Brick And Mortar

Brick and Mortar

Learning Team B:

University of Phoenix Online

EBUS 400 - E Business

Mr. Frank Futyma

May 23, 2005

Introduction

Brick and mortar is defined as a "traditional, street-side business that deals with its customers face-to-face in an office or store that the business owns or rents. Web-based businesses usually have lower costs and greater flexibility than brick-and-mortar operations" (Investopedia.com, 2005). A large majority of the travel industry has evolved through technological advancements, thus shifting their services from brick and mortar to providing online service. Web-based companies like Travelocity, Expedia, and Priceline are becoming important avenues for travel shoppers and have become a form of nemeses to traditional travel agents. However, analysts say that the traditional brick and mortar operations will always exist in the travel industry. "Leaders among online agencies, like Travelocity, acknowledge that multichannel competition has always characterized the airline industry and that offline agents have a place, filling the oft-expressed customer need for flesh-and-blood travel services" (Vigoroso, 2001).

Brick and Mortar Travel Industry Supply Chain

The retail travel industry is transitioning to the Internet in order to stay competitive. "The traditional travel business...evolved with an integrated group of players--airlines, Computer Reservations Systems (CRS), travel agents and credit card companies--whose successes were interdependent." (Harrell Associates, 2002) All parties involved received compensation when a ticket was sold. The CRS and travel agents received a commission, the credit card companies received "a percentage or discount fee of the face value of any transaction paid for with their card," and the airlines generated revenue when the ticket was sold. (Harrell Associates, 2002)

The traditional brick and mortar travel industry is one serving as the last link to the end user in the supply chain. Travel agents served as essential distributors for airlines for many years prior to the airlines venturing into direct sales via the Internet. However, the providers now threaten the travel agency's position in the supply chain because of direct sales. "The threat comes from increased competition from travel web sites and virtual travel agencies which consumers can easily reach to book travel." (Baldwin, 1999) As distributors, various providers such as airlines depended upon travel agents, cruise lines and lodging facilities to promote and sell the providers' products and services to the public. The traditional travel agency did not charge the end user because the airline or other transportation provider would pay the agency for the travel reservation. A few years ago the transportation provider reduced, sometimes eliminated, the commission paid to the travel agent which resulted in the agent charging a service fee to end user. "In 2001, there were 15% fewer travel agents in the United States than five years earlier." (Harrell Associates, 2002) Since that time the brick and mortar travel industry has tried to compensate by selling more product and offering more services.

Wynta's section

Modifications to the Supply Chain

The purchase of travel services has shifted from consumers using "bricks and mortar" travel agencies to direct purchase from travel providers themselves or from the new form of Internet based travel agents. These agents such as Travelocity.com and Expedia.com have been successful by using technology to establish a new supply chain. These changes are in the physical space business is conducted in, how information is communicated with consumers, the consolidation of information and the integration of all of this information.

Physical Space

The traditional travel agency set up shop in small or medium sized office in the area where their customers lived. Customers purchased services by calling or visiting this physical space and conducting business face to face with an agent who gathered the information needed to select and transact the reservations and ticket issuing necessary. The use of the Internet web browsers is now the primary space that customers access travel services of their homes. The additional improvements I communication makes a physical location near the customer unnecessary.

Communication

Electronic communications in the form of email, and text messaging, have reduced the need for face-to-face communications and greatly reduced the need for phone calls. Digital methods of transacting money using credit cards further reduce the need for customers and businesses to be in the same physical location. The development of the e-ticket for air travel and the posting or emailing of itineraries was the last piece of communications that ended any need for needing a