Page 164 - Electronic Commerce

Selling on the Web

strategy and continue to pay commissions to travel agents on the sales that they
make. Web sites that make discounted cruise packages easy to search, such as
VacationsToGo.com, or that provide detailed information about cruises, have been
successful in this travel industry niche.
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Other small travel agencies have been successful by following a reintermediation
strategy with a focus on specific groups of travelers. These travel agents identify a group of
travelers with specific needs and sell travel packages designed for that group. For example,
surf vacations have become increasingly popular. The stereotypical surfer of years gone by
(a young unemployed male) has been replaced by a much broader demographic. Today’s
surfers often have significant financial resources and enjoy surfing in exotic locations.
Web sites such as WaveHunters.com have followed a reintermediation strategy and cater to
this specialized market. Travel agencies that specialize in unusual or exotic destinations,
such as Antarctica, have also been successful as intermediaries if they have particular
expertise, knowledge, or local contacts that help them create custom itineraries. These
sites also include advertising as part of their online presences and revenue models.

Automobile Sales
Traditional auto dealers buy cars from the manufacturer and sell them to consumers.
They provide showrooms and salespeople to help customers learn about product features,
arrange financing, and make a purchase decision. Dealers make their profits by charging a
markup on each vehicle sale in addition to charging fees for service, warranty extensions,
and other add-ons. In the United States, most states have laws that prevent auto
manufacturers from selling directly to consumers, which provides some protection from
disintermediation for auto dealers. Almost all auto dealers negotiate the prices at which
they sell their cars; thus, the salesperson’s job includes extracting the highest possible
price from the consumer. Many people do not like negotiating car prices, especially if they
have taken the time to learn about car features, arrange financing, and are ready to
purchase a car without further assistance from a salesperson.
Autobytel and similar firms, such as Edmunds.com, provide an information service
to car buyers. They offer an independent source of information, reviews, and
recommendations regarding auto makes and models. Some of these firms offer customers
the ability to select a specific car (model, color, options) at a price the firm determines.
The firm then finds a local dealer that has such a car and is willing to sell it for the
determined price. An alternative approach is for the firm to locate dealers in the buyer’s
area that are willing to sell the car specified by the buyer (including make, model, options,
and color) for a small premium over the dealer’s nominal cost. After the firm introduces
the buyer to the dealer, that buyer can purchase the car without negotiating with a
salesperson. The firm charges participating dealers a fee for this service. In effect, these
firms are disintermediating the individual salesperson. To the extent that the salesperson
provides little value to the consumer, these firms are reducing the transaction costs in the
process. The car salesperson is disintermediated and the Web site becomes the new
intermediary in the transaction, which is an example of reintermediation. Some auto sales
sites also sell advertising on their sites, which makes them, like the online travel agencies,
examples of mixed fee-for-transaction and advertising-supported revenue models.

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