How eco-badges shape online purchase decisions: the roles of perceived diagnosticity and label credibility

Purpose This study aims to investigate the influence of eco-badges on consumers' purchase decisions within information-dense e-commerce environments in Indonesia. It focuses on perceived diagnosticity as a central cognitive mechanism and label credibility as a key moderating factor, to better understand how sustainability signals affect consumer behavior amid information overload and skepticism about green claims. Design/methodology/approach This study employs an explanatory quantitative research design grounded in signaling theory, the heuristic–systematic processing model and source credibility theory. Data were collected through an online survey distributed via social media and e-commerce user communities, resulting in 200 valid responses from millennial consumers actively engaging with e-commerce platforms across multiple regions in Indonesia. The proposed conceptual model was tested using consistent partial least squares structural equation modeling (PLSc-SEM) with ADANCO software to assess the relationships among eco-badges, perceived diagnosticity, label credibility and purchase decision. Findings The results reveal that eco-badges, perceived diagnosticity and label credibility each have a positive and significant impact on consumers' purchase decisions. Perceived diagnosticity emerged as the strongest predictor, indicating that consumers prioritize sustainability information perceived as useful and capable of reducing uncertainty over heuristic cues like eco-badges alone. Additionally, label credibility significantly moderates the effects of both eco-badges and perceived diagnosticity, underscoring the crucial role of credible certification sources in enhancing the effectiveness of sustainability signals in e-commerce environments marked by skepticism toward green claims. Research limitations/implications This study has several limitations that offer directions for future research. First, the sample size of 200 millennial consumers, while adequate for the analysis, may limit the generalizability of the findings to broader or more diverse consumer segments. Future studies could include larger and more varied samples, including different age groups and geographic regions, to enhance external validity. Second, the cross-sectional design restricts the ability to draw causal inferences. Longitudinal or experimental research could better capture the dynamics of consumer responses to eco-badges and sustainability information over time. Third, the focus on millennial consumers in Indonesia may not fully capture cultural or regional variations in perceptions of eco-badges, diagnosticity, and credibility; comparative studies across countries could address this gap. Practically, the findings suggest that e-commerce platforms should prioritize providing clear, diagnostic sustainability information backed by credible certification to effectively influence purchase decisions. Simply displaying eco-badges without supporting credible and detailed information may not sufficiently alleviate consumer skepticism, especially in markets where greenwashing is a concern. Future research could explore how emerging verification technologies and product category differences impact consumer trust and behavior in online marketplaces. Practical implications The findings of this study offer valuable guidance for e-commerce platforms, marketers and sustainability certification bodies. First, platforms should move beyond merely displaying eco-badges as symbolic cues and focus on providing clear, detailed and easily accessible sustainability information that consumers perceive as diagnostic and useful. This approach can help reduce consumer uncertainty and enhance decision-making confidence in information-rich online environments. Second, establishing and prominently showcasing credible certification sources is crucial. Label credibility significantly strengthens the impact of eco-badges and diagnostic information, helping to counteract consumer skepticism toward green claims and potential greenwashing. Marketers and certification bodies should collaborate to ensure transparency and build trust through rigorous verification processes and clear communication. Finally, these insights highlight the importance of tailoring sustainability communication strategies to consumer segments, particularly millennials who are active e-commerce users. By integrating credible, diagnostic sustainability signals into the user experience, businesses can better engage environmentally conscious consumers and foster more sustainable purchasing behaviors in digital marketplaces. Social implications This study underscores the growing importance of transparent and credible sustainability communication in shaping consumer behavior within digital marketplaces. By enhancing the visibility and trustworthiness of eco-labels and sustainability information, e-commerce platforms can empower consumers to make more informed and environmentally responsible purchasing decisions. This, in turn, supports broader societal goals of reducing environmental impact and promoting sustainable consumption patterns. Moreover, the emphasis on credible certification helps combat the pervasive issue of greenwashing, which can erode public trust and hinder collective efforts toward sustainability. Strengthening consumer confidence through reliable sustainability signals fosters a culture of accountability among producers and retailers, encouraging more ethical business practices. Finally, by engaging millennial consumers – who represent a significant and influential demographic – this research highlights the potential for digital commerce to serve as a platform for social change, where informed consumer choices can drive demand for greener products and ultimately contribute to advancing global sustainability agendas such as the United Nations Sustainable Development Goals. Originality/value This study contributes to the literature by uniquely integrating perceived diagnosticity and label credibility into the understanding of how eco-badges influence consumer purchase decisions in information-dense e-commerce environments. While previous research has often focused on eco-labels as isolated signals, this research highlights the critical moderating role of label credibility and positions perceived diagnosticity as the central cognitive mechanism driving sustainable consumption choices.