Supply and sell side map - Expedia

 

Background of this post:-

This is the first assignment from BI5691 - The Networked Organization course (Msc Business Information Systems 2011, Royal Holloway University of London). Major part of the assignment is to “build a ‘map’ that contains the supply (or buy) side and sell side for a company / organization”. 

I looked at lot of different companies from Chaffey’s E-business and E-commerce Management book. Then thought, maybe I should select a company which utilizes several e-utilities at all aspects of their business. After looking at couple of companies I have decided to select Expedia Inc (www.expediainc.com) a leading travel services provider. I will try to share my understanding of the business strategies and e-technologies adopted by this company.

A: Understanding background of the company.

According to  Expedia Inc website (Accessed 21:09, 10Aug2010 Available:http://www.expediainc.com/) Expedia Inc was founded as a division of Microsoft in 1996 and spun off in 1999.The aim was to capture a lion’s share of ever growing travel market. Expedia Inc adopted several strategies to achieve this goal.

B: Supply and Sell Side Diagram


Following is a visual representation of strategies adopted by the company (Portrayed as a supply/sell diagram - Expedia Inc)

                        *Please click on the image to maximize

C. Summary of Supply / Sell Diagram (Current Scenario)

Supply Side: Company has direct contracts with suppliers such as Airlines, Hotels, Car Rentals, Cruise ship companies and events/show organizers. In most cases company can make a real time booking with suppliers. This is achieved through integration of Expedia Inc‘s e-commerce systems with supplier systems such as Airline global distribution systems (GDS) and hotel reservation softwares. As a result of this company is able to give best available rates to its online customers.

Sell Side: Expedia Inc uses different approaches to achieve maximum market penetration.

1.  Directly owned travel and hospitality websites (http://www.expedia.com/, http://www.hotels.com/ etc.) tailored to suit customer requirement in different markets (local versions also offered eg: http://www.expedia.co.uk/).

2.  Tele Sales: Customers can call the tale sales center and book tickets by providing their credit card details.

3.  Web Affiliate programs: Expedia Inc offers a wide array of affiliate programs to online and traditional travel agents. Company has the capability to offer online solutions where either 3^rd parties can have a ‘white label’ website supported by Expedia Inc or use Expedia Inc’s booking engine for their websites.

4.  Travel Agent system: Expedia Inc offers special programs targeting traditional travel agents where a travel agent can book through the distribution systems built by Expedia Inc and earn commissions based on their business volume.

5.  Another method adopted was promoting travel advisory / travel review websites. Worlds most popular and most trusted travel advisory website http://www.tripadvisor.com/ is owned by Expedia Inc. A ‘white labeled’ booking solutions is integrated to advisory website which directs all sales traffic to parent booking systems.

D: New technologies which can be used to improve either side (buy/sell)

Expedia Inc could use lot of new options to improve their customer experience and market exposure of the company. Following are a few to name.

1. Company should explore the possibility of mobile based travel services where customers can book and pay for services offered though Smartphone applications.

2. Company can also explore the possibility of real-time feedback from customers using toll free SMS or other mobile based services and share it with relevant suppliers for better service.

3. Use different social networking platforms such as facebook and myspace to increase the visibility of the brand and use twitter to provide daily special offer of the tweets to followers.

4. Custom tour packages: Provide option to build customizable tour packages where customer can choose price, duration and pace of their trip from a wide variety of options.

5. Restaurants: Include restaurant reservation as part of the hotel booking deal where customers can choose any available restaurant and reserve a place for them.

E: Summary of relevant findings:

I think this organization fits in a variety of e-business models within Chaffey. Buy side fits in to B2B model as company receives most of its services from business service providers. Sell side fits in to B2B, B2C and C2B models.  Most of the ‘white label’ products follow B2B, web sales & telesales follow B2C and feedback sites follow C2B model.

Some other thoughts: Integration of e-technologies can really transform some of the traditional business models like travel agency and reap unimaginable benefits. Expedia Inc’s case is a perfect example for this. Before the arrival of Expedia Inc & Sabre Holdings into online travel scene, travel agencies were not considered as a business model with huge potential. Success of these two companies provides a perfect example for the amazing level of global penetration and cost savings possible with a wide array of online strategies and tools.