Online ticket to ride
Internet sales: the state of play
Since the buzzphrase electronic commerce was invented in the mid-1990s, there have been some spectacular failures of the promise of the Internet to transform business, writes Fran Howarth of Bloor Research.
The dotcom boom has come and gone and the majority of online marketplaces - hyped as the future of business - have closed up shop.
Yet Internet sales are slowly gathering pace. Evidence from the retail travel sector in the Netherlands shows that customers are increasingly turning to online sales - and the travel companies are doing everything that they can to encourage the use of the Internet.
In the airline sector, a report released by Euromonitor on the travel and tourism market in the Netherlands indicated that online sales accounted for only 5 per cent of total reservations in 2001.
In March 2003, KLM's CEO stated that its Internet sales were experiencing double digit growth. To encourage this to increase further, its is boosting the quality of its online offerings, including enhanced customer service, and will make electronic ticketing available on all of the routes worldwide served by itself and its partners. To encourage customers to take up this service, it is offering a €5.50 discount for all tickets bought online and is cutting the ticket sales commissions that it used to pay travel agents, which previously amounted to 7 per cent of the price of a ticket.
In contract, its competitor in the European short haul market, EasyJet, has long encouraged its customers to book tickets over the Internet by offering cheaper tickets than those available if the booking is made over the phone. In 2002, EasyJet sold 88 per cent of its offerings via the Internet, and by 2003 that had increased to 93.8 per cent of all tickets sold. This allows it to greatly increase the productivity of its staff at the same time as providing a better service to its customers.
As their share in the market continues to fall, travel agents have been responding by increasing the amount of their own services that are accessible over the Internet. But the pattern of sales indicates that there is a concurrent move towards the greater need for personalised service. For example, when booking domestic trips, 19 per cent of Dutch booked over the Internet, compared to 14 per cent of those booking foreign travel. In 1988, Internet sales only accounted for 5 per cent of the sales in this sector. But the need for tailored services is shown in data that indicate that in-person consultations account for 17 per cent of domestic travel sales, compared to 50 per cent of foreign trips.
So, while use of the Internet is growing as a means for consumers to book their leisure activities, the greatest differentiator is the level of service that is offered - preferably tailored to the needs of the particular consumer. The use of the Internet for sales is not about convenience alone; it is about giving the consumer exactly what they want, when they want it.