust building elements that
may serve as importance for establishing a trustful relationship between trading partners in
business transactions.
2. Trust factors in an agrifood B2B e-commerce environment
1. Culture - An important factor that has the possibility to communicate using one’s own
language or a common language, but it also deals with several other aspects linked with
culture, such as the communication style, formal rules, relational models, contrasting or
unknown coded behaviors, etc. These elements are perceived as important in multicultural
environments, because of possible problems derived by the lack of shared values that
reduce perception of risks involved in undertaking long distance commercial relationships.
2. Motivation - This factor it represents the trustor’s perception of an alignment of the reciprocal
objectives between the involved actors. It is linked to the ability to stimulate a mutual
commitment in the relationship, reducing the sense of uncertainty and vulnerability, thus
constituting a basic mechanism to increase trust.
3. Professionalism - Competences and abilities to perform the role assigned within the network
(platform manager, IT professionals, monitoring and auditing professionals, sellers and
buyers, legal advisors), are essential components in order to let the trustor evaluate and the
trustee guarantee the security requisites of the transactions supported by IT tools.
4. Legal assistance - The legal framework as well as the level of assistance and legal support in
the event of controversies related to documents or transactions between the actors is
considered an important factor.
5. Transparency - It is one of the possible forms to allow or give the perception of
control.Information sharing allows the involved actors to reduce the perception of
vulnerability, increasing the level of predictability of the counterpart’s behavior to
consolidating the trust relationship.
6. Institutional protection - This factor can be seen as a sort of control on behalf
of an authority outside the network of relationships established by economic agents.
3. Trust and e-commerce in food supply chains
The relationship between buyers and sellers is subject to research areas such as transaction cost
economics, information economics and socio-economics. Trust in relationships between buyers
and sellers lowers transaction costs by reducing the efforts for contracting and the costs for
control and monitoring. As a consequence, the existence of trust in a buyer-seller relationship
complements incomplete contracts. This is why trust in buyer-seller relationships is often
considered as an economic asset creating value .Long-term business relationships is build on
experience as alternative to information search and past experiences create trust between
business partners.
Electronic marketplaces are intermediaries between buyers and sellers aiming at making
transaction processes more efficient as opposed to traditional transaction processes. They
intend to reduce transaction costs by supporting information and communication processes
between businesses. However, despite those advantages electronic marketplaces including
those in the agrifood sector faced difficulties to enter in buyer-seller relationships.One problem
may have been the lack of adapting and embedding the marketplaces’ services to the
demands of existing buyer-seller relationships . Another problem may have been the trust
problem related with the anonymity of the electronic commerce environments and the lack of
experience how to deal with them This problem is of particular significancein the agrifood
sector with the specific characteristics of food products.
The trust generating determinants, the trust in the transaction party and the trust in the control
mechanisms provided to monitor the performance of a transaction. In transactions, trust and
control complement each other. The underlying control mechanisms must be trusted as well.
When it comes to electronic commerce in the agrifood industry, trust in two transaction parties
may be required, the actual transaction partner and an intermediary, e.g. an electronic trade
platform. Accordingly, trust is required for the control mechanisms of the transaction partner
himself and the intermediary. For both determinants, there exist subjective and objective reasons
creating trust in the other party and the control mechanism. The trust generating determinants
together with appropriate, hierarchically derived trust reasons can be used to design trustworthy
transaction environments for electronic commerce in the agrifood industry.
Risk in electronic commerce transactions in the agrifood industry is complex and arises from a
number of sources. In general, every transaction with agrifood products contains risk as an
information asymmetry exists between buyer and seller regarding the food product quality
consisting of search, experience, and credence characteristics.In addition,
4. the degree of risk in a transaction depends on the possible degree of damage and the
negative consequences following a failed transaction.International transactions with partners
from other countries – e.g. fruits and vegetables from Mediterranean EU countries to northern EU
countries – always bear an additional risk. When it comes to e-commerce transactions with
agrifood products, risk not only comes from an information asymmetry between buyer and seller
regarding product quality, but also regarding the overall transaction settling including payment
and shipping .
In essence, it may be said that an e-commerce transaction situation in the agrifood industry on
the one hand has a potential gain through efficiency potentials, but on the other hand adds an
additional risk to agrifood transactions. As the trust model shows, high risk may rise the trust level
needed for an individual to engage in a transaction. A high level of risk in a transaction situation
may be compensated by an intense trust generation.To design a trustworthy e-commerce
environment for transactions in the agrifood industry achieving a sufficient level of trust,
appropriate reasons to generate trust in the other party and the control mechanisms must be
derived.
Electronic market places and the trust dimensions
The marketplace make use of the trust dimensions that are important for buying strategy.
An overview of the marketplaces analysed for the specific dimensions of trust on which signs of
trust where observed is shown in figure . If a website for instance clearly mentions that all their
suppliers need to be certified , one can conclude that they use the trust dimension ‘certification’
on their website, which relates to the object of trust of the ‘product’. For the buyer who is
looking for inputs for their products, product specification is one of the key aspects to base a
buying decision. The selected marketplaces that have a focus on connecting buyers and
suppliers of inputs all clearly communicate the product specification.
As the product is the main object of trust for input suppliers it might be useful to actively
communicate all elements related to the product in order to build trust at for the buyer. It is
interesting to see that while for the buyers in the cases the market environment was not of
importance of that it these dimensions of trust are supported by signs of trust on most of the
websites. For the buyer that is looking for a new category supplier both the product as well as
the some characteristics of the supplier are important.
The buyer wants to be certain that a supplier has the right certifications, will be capable and will
turn out to be a reliable partner, also when problems occur.
5. Object of trust Product Seller Market env
Dimensions of the objects of trust
Productreputation
Productspecification
Productinspection
Productcertification
Price/performanceratio
Capabilityofthesellingcompany
Relationshipwithseller
Reliabilityoftheseller
Reputationofseller
Privatecontrolinstitution
Informalinstitutions
Publiclegalinstitutions
Reptutationofmarketenvironment
Input search
Agriculturesource.com
Busytrade.com
Worldbid.com
Allproducts.com
Alibaba.com
Saudicommerce.com
Category supplier search
Fuzing.com
Globalsources.com
Ec21.com
Eng.foods1.com
Commerce.com.t
w
Browsing for specialties
Halalstock.com
Agrob2b.com
Tradett.com
Frozenb2b.com
Sign of trust present
Sign of trust not present
In this figure is shown the analysis of 15 companies website that gives the information and the procedures of
buying for all the business member of this site.The global leader in e-commerce are Alibaba.com &
Eng.foods1.com that include all the element of trust for most of their business members . They includes
online marketplaces that facilitate business-to-business international and, retail and payment platforms,
shopping search engine and data-centric cloud computing services.Alibaba Group reaches Internet users
in more than 240 countries and regions. Alibaba Group, including its affiliated entities, employs more than
23,000 people in some 70 cities in GreaterChina, India, Japan, Korea, the United Kingdom and the United
States.Foods1 started her B2B online service professionally in food industry field, always be in pursuit of more
direct way for importers and exporters. Powerful datas of food importers and exporters, sell and buy offers
which could link with others. Foods1.com have more than 50,000 registered members from over 200
countries and territories. Pageviews amount to 1 to 1.05million, More than 80,000 people visit the site every
day, most of them are global buyers and importers.
6. - The score of the electronic market places on dimensions of Trust.
Object Of trust Product Seller Market env
Dimensions of the objects of trust
Productreputation
Productspecification
Productinspection
Productcertification
Price/performanceratio
Capabilityofthesellingcompany
Relationshipwithseller
Reliabilityoftheseller
Reputationofseller
Privatecontrolinstitution
Informalinstitutions
Publiclegalinstitutions
Reptutationofmarketenvironment
Olive Oil Company Website
detuhome.es
arjonaderasa.com
multiproducts.es
garciamoron.com
exportolive.com
mkoliveco.com
axaolivos.com
www.oliflix.com
senoriodejaen.com
olisbargallo.com
aceitesdelmediterraneo.com
quebuenodistribution.com
orodeldesierto.com
gruposos.com
mothersgarden.org
sanantonioabad.es
aceitesmalagon.com
sabocat.es
coreysa.com
pagobaldiosancarlos.com
oliveoilofspain.com
ecolijar.com
sucdor.com
sites.google.com/site/oleozufre
exporta-me.es
bazarplaza.com
ingemose.com
alphatradefinancial.homepage.e
u
iberianpgf.eu/
agrolainez.com /
7. The score of the Company Website on dimensions of Trust.
Sign of trust not present Sign of trust present
Private control institution 3 27
Product specification 4 26
Product reputation 7 23
Reputation of seller 9 21
Product certification 12 18
Reptutation of market environment 12 18
Capability of the selling company 13 17
Public legal institutions 15 15
Relationship with seller 15 15
Reliability of the seller 18 12
Product inspection 20 10
Informal institutions 21 9
Price/performance ratio 23 7
According to these data the most important elements of trust on buying online are product
specifications, product and seller reputation. Less important element under this analysis are the
product price and customer relationship but even this element should be considered very
important on this proces. Branded products would stress the product as trust dimension most and
the importance of their own inspections, beside specification of the product. Also the case
analysis suggests that multiple retailers and wholesalers of consumer products would consider
certification the most important trust-generating element of the product and ‘reliability’ of the
seller.Risks related to a new market environment are however clear the buyer: In new
marketsthere is a risk of not knowing, then you need more information both on the product as
well as the producer, and you need information on the information that you get, e.g. the
meaning of a financial report. And you want to know about the political stability of the country
in which the supplier operates.Buyers have to put al lot of energy in finding the right information
and check on the information.
8. The buying process consists of the following steps:
1- There will find product with the characteristic needed.
2- Searching new by browsing the market/ fairs or stock exhange.
3-Bargaining
–– Sample taking and tasting:
–– Check on the firm (demanded certification, competence, excellence, quality):
–– Describe the product, agree on price, deliveries: quantities, time; if ok then:
4. Buying.
They should distinguish between the reputation of the product and the producer.
For product the, after price/ performance, reputation is trust generating, but for the wholesalers
strategy to generate new trends and keep up his exclusiveness the reputation of the product
may not too widespread. Inspection may not be a term the buyers of specialties would use, but
at the same time they will carefully check on the seller and preferably meet him personally.
Exclusiveness also refers to quality and keeping quality at a high level, which explains capability
as trust generating dimension for the seller.Longer relations evolve when the producer can offer
new products and innovations. Implications for the seller are that he will have to signal a
complete story of the product and way of production in the searching stage as well as the high
standards of the quality of the produce.
Advantages and Disadvantage of Electronic Commerce
Electronic commerce, has completely revolutionized the traditional concept of doing business
by enabling a presence in the global market. A rapid growth of e-commerce has pervaded
almost every other aspects of business such as supply chain management, transaction
processing,internet internet marketing and inventory management.
The greatest and the most important advantage of e-comerce, is that it enables a business
concern or individual to reach the global market. It caters to the demands of both the national
and the international market, as your business activities are no longer restricted by geographical
boundaries. With the help of electronic commerce, even small enterprises can access the
global market for selling and purchasing products and services. Even time restrictions are
nonexistent while conducting businesses, as e-commerce empowers one to execute business
transactions 24 hours a day and even on holidays and weekends. This in turn significantly
increases sales and profit. For business e-commerce significantly cuts down the cost associated
with marketing, customer care, processing, information storage and inventory management.
9. It reduces the time period involved with business process re-engineering, customization of
products to meet the demand of particular customers, increasing productivity and customer
care services. Electronic commerce reduces the burden of infrastructure to conduct businesses
and thereby raises the amount of funds available for profitable investment. It also enables
efficient customer care services.On the other hand, It collects and manages information related
to customer behavior, which in turn helps develop and adopt an efficient marketing
and promotional strategy.
Disadvantages of Electronic Commerce
Electronic commerce is also characterized by some technological and inherent limitations
which has restricted the number of people using this revolutionary system. One important
disadvantage of e-commerce is that the Internet has still not touched the lives of a great
number of people, either due to the lack of knowledge or trust. A large number of people do
not use the Internet for any kind of financial transaction. Some people simply refuse to trust the
authenticity of completely impersonal business transactions, as in the case of e-commerce.
Many people have reservations regarding the requirement to disclose personal and private
information for security concerns. Many times, the legitimacy and authenticity of different e-
comerce sites have also been questioned.Another limitation of e-commerce is that it is not
suitable for perishable commodities like food items. People prefer to shop in the conventional
way than to use e-commerce for purchasing food products. So e-commerce is not suitable for
such business sectors. The time period required for delivering physical products can also be quite
significant in case of e-commerce. A lot of phone calls and e-mails may be required till you get
your desired products.
Those, on evaluating the various pros and cons of electronic commerce, we can say that the
advantages of e-commerce have the potential to outweigh the disadvantages. A proper
strategy to address the technical issues and to build up customers trust in the system, can
change the present scenario and help e-commerce adapt to the changing needs of the world.
10. Conclusions
Electronic commerce is an interesting support option for companies in the agrifood sector to
establish new business relationships. The agrifood sector deals with products where
a large amount of information asymmetry exists between transaction partners. Many
characteristics of food products may only be analyzed after use and others even cannot be
examined at all. Electronic commerce where has often been criticized as too anonymous for
agrifood transactions.
The risk and uncertainty created a lack of trust in electronic commerce in the agrifood sector.
The weakest form of reputation is that sought through brands. Although founded on quality,
relevance and consistency of product, branding focusses very heavily on image-manufacture,
manipulation and maintenance. The seller knows about the quality of the product, but the buyer
still has to find out.
The seller expresses his intentions but the buyer does not know whether the seller’s future
behaviour will be consistent with those. Although agricultural products do not have the same
opportunities as digital products, agro-food firms should adopt e-commerce practices in order
to benefit from the advantages that the new technology offers.
It should also be noted that this same rapid growth makes E-Commerce and E-Business practices
very hard to study in the context of long-run business planning requires further analysis.
Agrobusiness’ resistance to changing business practices, commitment to tradition, and lack of
familiarity with information technology are critical concerns. Place, industry structure and
participant demographics are also constraining factors.
Every Country is competitive in a Global Market with their domestic product or service. Growing
this competitive advantage they should develop a better infrastructure of E-commerce. This
could be possible from different organization that promote this form of commerce and the
Govermant with their regulations on the low procedures. E-comerce lead the demand for the
product and service in a new direction in long distance places, in different cultures,in different
social-political environment where are more alternatives to choose in price, quality or quantity.
