1. E-Commerce & Internet Applications
BBA (Hons) 7th
(EC in Service Industry)
Lecture 13,14,15
By: Farhan Mir

2. Learning Objectives
Understand how broker-based services are performed online
Describe online travel tourism services and their benefits
Discuss the impact of EC on the travel industry
Describe the online job market, its drivers and benefits
Describe the electronic real estate market
Understand how stock trading is done online and its benefits

3. Learning Objectives (cont.)
Discuss cyberbanking, its drivers and capabilities
Describe some innovative applications in the service industries
Discuss the future of intermediaries and their role in cyberspace

4. Broker-Based Services
Brokers work as intermediaries between buyers and sellers
Agents basically make the markets
Agents provide many services
Most of the value-added tasks of brokers can be automated
Major electronic agent-based services
travel
employment
real estate
stocks
electronic auctions
at-home banking
insurance

5. Broker-Based Services (cont.)
Service Industries Vs. Manufacturing and Product’s Retailing
Service Industries
pure EC is quite possible  substantially reduced cost
bank and brokerage houses
possible digitization of the entire process
travel and real estate agents
viewing an online video clip or seeing photos of a hotel or a house for sale
Manufacturing and Product’s Retailing
physical delivery cost may be high

6. Travel and Tourism Services
By the year 2006, close to 49 percent of all business-to customer Internet commerce will be related to tourism
The Internet is an ideal place to plan, explore, and arrange almost any trip
IBM’s vision of seamless electronic travel using smart cards

7. Travel and Tourism Services (cont.)
Services Provided
Providing maps
Information and booking of airlines, hotels, cars, and even golf courses
Pictures of major attractions
Information about entertainment and ticket purchasing (such as
Fare comparisons
360 degree video tours of top destinations
Tips provided by people that experienced certain situations (like a visa problem)
Electronic Travel magazine
Converting 200 currencies

8. Travel and Tourism Services (cont.)
Frequent flier deals
Fare tracker (free alerts on low fares)
Special discount information
Restaurant reviews
Current status of flights
(real time)
Major international news
Chat rooms and bulletin boards
Worldwide business and places locator
Special interest vacations
Travel news
Shopping for travel accessories and books
Bed and breakfast recommendations
to intermediary
Driving directions in the US
Experts’ options
Weather watch 8
© Prentice Hall, 2000

10. Travel and Tourism Services (cont.)
Benefits
Free information is tremendous
Free information is accessible anytime
Substantial discounts

11. Travel and Tourism Services (cont.)
Impacts on the industry
Multimedia helps customers understand the products
Offering of lower-cost trips
Providing a more personalized service
Increasing the convenience of getting information at home
Supporting a customer-focused strategy (such as targeted advertisement and integration of products); push information to customers

12. The Employment Placement Market
Job markets
Employers are looking for employees with specific skills, and individuals are looking for a job
Very volatile market
Moved to the Internet
Millions of job seekers, hundred of thousands of jobs

13. The Employment Placement Market (cont.)
Shortcomings of the Non-Internet Job Market
Cost—Classified ads are expensive.
Life cycle— Unless renewed, at an additional cost, the life of the ads is only days or weeks.
Place— Most ads are local. Nationwide ads are very expensive. International ads are even more expensive.
Minimum information— Because of the high cost, the information provided is minimal and may not appeal to some job seekers.
Search— It is very time consuming for individuals to find all relevant newspapers. A trip to a library results in finding only major out of town newspapers.
What about looking for Jobs in International Market?

14. The Employment Placement Market (cont.)
Finding applicants— Most job seekers, in the pre Internet era, did not place ads about their availability. Some sent unsolicited letters with resumes. This situation made it difficult for companies to find employees with special skills. They had to use employment agencies and pay them high commissions.
Matching— It was difficult to match candidates to open jobs as well as to match supply and demand.
Lost and dated material— Some applications or letters of response tended to get lost, or arrive late. A letter in a big city may travel two weeks to arrive at a distance of a few blocks.
Speed— Communication by mail is slow and so is the processing of a large number of applications. Frequently, employers lose good employees, since by the time the application is processed, the applicant had taken another job. Similarly, applicants accept less desirable jobs because they are afraid to wait too long.

15. The Employment Placement Market (cont.)
The Internet Job Market
The Internet offers a perfect environment; it is especially effective for technology-oriented jobs.
Job seekers
Job offerers
Recruiting firms
Government agencies and institutions

17. The Employment Placement Market (cont.)
The Advantage of the Electronic Job Market
For job seekers
Ability to find very detailed and timely information on a large number of jobs world-wide
Ability to quickly communicate with potential employers
Ability to post resumes for large-volume distribution
Ability to search for jobs quickly from any place at any time
Obtain several support services at no cost
writing resume  career development  how to interview
Find employer profile & industry guides

20. The Employment Placement Market (cont.)
For employers
Ability to advertise to a large number of job seekers
Ability to save on advertisement costs
Lower the cost of processing (using electronic application forms)
Ability to provide greater ‘equal opportunity’ for job seekers
Ability to find highly skilled employees
Ability to conduct tests quickly, online
Ability to change and update ads quickly
Ability to fill up positions rapidly
Interviewing from distance

21. The Employment Placement Market (cont.)
The Limitations of the Electronic Job Markets
Many people do not use the Internet
Security
Privacy
Lack of face-to-face contact

22. The Employment Placement Market (cont.)
Major Services Available on the Net
Finding a job
Writing and posting resumes
Career planning
Newsgroups
The Intranet Job Market
Most companies organize an internal electronic job market
Openings are posted for employees to look at, and search engines enable managers to identify talents even if the people were not actively looking for a job change

23. Real Estate: From Virtual Realtors to Virtual Reality
You can view many properties on the screen
You can sort and organize properties
You can find detailed information about the properties
You can search, compare and apply for loans

24. Real Estate: From Virtual Realtors to Virtual Reality (cont.)
Real Estate Applications
International Real Estate Directory and News is the most comprehensive Web site
National listing of real estate properties
Commercial real estate directory
The complete real estate software catalog

25. Real Estate: From Virtual Realtors to Virtual Reality (cont.)
Real Estate Applications
Mortgage comparisons and calculations and other financing information; mortgage application ;
Searching residential real estate in multiple databases
Real estate related maps are available on:
Automating the closing of real estate transactions, which is overwhelmed by paperwork

26. Real Estate: From Virtual Realtors to Virtual Reality (cont.)
Real Estate Applications
The National Association of Realtors, has links to property listings in all major US cities
To find how much house you can afford, consult:
Mortgage brokers can pass on loan applications over the Net and receive bids from lenders that want to issue the mortgages

27. Trading Stocks Online
Trading Stock of companies through electronic means especially through internet (kSE)
Costs between $7 and $20 per transaction (Vs. $30 - $100 in traditional brokerage)
No waiting on busy telephone lines
No oral communication, less chance for errors
Place orders from anywhere, any time, day or night
No biased broker to push you
Considerable amount of free information

28. Trading Stocks Online (cont.)
E*Trade, Schwab Online
Order is placed, as described earlier, on an electronic form from any computer with access to the Web, anywhere in the world.
The order is routed to Schwab’s host computer in San Francisco and, within a split second, forwarded to the trading floor of the New York Sock Exchange (NTSE).
Is the order larger than 30,000 shares?
Order is transferred to Schwab’s floor brokers at the NYSE, who take it to the specialist, who finds the best price and, if satisfactory, the order is fulfilled.
Yes
Order is automatically transferred to a specialist and fulfilled based on the bid and ask prices. No
In a few seconds, (most cases), Schwab confirms that trade and the price, relaying the information to the investor’s PC.

29. Trading Stocks Online (cont.)
Investment Information
For municipal bond pricing see : and
For overall market information and many links see:
For free Gurus’ advice see:
For stock screening and evaluation try:
provides articles from the Journal of the American Association of Individual Investors

30. Cyberbanking and Personal Finance
Electronic banking
Saves time and money for users
Offers an inexpensive alternative to branch banking
Application Case: Cyberbanking at Wells Fargo

31. Cyberbanking and Personal Finance (cont.)
Implementation Issues in Banking and Online Trading
Securing Financial Transactions
Application Case: Security at NationsBank
Logon Screen
User ID
User Password
B of A
Web Site
External Firewall
B of A
Web Server
Internal Firewall
B of A Application Server
Customer’s
Computer
Encrypted Session & Digital Verification Initiated
Bank of America Security System

32. Billing Online Automatic transfer of mortgages
This method has existed for several years. The payer authorizes its bank to pay the mortgage, including tax payments.
Automatic transfer of funds to pay monthly utility bills
As of fall 1997, the city of Long Beach has allowed its customers to pay their gas and water bills automatically form their bank accounts.
In 1999, many utility companies worldwide, including those in Hong Kong, allow customers to pay from bank accounts, or ATMs.

33. Billing Online (cont.) Paying bills from online banking account
Such payments can be made into any bank account. Many people pay their monthly rent and other bills directly into the payee’s bank accounts.
Bill Consolidator
Billers
Phone
Consumer
Credit Card
Utility

34. Billing Online (cont.) A merchant-to-customer direct billing
Under this model, a merchant like American Express posts bills on its Web site, where customers can view and pay them . This means that the customers have to go to many Web sites to pay all their bills. Several utilities in Los Angeles allow customers to pay bills on the utilities’ Web site, charging customers 20 cents per transaction, which is less than the price of a postage stamp.

35. Auctions: From Theory to Practice
Used when the conventional marketing channels are ineffective or inefficient
Offer trading opportunities for both buyers and sellers which are not available in the conventional channels
Internet provides much cheaper infrastructure with many more involved sellers and buyers
Individual consumers and corporations alike can participate in this rapidly growing and very convenient form of electronic commerce

36. Auctions: From Theory to Practice (cont.)
Limitations of traditional auctions
Last only a few minutes for each item sold
Give buyers little time to make a decision
The bidders do not have much time to examine the goods
Exclude many potential bidders
May be complicated for sellers to move goods to the auction site
Commissions are fairly high (rent, advertising, auctioneer and other employees)

37. Auctions: From Theory to Practice (cont.)
Electronic Auctions
Early auctioning done on local area networks
the auctioning of pigs in Taiwan and Singapore
the auctioning of flowers in Holland
the auctioning of cars in Japan
Auctions on the Internet started in 1995
similar to offline auctions, except for the fact that they are done on a computer
some last days, others a short time
detailed information is available
start bidding by sending or filling out an electronic form
names of bidders are kept coded to maintain privacy

38. Auctions: From Theory to Practice (cont.)
Electronic Auctions
Auctioning methods
Yankee method
Dutch (Reverse bidding) method
“Straight sale” method
Examples
; a directory of sites, search
Onsale, eBay, uBid

39. Auctions: From Theory to Practice (cont.)
Benefits and Limitations
Benefits
For seller
Sells goods efficiently
Sells goods with little action or effort
Creates a greater range of potential buyers
Sells excess inventories quickly via this process
For buyers
Gets a huge variety of goods
Finds quality goods for largely discounted prices
Limitations
Inability to physically see the items
Possibility of fraud
Less competitive atmosphere may prevail on the Net

40. Impacts Parameter Impact of the Web Auctioneer
Lower entry barriers, opportunity for direct sales
Access rules
Customizable, theoretically millions of potential customers can be reached
Trading rules
The trading rules reflect the lack of a guaranteed service
Execution
process
For digital products the entire trading cycle can be handled on the Web; for physical products the trading process and the physical logistics of the trade objects can be separated, leading to a reduction of costs

41. Online Publishing
The electronic delivery of newspapers, magazines, news, and other information through the Internet
Online Publishing Today and Tomorrow
Today— mainly used for disseminating information and for conducting sales transactions interactively
Tomorrow— include more customized material that the reader will receive free, or will pay for

42. Online Publishing (cont.)
Publishing Modes
newspapers, magazines, news, textbooks, music, artwork, video clips, and movies
Publishing Methods
online archive approach— a digital archive such as library catalogs and bibliographic databases
new medium approach— add extra comprehensiveness to any issue or topic
publishing intermediation approach— an online directory for news services
dynamic or just-in-time approach— create content in real-time and transmitted on the fly

43. Knowledge Dissemination
Virtual Teaching and Universities
Many universities are offering limited courses and degrees but use innovative teaching methods and multimedia support
MBA program in Hong Kong
lectures are delivered as an interactive TV (iTV)
students can decide what and when they want to ‘attend’ the lecture
lecture, support material, exercises etc. are provided on the Web

44. Knowledge Dissemination (cont.)
Online Consulting
Medical advice— provide consultation with top experts
Management consulting— provide accumulated expertise from knowledge bases
Legal advice— delivery of legal consultation services to business has considerable prospects
Financial advice— offer extensive financial advice
Other service online
insurance, healthcare, future exchanges, matchmaking, venture capital, finding a college, digital delivery of documents, and electronic stamps

45. The Impact on Intermediaries and Their Changing Roles
Change the role of agents to :
Assist in comparison shopping from multiple sources
Providing total solutions by combining services from several vendors
Providing certifications and trusted third party control and evaluation systems

46. The Impact on Intermediaries and Their Changing Roles (cont.)
Issues that could impact the future of the intermediaries
The success of intelligent agents— In addition to the travel intelligent agents, there are agents to support job matching and to interpret resumes. The more intelligent the software agents will be, the less you will need human agents.
Customer attitudes and behavior are important— If you have good experience with online insurance or stock purchasing, or with virtual travel agencies would you ever return to use a human agent?

47. The Impact on Intermediaries and Their Changing Roles (cont.)
New roles of electronic marketing intermediaries
To extend what we are familiar with in physical markets to the virtual world (e.g., search services and electronic malls)
To extend payment clearing functions into the Internet (e.g. electronic cash and digital credit card services)

48. Managerial Issues Effectiveness of out-of-town recruitment
Privacy may be in danger
International legal issues may impact services more than products
Ethical issues are prevalent in services
The intermediaries and their roles are changing