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

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 75% 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” in and around households, business firms, and institutions
The major service industry groups include:
Finance, insurance, real estate
Travel
Legal and accounting
Business services – consulting, advertising and marketing, and information processing
Health services
Educational services

5. Question
Within these service industry groups, companies can be further categorized into two groups that provide services with very different characteristics
What are these two types of services?

6. Categorizing Service Industries
Services either involve transaction brokering or “hands-on” service
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 these categories has been most impacted by e- commerce?

7. Online Service Industries
In this chapter we will focus on characteristics and trends in the three of the largest, and most successful, online transaction brokering industries
These industries include:
Online financial services
Online travel services
Online career services

8. Online Financial Services
Contributes over $3 trillion to the US GDP or about 20% of the total GDP
Financial services include:
Banking
Brokerage
Mortgage and lending
Insurance
Real estate

9. Online Financial Service Industry Trends
Two important global trends in the financial services industry have direct consequences for online financial services firms and overall industry structure
These trends include:
Industry consolidation
Movement toward integrated financial services

10. Online Financial Consumer Behavior
Consumers are attracted to financial sites because of their desire to save time and access information rather than save money
Around 72.5 million households use online banking compared to just 46.7 million in 2005
Most online consumers use financial services sites for mundane financial management, such as checking balances of existing accounts and paying bills
Once accustomed to performing these simple tasks, consumers move on to more sophisticated capabilities such as using personal financial management tools and making loan payments
The number of people using mobile devices for financial service needs is also surging

11. Online Travel Services
Travel and tourism in the US contributes over $400 billion to the GDP
Online travel is one of the most successful B2C e-commerce segments
Travel is an information intensive product requiring significant consumer research
Travel market segments include airline tickets, hotel reservations, car rentals, and cruises/tours

12. 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 intense because shoppers 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:
Industry consolidation
Use of meta-search engines that scour the Web for the best deals and then collect finder or affiliate fees from travel site
Increased use of mobile devices and apps

13. Online Career Services
Next to travel services, one of the Internet’s most successful online services has been job services
The top sites generate more than $1 billion annually in revenue from employers’ fees and consumer fees
Recruitment market segments (Table 9.9)
General recruitment sites
Executive search sites
Niche job sites
The professional social networking site LinkedIn is also becoming an increasingly important player in the market
In 2011, it added a plug-in, Apply with LinkedIn, that allows job seekers to easily submit their LinkedIn profile to an employer’s Web site

14. Online Career Services Trends
Trends for in the online recruitment services industry include the following:
Consolidation – industry dominated by two sites
Diversification – explosion of small niche sites
Localization
Job search engines/aggregators
Social networking
Mobile