1. Online Services
Chapter 9

2. 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
Understand the business models of on-demand service companies

3. 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 80% of all economic activity
E-commerce in the service sector offers extraordinary opportunities to deliver information, knowledge, and transaction efficiencies

4. 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 e-commerce?

5. Service Industry Groups
The major service industry groups are:
Finance, insurance, real estate
Travel
Legal, accounting, and other business services
Health services
Educational services
In this chapter we will focus on characteristics and trends in three of the largest, and most successful, online transaction brokering industries
Online financial services
Online travel services
Online career services

6. Online Financial Services
The online financial services sector is a shining example of an e-commerce success story, 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

7. Online Financial Consumer Behavior
Surveys show that consumers are attracted to financial sites because of their desire to save time and access information rather than save money
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

8. 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

9. Online Travel Services
Online travel is one of the most successful B2C e-commerce segments
Accounts for almost one-third of all US B2C e-commerce revenues in 2015
Online travel services revenues are expected to grow to almost $200 billion in 2019
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
The four major sectors include airline tickets, hotel reservations, car rentals, and travel packages

10. 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:
Intense 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
Social media also impacts the industry through user-generated content and online reviews

11. Online Career Services
Next to travel services, one of the Internet’s most successful online services has been job services
Online job market is dominated by two large players – Monster and CareerBuilder
LinkedIn is also becoming an increasingly important player in this market
Recruitment market segments (Table 9.8)
General recruitment sites
Executive search sites
Niche job sites

12. Online Career Services Trends
Current trends in the online recruitment services industry include:
Consolidation – industry dominated by two sites
Diversification – explosion of specialty niche sites (reduces information overload for users)
Social recruiting – 92% of HR professionals surveyed recently said they use sites like LinkedIn for recruiting
Mobile
Job search engines/aggregators – provide free, searchable, index of thousands of job listings and use an advertising revenue model rather than a transaction fee
Data analytics and hiring by algorithm – increasingly used to match job seekers with job openings, and sift online job applications focusing on key words

13. On-demand service companies
Provide a platform that enables on-demand service delivery by connecting providers (with spare resources) to consumers
Unlike traditional sharing, these firms collect a fee from both sellers and buyers
Funded by over $26 billion in venture capital
Examples of on-demand service firms are listed in Table 9.9
Two common examples include Airbnb and Uber
They incorporate several unique characteristics into their service provision:
Use of mobile and Internet technology to enables transactions on their platforms
Supported by the use of online reputation systems
Successful firms lower the cost of services like urban transportation, lodging, office space, and personal errand services