Should new online stores invest in social presence elements? The effect of social presence on initial trust formation

Online shopping has become increasingly popular in business development and the number of new online stores is ever increasing. Many of these online stores, however, fail. Research has indicated that one of the biggest reasons why these online stores fail is because of consumers' lack of trust. One solution that has been proposed is for online retailers to increase their level of social presence. This study investigates the impact of social presence, in its extreme form of online chat boxes, on initial trust formation for an online retailer. An experimental design was used and a structural equation model is tested using PLS-SEM (partial least square based structural equation modeling). Social presence was found to not only influence initial trust in the website, but also participants' enjoyment and perceived usefulness of the site. Therefore even though managers might think that there is no ROI in their investment in social presence, it still has a notable impact on consumers' perception of an online retailer they have not seen or used before. This is especially relevant to new online stores. (C) 2014 Elsevier Ltd. All rights reserved.