Digital Commerce Goes Local: An Empirical Analysis of Transactional Behaviors in Hyperlocal E-Commerce
Jong-hyun Hong, Hangjung Zo, and Hyeon Jo
International Journal of Electronic Commerce,
Volume 30, Number 1, 2026, pp. 117-146.
Abstract:
In hyperlocal e-commerce platforms, trust relies on credible user-generated signals in the absence of formal safeguards. Drawing on signaling theory, this study examines how buyer engagement and seller trust signals influence transaction success. This study analyzes a dataset of over 35 million transactions from Karrot, a hyperlocal marketplace, to compare outcomes in paid sales versus free giveaways and to examine product category as a moderator. The analysis reveals that active buyer engagement strongly increases transaction success, whereas passive interest has limited or even negative impact. Seller trust signals also have a significant positive impact on transaction success. However, their influence depends on transaction context. In paid sales, signals of buyer engagement and seller local activity are especially critical, reflecting the higher scrutiny when money is at risk. In free giveaways, by contrast, quick seller replies and an established track record become decisive signals to assure trust and follow-through. The moderating influence of product category is modest, since engagement and trust signals generally determine successful outcomes regardless of category, aside from minor variations. These findings extend signaling theory to hyperlocal commerce by revealing how fundamental engagement and trust signals underpin digital trust in neighbor-to-neighbor marketplaces, and offer practical insights for platform design and user strategies.