Reshaping digital literacy: How does herding behavior manipulate consumers' e-commerce decision-making?

Abstract

This study investigates the impact of digital transformation on Vietnam's e-commerce industry, focusing on how features like product reviews, ratings, and sales volume influence consumer decision-making. Online reviews significantly influence 93% of consumers, but the rise of fake reviews distorts perceptions and encourages herd behavior, where consumers mimic others' decisions based on reviews and sales data. This can lead to wasteful consumption, product returns, and unsustainable production practices. Therefore, the purpose of this study is to explore consumer herding behavior and purchase intention after being influenced by that herding. Especially, emphasizes the need for enhancing digital literacy to help consumers make informed decisions, avoid falling victim to deceptive tactics, and promote responsible consumption, aligning with Sustainable Development Goal (SDG) 12 on responsible consumption and production. By investigating herd behavior and fostering positive control, this research aims to contribute to building a more transparent and sustainable e-commerce environment. The study gathered 250 valid responses through a Google Form survey (July-August 2024), analyzed using SmartPLS 4.0 and the PLS-SEM method. The results show that external factors: network externalities and homophily theory drive herd behavior, affecting consumer purchasing decisions. Key findings indicate that perceived network size influences consumers to discount their own information, leading them to imitate others, especially when uncertain about a product or service. Additionally, attitude homophily influences imitation behavior, while background homophily does not. The results further demonstrate that imitating others and discounting information are positively correlated with information adoption, which, in turn, strongly impacts online purchase intention and behavior