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E-Business Strategy & Management (GBAT9117)

Assignment 1
Comparative Study of Two E-Business Sites

Assignment:
Choose two web sites belonging to companies of the same industry. They may be
B2B or B2C sites.

a) For each site:

Briefly describe whether the site is a B2B or a B2C website;
What functions does each site offer?
What can the end user do?
Briefly describe what technologies enable the user to interact with the
site.
b) Compare the two websites
What are the comparative features and benefits?
Are there any problems with the sites?
Which is better from the users point of view? Why?
c) Analyse the business benefits of the websites.
Speculate on why each company set up the site. What do you think the
company hoped to achieve?
Does each company make money from the site? If so, how?
What are ALL the Returns on Investment in setting up the site (not just
financial)?

E-Business Strategy & Management (GBAT9117): Assignment 1 : Linda Stewart : August 2001

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Introduction
This paper reviews two Business to Consumer (B2C) Internet sites
implemented by two organisations (Qantas and Ansett) in the same industry
air travel. The paper commences with a brief review of the Internet
commerce business models used by each organisation. This is followed by a
brief overview of the technical functionality and enabling technology of
each organisations web site. A user- focused comparison of site features,
benefits and problems is presented and a preferred site identified. A
speculative analysis of electronic commerce business drivers is proposed
together with an analysis of revenue generation and returns on investment.
The paper concludes with a proposition that the construct of each
organisations web site reflects a fundamental difference in business
strategy.

Models Used
Using Lawrence et als 1 (2000) list of Internet commerce business models,
the closest match to the model used by both Ansett and Qantas is a hybrid of
the Virtual Storefront (VS) and Internet Commerce Customer Service Life
Cycle (ICCSLC) models. Table one lists the features of each model and
identifies whether either site contains each feature.
Feature
Business service/product information
Online Purchasing
Customer Support
Product/service delivered at later date
Register before purchasing services
Order purchasing time reduced
Help customer determine their needs
Assist acquisitio n
Brand loyalty promoted
Help Retirement of service / product

Model
VS
VS
VS
VS
VS
VS
ICCSLC
ICCSLC
ICCSLC
ICCSLC

Ansett
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No

Qantas
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No

In both sites there are also elements of the Integrated Internet marketing
model, most notably the inclusion of news stories and press releases about
the company and/or its services.

E-Business Strategy & Management (GBAT9117): Assignment 1 : Linda Stewart : August 2001

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Site Functionality
Site technical functionality is briefly reviewed below. The sites are
technically similar with content rather than contextual differences.
Image
Both sites homepage facilitates speedy information access. Qantas places
flight booking and fare query functions on its homepage whereas Ansett
requires users to switch to the appropriate function to book flights and check
fares. The Qantas homepage is a confronting bright red with white text, the
colour scheme in the rest of the site being more user- friendly. The Ansett
homepage is more subdued, using colour to indicate functions.
Navigation
Both sites have reasonably intuitive navigation with consistency of page
switching mechanisms. Qantas provides a site map to facilitate direct access
to required functions, Ansett provides similar functionality via a site index.
Search engines in each site only search on page titles within either site map
or site indexno text-based search is provided.
Information
Both sites are complex and information rich. Ansett displays more
destination information than Qantas but both sites display information about
routes, flights, fares, aircraft, travel comfort and corporate details.
User feedback
Both sites provide facilities to capture user feedback.
Enabling Technology
Both sites are virtually identical in their use of technology. Both:

Require the use of either Netscape Navigator V4.0 or greater or

Microsoft Internet Explorer V4.0 or greater as browsers;

Use Hyper Text Markup Language (HTML) V4.0 and Javascript to

build site pages;

Use Secure Sockets Layer (SSL) to provide encryption of sensitive or

personal information;

Store cookies on the users web browser to record user preferences;

Link the web site to databases facilitating data query and extraction;

Link the web site to other affiliated external organisations.

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Comparison of Features and Benefits

Table two lists the features and benefits of the two sites identifying which
site provides which feature/benefit. Note that although both organisations
provide customer loyalty programs the features and benefits of those
programs are outside the scope of this paper.
Table 2: Comparison of Features and Benefits

Feature / Benefit
Flight booking function
Fare query

Ansett Qantas
4
4
4
4

Destination Marketing
Alternative flights
suggested
Special deals
Flight arrival / departure
information
Customer loyalty
program
Join loyalty program online
Query loyalty program
status and points online
Award bookings online
Freight information

4
8

8
4

4
4

4
4

4
8

4
4

Unaccompanied baggage
freight service
Corporate gifts &
souvenirs

Corporate contact details

Corporate Information

4
4

4
4

Press releases
Ability to send e-cards

4
4

4
4

Caters for non-English

speaking users
User feedback function

Notes
Ansett requires user preregistration, Qantas allows
access without preregistration.
Price or time preference
alternatives provided.

Ansett has no joining fee,

Qantas charges a fee to join

Qantas provides extensive

freight services including
online booking and tracking
mainly for corporate
customers.

Qantas souvenirs (model

planes, watches etc) available
via Qantas on- line shop.
Ansett is more
comprehensive than Qantas
Qantas has a more extensive
range of card images
Ansett has a Japanese web
site
Qantas provides customised
feedback forms relative to
type of issue.

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Feature / Benefit
Downloads

Ansett Qantas
8
4

Technical support

Notes
Qantas allows downloads of
specific software
(QANTIM), wallpapers, and
screen savers.
Ansetts support is via
telephone or email but
telephone support is only
available Monday-Friday
9.00am to 5.30pm
Qantas provides a 24x7
telephone accessed internet
help desk for assistance with
internet bookings.

Site Problems
Neither site provides good on- line help, relying upon site design and
intuitiveness to guide users through the use of the various functions
provided. Ansett provides significantly more help facilities than Qantas,
including a Frequently Asked Questions section and a live text chat
function. However, this function only operates within a limited timeframe
whilst Qantas provides a 24 hour 7 days per week telephone helpline for
internet bookings.
The lack of alternatives to English is a problem in such a multi-cultural
country as Australia. Ansett does provide a Japanese web site but Qantas
provides no alternatives to English. In both web sites there is an assumption
that their users will not only understand English but be sufficiently technosavvy to understand internet user-interface conventions.
Whilst a great deal of information is provided in both sites, much of the
corporate information provided by Ansett requires viewing with Adobe
Acrobat. This information is accompanied by large, complex graphics
requiring significant time and/or bandwidth to download.
The Ansett requirement that users register prior to accessing the flight
bookings and fares functions is not as user-friendly as the Qantas approach
which allows full access to all flight functions with no pre-registration
requirement.

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Preferred Site A User Perspective

Both organisations generate a Virtual Value Chain (VVC) by using
information to create value for the customer (Rayport and Sviokla 1994 2 ).
Activities are performed with and through information rather than with and
through physical products and activities. Both sites save the consumers
time and allow access to information hitherto only available from travel
agents. Flight travel can be booked online and electronic tickets requiring
no physical paper-based ticketing functions generated. In this respect the
use of technology is in accord with Hammers3 (1990) contention that
technology should obliterate work.
However, the differences between the sites dictate user preferences. For
those users wishing to access information about destinations, such as
attractions, activities, history and best times to visit, then the Ansett site
would be preferred. For users knowing where and when they want to go and
wishing to obtain quick comparisons of alternative itineraries the Qantas site
would be preferred.
Users having limited exposure to internet user- interfaces or travel functions
in general would more likely prefer the Ansett site for its on-line help. Any
user requiring freight services would prefer the Qantas site as Ansett does
not provide an equivalent on- line service. And lastly, membership of
loyalty programs will determine which site is accessed regardless of the
site features or failings.
Speculative Analysis Site Creation Business Drivers
Porter (1985)4 defines competitive advantage as offering a product of
superior value to customers. Given the similarities of both sites relative to
model, features, benefits, products and services offered, it is doubtful
whether either organisation developed their web sites to secure competitive
advantage. This is strengthened by the fact that neither organisation mention
their internet presence in their on- line press releases or annual reports.
Discounting strategic advantage, speculation arrives at the following
drivers:
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Competitive defence : Porter5 (2001) maintains that one of the greatest

threats to an established company is failing to deploy the internet. As
both organisations are well established, their drive to build an internet
site may lay in a need to maintain market position.

Operational efficiencies: Both web sites are linked to value chain

elements. Ansett more than Qantas is positioning itself as a channel
replacement and both airlines have replaced physical activities (such as
the creation of paper tickets) with electronic processes.

Customer service: two of McNurlin and Ghaffaris 6 four components of

the Internet Mindset relate to customers iterative customer contact
capturing customer feedback and the provision of customer service
within the customers timeframe. Both web sites cater for these
activities together with the opportunity for customers to personalise their
travel experience.

Customer retention: with airlines competing in the same market with

similar products and being forced by competitive pressures to compete
on cost, building loyal customers is a survival strategy. Allowing
customers to view accruing loyalty rewards and building loyalty
programs communities is an internet enabled retention strategy.

Site Revenue Generation

As both sites sell travel and associated services there is little doubt that
revenue is generated. Qantas sells freight services online, however, as this is
a relatively new on- line service any revenues generated may not be reflected
in earnings figures.
Unfortunately it is dubious whether revenue earned is translated into profit.
Ansett recorded a yield decline of 2.6% on increased revenue of 2.5% and
increased capacity of 3% 7 . Ansett state that the main reason for the reduced
yield was increased domestic competition. Whilst Qantas total business
recorded a profit with increased revenue and yields, Qantas domestic
business recorded Earnings Before Interest and Tax down by 53.2% on the
previous year. Qantas domestic capacity grew by 7.6% but yields
deteriorated by 8.2%8 . Echoing Ansetts reasons for reduced yield, Qantas
E-Business Strategy & Management (GBAT9117): Assignment 1 : Linda Stewart : August 2001

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blames price discounting and heavy competition for the poor domestic
performance.
It is obvious from the above figures, and from the fact that both
organisations are using similar electronic commerce strategies, that factors
other than electronic commerce are influencing corporate profitability. The
airline industry globally is in the process of fulfilling Porters 9 (2001)
prediction relating to competition based on cost, they have turned
competition into a race to the bottom.
Site Returns on Investment (ROI)
With web sites of such broad scope one could speculate that the ROI may
include:

Facilitation of inter-organisational alliances both airlines have built

alliances with credit organisations, hotel chains, holiday resorts and
others. These organisations offer airline loyalty miles for money spent
with them. Co-operative forms of advertising and the development of
product blends such as Qantas Holidays are possible and are promoted
to mutual advantage on the airlines web sites.

Reduction of operational costs relating more to the sales operations

and customer administration costs. As Timmers 10 (2000) states
eliminating paper in the ordering and delivery process can lead to
enormous savings.

Reduction in loyalty miles liability the airlines can reduce liability at

minimal additional cost by promoting loyalty miles specials for flights
where capacity is not at maximum.

Minimisation of channel costs Ansett appears to be more aggressive

than Qantas in using their web site to promote destination travel (usually
holidays), providing similar services to those provided by travel agents.
Both airlines are providing customers with the ability to book and pay
for travel on- line, thus reducing the amount of commissions payable to
the channel.

Identification of the value of customers Gupta 11 (2001) states that

different types of customers cost different amounts of money to maintain

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and therefore produce different levels of profit. By capturing customer

interactions with the organisation via the web sites, the airlines may
analyse the data and segment customers according to their contribution
to profit.
Conclusion
With similar companies using similar internet commerce models there is an
expectation, and delivery of similarity in site functionality. However, there
are subtle differences in implementation. Ansett appears to be targeting
holiday trave lers more than Qantas. This strategy may have significant
impact on travel agents (a traditional travel channel) something that
Qantas appears not to desire. Qantas has a slightly different strategic
approach to its web site it assumes that site users are travel- literate, know
what they want and appreciate a quick, responsive on- line service to obtain
it. Thus Ansett appears to be focusing on new customers whilst Qantas is
focusing on existing customers.

Word Count: 2010

References & Bibliography

1

Lawrence, E et al (2000) Internet Commerce: Digital Models for

Business, second edition, John Wiley & Sons Australia, Milton, pp23-44
(Business Models for Internet Commerce)
2

Rayport, J and Sviokla, J., Managing in the Marketspace, Harvard

Business Review, Cambridge, MA, November/December 1994, pp141-150
and Exploiting the Virtual Value Chain, November/December 1995,
pp75-85
3

Hammer, M., Reengineering Work: Dont Automate, Obliterate,

Harvard Business Review, July/August 1990, pp104-112
4

Porter, Michael E., (1985) Competitive Advantage: Creating and

Sustaining Superior Performance, The Free Press, New York, pp4-10
(Five Forces of Competitive Advantage), pp 36-61 (Value Chain)
5

Porter, M.E., (2001) Strategy and the Internet, HBR OnPoint, Harvard
Business School Publishing Corporation, March 2001, p77
6

McNurlin,B.C & Ghaffari,E., as quoted in: McNurlin,B.C., & Sprague,

R.H., (1998) Information Systems Management in Practice, Fourth
Edition, Prentice Hall, New Jersey, pp334-336 (The Internet Mindset),
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Figures quoted in the Ansett web site: <www.ansett.com.au>, Annual

Reports,
8

Qantas press release 16-8-2001 reported in the Qantas web site,

<www.qantas.com.au>,
9

Porter, M.E., (2001) Strategy and the Internet, HBR OnPoint, Harvard
Business School Publishing Corporation, March 2001, p72
10

Timmers, P., (2000), Electronic Commerce, John Wiley & Sons Ltd,
England, p.7
11

Gupta, S., (2001), Managerial and Marketing Lessons from dot com
failures, Mt Eliza Business Review, Volume 4 Number 1 Winter/Spring
2001, pp 13-14.

E-Business Strategy & Management (GBAT9117): Assignment 1 : Linda Stewart : August 2001