THE IMPACT OF REPUTATION AND QUALITY SIGNALS IN IMPERFECT MARKETS: CASE IN INDONESIA
The rapid growth of e-commerce platforms has opened doors for small businesses to reach wider markets. However, these platforms also face challenges, particularly in terms of information asymmetry, where consumers struggle to gauge product quality. This study delves into the Indonesian e-commerce, specifically Tokopedia platform, focusing on the role of halal certifications, online labels, and historical firm reputation in addressing these challenges. Despite the cultural significance of halal certifications in Indonesia, the research found no significant impact of halal labels on sales. This could be attributed to the label’s subtle visibility on the platform and ingrained consumer purchasing behaviors. On the other hand, the Power Merchant label, a mark of a seller’s performance on Tokopedia, showed a more pronounced effect on sales, especially for the ones with highest and lowest sales. The findings underscore the importance of quality signals in online markets and suggest that platform-specific labels, backed by promotional efforts, can influence consumer decisions. Policymakers and e-commerce platforms should collaborate to enhance the visibility and understanding of such labels.