Page 161 - Electronic Commerce

Chapter 3

Insurance Brokers
Other sales agency and brokerage businesses have moved substantial portions of their
operations online. Although insurance companies themselves were slow to offer policies
and investments for sale online, a number of intermediaries that sell insurance policies
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from a variety of companies have been online since the early days of the Web.
Quotesmith, which began business in 1984 as a policy-quoting service for independent
insurance brokers, decided in 1996 to sell its policy price quotes directly to the public
over the Internet. By quoting policies and accepting applications directly, Quotesmith
disintermediated the independent insurance agents with whom it formerly worked.
Although Quotesmith is no longer in business, similar sites such as InsWeb and Insurance
.com continue to provide quotes from multiple insurance carriers online directly to
consumers.
As you learned in the case at the beginning of this chapter, Progressive provides
quotes on its Web site for both its insurance products and for its competitors’ products.
The General (General Automobile Insurance Services) uses its Web site to reach auto
insurance buyers who might have had trouble getting insurance from other companies.
It advertises its online insurance quotes as being “fast and anonymous.” By offering a
comfortable environment to potential customers who have been rejected by other
companies because of credit problems or traffic tickets, The General has been successful
in this specific niche of the insurance market. Today, most major insurance companies
offer information and policies for sale on their Web sites.

Event Tickets
Before the Web made online sales possible, obtaining tickets for concerts, shows, and
sporting events could be a challenge. Some venues only offered tickets for sale at their
own box offices, and others sold tickets through ticket agencies that were difficult for
patrons to find or impossible to reach by telephone. The Web gave event promoters the
ability to sell tickets from one virtual location to customers practically anywhere in the
world. Established ticket agencies such as Ticketmaster were early participants in online
ticket sales and earn a fee on every ticket they sell.
In addition to the original sale of tickets, the Web created opportunities for those who
deal in secondary market tickets (tickets that have already been sold by the event’s
producer and that are being offered for resale to other persons). Companies such as
StubHub and TicketsNow operate as brokers to connect owners of tickets with buyers in
this market. These ticket resellers earn fees on tickets they resell for others, but they can
also profit by buying blocks of tickets and reselling them at a higher price. Both ticket
brokers and ticket resellers reduce transaction costs for both buyers and sellers of tickets
by creating a central marketplace that is easy to find and that facilitates buyer-seller
negotiation.
Individual entertainers, as you learned earlier in this chapter, operate their own Web
sites to promote themselves and, in some cases, sell music or performance videos online.
A few of these performers are experimenting with selling tickets to their live performances
directly to consumers online. This allows them to disintermediate ticket brokers from the
value chain and either reduce ticket prices or keep more ticket revenue for themselves.

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