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Chapter 2 E-commerce fundamentals 73

Some of the main new intermediaries identified by Sarkar et al. (1996) were:
Directories (such as Yahoo!, Excite).
Search engines (AltaVista, Infoseek).
Malls (BarclaySquare, Buckingham Gate).
Virtual resellers (own-inventory and sell-direct, e.g. Amazon, CDNow).
Financial intermediaries (offering digital cash and cheque payment services, such as
Digicash).
Forums, fan clubs and user groups (referred to collectively as ‘virtual communities’).
Evaluators (sites which perform review or comparison of services)
Timmers (1999) identified other sites which we will review later for their alternative revenue
models. It is useful to review how the role of online intermediaries has changed since this
time to evaluate the importance of different types of intermediaries today in reaching and
influencing an audience. General directories are now less important and have mainly
merged with search engines since search is now the preferred form of access through the
search engines that have risen to the top of the pile, namely Google, Yahoo! and Microsoft
Live. However, traditional directory owners such as the Yellow Pages (www.yell.com) and
many small-scale directories of sites still exist in vertical sectors which give opportunities for
visibility to be reviewed by companies.
Online shopping malls, which were online equivalents of the offline phenomenon, did not
prove effective since there was no consumer benefit in visiting a shopping mall retailer when
you could go direct to the retailer’s web site. Instead, sites in the evaluator category such as
the price comparison search engines we considered earlier in this chapter such as Kelkoo and
Pricerunner have become important destinations since they enable a choice of many suppli-
ers across many categories based on price. E-retailers such as Amazon have remained
important, but many such as CDNow have failed since they could not balance the expendi-
ture on customer acquisition with the need to retain customers. These have been replaced by
new e-retailers such as CDWow (www.cdwow.com) and Play.com (www.play.com). Many of
the forms of digital currency such as Digicash and E-cash did not prove popular. Instead,
PayPal (www.paypal.com) became popular and was purchased by eBay (www.ebay.com, see
Case Study 1.3). The C2C virtual communities category described by Sarkar et al. has proved
to be where many online users spend the most time, with specialist forums and chatrooms
and the major social networks such as Bebo, Facebook and MySpace. For the younger age
group, HabboHotel (www.habbohotel.com) has proved popular in many countries.
A more recent trend in consumer intermediaries is the growth of cashback sites. An inter-
esting initiative blending search, comparison sites and cashback launched by Microsoft in 2008

is shown in Mini Case Study 2.2 on a new Microsoft cashback initiative in their Live Search.
This is a typical powerplay between intermediaries which digital communications facilitates.

Microsoft combines cashback with product comparison in their Live
Mini Case Study 2.2
search engine

Microsoft introduced their Live search cashback (http://search.live.com/cashback) on 21 May 2008. It was
initially limited to US citizens.
Microsoft’s value proposition is evident from their cashback search FAQ which include the positioning
statement:
We want to earn your loyalty and reward it with cashback savings for your everyday online shopping. We
are ‘The Search That Pays You Back!
Strictly speaking, it isn’t a ‘get paid to search’ service as some of the headlines at the time suggested, but instead
consumers are paid a cashback sum after purchasing through one of Microsoft’s participating merchants.