ONLINE SERVICES
Chapter 9
Learning Objectives
• Describe the major features of the online service sector
• Discuss current trends in the following online industries:
• financial services
• travel services
• career services
• legal services
The Service Sector
• Largest and most rapidly expanding part of the economies
in advanced industrial nations
• In the US, the service sector (broadly defined) employs
about four out of every five workers and accounts for
about 75% of all economic activity
• E-commerce in the service sector offers extraordinary
opportunities to deliver information, knowledge, and
transaction efficiencies
What are Services?
• Service occupations are “concerned with performing
tasks”
• Two service categories include:
• Transaction brokers
• “hands-on” services
• Transaction brokering involves acting as an intermediary
to facilitate a transaction
• In hands-on services the service provider and client need
to interact directly
• Which of the categories has been most impacted by ecommerce?
Service Industry Groups
• The major service industry groups are:
• Finance, insurance, real estate
• Travel
• Legal and accounting, and business services
• Health services
• Educational services
• In this chapter we will focus on characteristics and trends
in the three of the largest, and most successful, online
transaction brokering industries
• Online financial services
• Online travel services
• Online career services
Online Financial Services
• The online financial services sector is a shining example
of an e-commerce success store, but one with many
twists and turns
• Innovative, pure-online firms such as E*Trade have
transformed the brokerage industry
• Impacts on large, powerful banking, insurance, and real
estate firms have been delayed by consumer resistance
and lack of industry innovation
• For instance, online-only banks have not displaced or
transformed traditional banks
Online Financial Consumer Behavior
• Surveys show that consumers are attracted to financial
sites because of their desire to save time and access
information
• Most online consumers use financial services sites for
mundane financial management, such as checking
balances on existing accounts
• Once accustomed, consumers move on to more
sophisticated capabilities such as using personal financial
management tools, making loan payments, and
considering offers from online institutions
• The number of people using mobile devices for financial
service needs is also surging
Financial Portals and Account Aggregators
• Online financial services also enable some new services
that would be more difficult to perform offline
• Financial portals provide consumers with comparison
shopping services, independent financial advice, and
financial planning
• Account aggregators pull together all of a customer’s
financial (and even nonfinancial) data at a single
personalized Web site
Online Travel Services
• Online travel is one of the most successful B2C e-commerce
segments
• Today, more travel is booked online than offline
• Online travel services revenues are expected to grow to almost
$170 billion in 2017
• Travel services appear to be an ideal service for the Internet
• It is information intensive and requires significant consumer research
• Travel requirements can be accomplished online
• Travel service sites do not require any “inventory”
• Suppliers are highly fragmented and often have excess capacity
• Major sectors include airline tickets, hotel reservations, car
rentals, and travel packages
Online Travel Industry Dynamics
• Because much of what travel agency sites offer is a
commodity, and thus they face the same costs,
competition among online providers is intense
• Price competition is difficult because shoppers, as well as
online site managers, can comparison shop easily
• Therefore, competition among sites tends to focus on
scope of offerings, ease of use, payment options, and
personalization
• Some industry trends include:
• Consolidation to build stronger multi-channel sites
• Impacted by meta-search engines that scour the Web for the best
prices on travel and lodging
• Use of mobile devices and apps is increasing
Online Career Services
• Next to travel services, one of the Internet’s most
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successful online services has been job services
Online job market is dominated by two large players –
CareerBuilder and Monster
The top sites generate more than $1 billion annually in
revenue from employers’ fees and consumer fees
A 2013 survey found that around 70% of US Internet
users had looked for jobs online
LinkedIn is also becoming an increasingly important
player in this market
Recruitment market segments (Table 9.7)
• General recruitment sites
• Executive search sites
• Niche job sites
Online Career Services Trends
• Trends for 2013-2014 in the online recruitment services
industry include the following:
• Consolidation – industry dominated by two sites
• Diversification – explosion of specialty niche sites
• Localization
• Job search engines/aggregators
• Social networking
• Mobile