Trust is The Biggest Unsolved Concern in Large Transactions

Purchasing a Boat… Online!

I did something incredibly risky when buying a big ticket item a few years ago that thankfully worked out okay in the end. My wife and I decided that buying a used ski boat would be a great way to create some family memories with our young sons and saved funds for a couple of years for this dream purchase. We went to a classifieds website that specializes in boats, I did all the research and found out which available used boat was best for our situation. Long story short I negotiated a potential deal with a seller and sent them a check, but the seller lived in Missouri and I was on the West Coast.

We ultimately agreed on terms and I committed to buy a boat– sight unseen — from someone I had never met in person, and in whom I had no assurances I could trust. We went back and forth over the possible ways to make the exchange of money and goods, but each option had serious issues and inconveniences:

  • fly to his location, rent a truck and tow the boat back to my home, pay in person with a cashiers check — > too much time, can’t take days off work, don’t want to rent and return a truck
  • each of us drive a few states away (12-15 hours each) and meet in the middle –>same problems as above
  • Find a 3rd party logistics provider –> great, but what about exchanging money?
  • Use an expensive white glove shipping service that specializes in boat deliveries –> great, but much too expensive. I wasn’t buying a yacht, just a family ski boat.
  • Wire the money or send a check and wait for it to be cashed and hope the seller releases the boat –> simplest solution, but biggest risk of them all as there is a chance you send a complete stranger money and never hear from them again!
  • Pay half now and half upon receipt of the boat –> seller likely not willing to release the boat if only paid for half

Inherent Lack of Trust in Online Transactions

At the end of the day none of these solutions solve the biggest concern in classifieds transactions — trust. How was I actually to know, without expending significant time or cost, that I could trust this person? Seriously, I mean who knows if the boat even existed!

I ended up wiring the seller the money (several thousand dollars!) and just hoped that he would send me the boat! It was the most frustrating, nerve wracking purchase I’ve ever made. What made me comfortable to do that? In the process of trying to find a shipper for the boat I called a local boat dealer in the seller’s home town. When I mentioned the name of the person from whom I was buying the boat, the dealership manager spoke very highly of him, said he always takes nice care of his boats, and was just in their shop recently to get the boat in question serviced. That independent third party provided the assurance I needed to transact.

I should also add a plug (not sponsored) for uShip… I used uShip, which is a marketplace for large item shipping/delivery, and very highly recommend it! They have a very helpful way of securing your funds until you receive the item you paid for, which helps with the trust concerns.

Seeing Frustration as an Opportunity

Richard Branson says that opportunities arise from your personal frustrations and that if you can find a way to make someone’s life easier, then you have found a business opportunity.

“The best businesses come from people’s bad personal experiences. “If you just keep your eyes open, you’re going to find something that frustrates you, and then you think, ‘well I could maybe do it better than it’s being done,’ and there you have a business.”

Richard Branson, Forbes

Is there an opportunity here? Perhaps it already exists and I just haven’t found it yet. Surely there are platforms that help to remove barriers to transacting, specifically around trust. For instance, eBay offers its users several elements to improve trust: reviews and ratings on buyers/sellers, insurance, guarantees that if you transact on the platform you can be covered in the event something goes wrong, the ability to wait to ship until payment has been made. So in essence, eBay has solved this problem on many levels for its millions of users. eBay Motors, for instance, which includes the sale of cars and boats, offers Vehicle Purchase Protection to buyers in its marketplace, covering them for up to $100,000 if something goes wrong with the transaction, including fraud. But for a number of reasons, too long to list here, not everyone chooses to sell on eBay. So for those people, is there an alternative out there? I wish I could have convinced my seller to do the deal on eBay but he was confident he could find a buyer without doing so, and further, if he did list on eBay, there was no guarantee that someone else wouldn’t see the boat and try to buy it before or at a higher price than me.

Trust is the biggest unsolved problem in large online transactions. I do believe an opportunity exists for someone to create a secure transaction system that can serve to hold a deposit or full transaction in escrow, until conditions that both the buyer and seller agree to are met. In the case of my boat purchase, I would have contacted this company, told them the situation, agreed with the seller to use this company, sent the company my money, and they would have held that money until they verified transaction.

Online or Offline, You’re Only As Good as Your Word

This reflection on our family’s big purchase is making me appreciate the saying “you’re only as good as your word”. I believe that to be true — in our world, despite legal protections, governments, and contracts, the most important thing we can give someone is our word that we will do what we say we will do.

Thankfully it all worked out for both buyer and seller — and my family. We indeed received the boat as promised and had three great summers creating family memories, until I sold the boat to my brother-in-law. We did that deal sight unseen as well; either he really trusted me or maybe he’s sitting at home writing a blog post about how he took a huge risk, too!