E-commerce travel industry

Introduction

According to Keith Blois, (2003), in recent years, increasing numbers of businesses have been using the Internet in their marketing efforts. The Internet is unique because it is both a market and a medium. This means that it can efficiently assume a multi-channel role by serving as a computer-mediated market in which buyers and sellers access each other, and as a medium to conduct and execute business functions such as marketing, sales, and distribution.

Many e-commerce principles were pioneered by the travel industry. These include the first business-to-business electronic information exchange and industry-wide electronic marketplace. This environment provided unprecedented opportunity for operations research (OR) modeling. Travel companies continue to derive billions of dollars annually from these and derivative models. The availability of reliable, low-cost communications via the Internet is not only providing new modeling challenges within the travel industry, but it is also providing similar opportunities in other industries [1]. Tourism industry is one of the most competitive industries within the economic environment. Within industry’s boundaries actors have more or less recently and with significantly different patterns of action undertaken efforts to achieve an integration of the internet platform and its applications. In this section, we explore the effects of electronic commerce and its potential for competitive advantage for airline industry by using Michael Porter’s seminar work on industry analysis as a framework.

§ Website Comparison

www.travel companiesocity.com:

The moment I visit the Travel city site -the first page gives me the impression that my country, Sultanate of Oman is not there in listed? And I don’t like it that my country is not listed here. Moving in to the website with this sad feeling in mind that my country is not listed we go ahead to log in to one of the global sites as they say, the nearest country, and the company wants to say too many things in one go to the customers and this is something that is difficult to digest for the first time visitors. The first-timer is very confused to be able to relate to all the features in the website. Though the regional flavor and link through the local site helps it is difficult to do a very high level of localization of the content to cater to all the segments of the market

www.southwest.com

The look and feel of this website is a lot cleaner than other travel companies website for instance in Travel city.

The most important feature that this website it that most of the commonly used menus are neatly tucked inside the main menus and just on the movement of the mouse they unfold in to the options. This is a very good feature that helps maintain the clean looks and still does not compromise on the functionality

www.Adrenalin.com

This Polaris group company that is selling the HR software is using the website more for servicing functionalities

The overall framework:

• Generating demand
• Ordering
• Fulfillment
• Processing payments
• Service and support
• Security
• Community

Regardless of which business model travel companies adopt, to be successful, travel companies need to understand how the Web and e-commerce affects their business [2]. Travel companies need to develop an overall strategy covering: strategic management, IT infrastructure, design, content, e-commerce systems, marketing and customer service. Travel companies also need to be creative and entrepreneurial. As every entrepreneur knows however, you will only be truly successful if you provide genuine value to your customers and solve a problem for them. As it is evident from the above list that it’s easy to navigate through the website by following the links. It’s user friendly and the home page of the airlines gives a glance of the services provided by them and the beautiful destinations and the activities which can be performed. It also gives the information about the hotels and resorts in each destination. All the document or equipments requirement for all the situations is also mentioned in the website e.g. when traveling with pet, traveling with children, baggage rules etc. Over all it gives every possible information to the passengers they might need to make their travel plan and during their stay at various destinations.

Sources of Competitive Advantage

Travel companies do conform to those which Porter describes: Cost Leadership, Differentiation and Focus. The proposition is that travel companies that can successfully work in one of these areas will be able to establish and sustain a competitive advantage.

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§ Cost Leadership

Travel companies can generate significant cost savings by sending tickets, newsletters, quotes, and other documents via Internet, rather than by post or facsimile. Travel companies can use Web site to publish – in a cost-effective way – public domain documents such as annual reports, product brochures, positions vacant, contact details and other important Travel companies’ information. Travel companies can save on the cost of running “bricks and mortar” outlets and can reach global markets without having to develop a physical global distribution network. Most importantly, Travel companies can save on customer service costs by enabling customers to serve themselves.

One of the American Travel companies CEO said that the Web site is playing a major role in mitigating the rise in unit costs affected by high fuel prices. It’s 10 times cheaper to deliver to customers through the online service than through a travel company’s agent and costs 5 times less than using travel companies’s own reservation staff. The booking cost per passenger online is well under $1, and is scaling down even further. He said Internet use by passengers was helping the carrier keep fares at low discount levels [4].

Massive investment in both business-to-business (B2B) and business-to-customer (B2C) information systems is expected to translate into important cost savings in procurement, sales, billing and other support activities. The travel companies’s fully automatic ordering system, for example, should reduce order processing costs by 90%. [5].

§ Differentiation

E-ticketing the issue of a booking code at the conclusion online transition that replaces the traditional travel companies’ ticket. E-ticketing seems to be a ‘win-win’ solution for the travel companies business. It offers the travel companies the chance to make considerable savings in both trade terms as well as in invoicing and internal accountancy procedures. Moreover, it helps to fight the downward profit spiral that has affected the industry for years. Secondly, it is very attractive to customers, who may benefit from a service offer both technologically advanced and of high intrinsic value.

§ Focus

The travel industry gives us a perfect example of successful Focus strategies – that is the so-called “Integrated Operators” of the travel business. FedEx, the integrated cargo carrier, was the pioneer. Having developed a very efficient and fully computerized system for tracking individual parcels anywhere on its network it took the next logical step. In 1994, through its website, it allowed its customers to book and pay for its services without restriction via the Internet [6].

The e-Commerce infrastructure developed by travel companies allows collection and central storage of sales and marketing data. Travel companies use this data to drive decision support tools for planning and marketing.

§ The Business Theories and concepts:

The old pillars and new meanings

The Laudon and Traver framework 2005 is very elaborate explaining the different pillars that have contributed to the development of the E-Commerce framework.

This framework at the very top of the list has E-Commerce application that can be used for the development of businesses in the future. These applications may seem at the outset like out of a science fiction book but are indeed realities.

The disintermediation and Reintermediation:

The travel agents for example it was believed that will lose their jobs when more people are interested on online business but interestingly the use of these web-enabled features have only increased the use and conveniences of these businesses.

For example two of the three websites that have been taken up for analysis by our group are Travel websites. These are supposed to wipe out the businesses of the intermediary called the travel agent but interestingly, these have added to the convenience of the travel agent hence creating a new intermediary.

The Grover V and J Teng (2001) model of the infomediaries and information flow model gives a more clear idea about the various channels that carry information between the buyers/sellers and the infomediaries.

The Themes:

Hence the themes that came up to us were the B2C models and we were interested in looking specifically at the travel related websites. There was one website travel that we could not get an approval for but the group was happy to consider the business model of B2C

B2C:

The group was of a very uniform opinion that the websites have to be B2B only since some of the data that was spoken about were like $ 250 billion revenue in 2005 from B2B as against 6.3 trillion in B2C. Although the difference is huge the group came to a strong consensus that the gap will be bridged and it will be worth pursuing with all the hopes for new business models in the future happening in the B2C segment rather than the B2C segment.

The death of the Physical travel agent or the focus on creation of new intermediaries

Considering the new intermediaries that are being evolved because of the e-business it is was discussed if the websites will wipe away the travel agent.

But the discussion pointed in the direction of all websites have been playing a supportive roles in the B2C front and the travel agent themselves are using these websites to help customers and give them a better service.

The Adrenalin.com website that sells software has been using the site to reach out to the resellers as well. In a business where there is a very high connectivity on the internet, this is a unique feature that this company is using it build customer loyalty as well as expand the channel of distribution.

§ The criteria for evaluating the websites:

The Criteria for assessment were selected after deliberations on how the customer will view the details of the site. The criteria customer interface was included to assess how the company was recording the details of the customer traffic and recording them in to usable database.

In the case of Southwest it was very clear that the website is a place for building the loyalty programs of the airlines. The Adrenalin website is a good place with its feature of blog, for all troubleshooting and technical whitepapers

How Web Site Visitors Evaluate “Content”

How Web Site Visitors Evaluate “Web Site Design”

Recommendation:

Website should be more informative. It should be easy to navigate through various pages even for the new online users. Since the Travel Agency is providing lot of services and products for its customers so must have “Search” function should have drop down menu so that even the customer who are not aware about all products and services of the Travel Agency can get information about it. May be it will help the Travel Agency to have more customers as sometime customers are not aware about all the products offered by the Travel Agency.

As it is clear from the financial report of Travel Agency which is available on website that the latest report is not available i.e. for third quarter. So it should be taken care that the website is updated regularly.