Price Discovery And Web 2.0

Back in 1996, when I was working with Tata Press Limited, I happened to experience my FIRST flight journey. A bit of a background! I was among the top two sales persons in Chennai branch and was selected owing to my knowledge and interest towards printing as a subject. The job was to travel with all the artworks for Chennai’s first edition of Tata Press Yellow Pages and ensure production happens correctly.

First flight journey. First flight ticket. It was a rectangular booklet containing 3 self-carbonated sheets which had the details neatly printed. It had my name and the best part was that it was next to the Indian Airlines logo. Felt proud! The pride was because the ticket cost was almost Rs.10,000 (which was loads of money around then).

I still remember how tickets used to get booked then. You called up your local travel agent and he would quote a rate for different airlines and different timings etc. You need to choose and then you end up ‘blocking’ the ticket. Once you pay, the blocking becomes a confirmation and you had you ticket to your destination. Whoa! Was it that complicated?

Let us take the trip back to today’s times. You want to take a trip, you get on to the internet and choose amongst the many aggregator brands like Ixigo, Cleartrip, MakeMyTrip, Yatra etc, choose the sector, the dates and voila! You have details of all flights for the sector you require across all time frames and the cost of your travel including all taxes etc. You can choose your convenient flight which comes within your budget and you are e-mailed your ticket which you take a print out of and travel. If that wasn’t enough, you can follow any of these brands on Facebook or Twitter and you will keep getting the best deal at any point of time!

What has been explained in the earlier paragraph almost killed an industry, but made an EMPEROR out of the customer. The entire ilk of Travel Agents had to change their business model because of technology helping what can be termed ‘Price Discovery Mechanism’.

Taking a cue from where I left day before, I am trying to explore the pricing function and the effect of Web 2.0. Airline industry is just an example.

To my best knowledge all airlines uses a system called Galileo for their ticketing and sector planning requirements. Crudely put, Galileo is something similar to the Finacle of the Banking industry. But Galileo suffered from an ugly-face syndrome. Basically the entire system lacked a decent front end.

With a bit of help from Web Technologies like AJAX, Flash etc Galileo acquired a beautiful front end. All airlines started building their own front-ends running on the same back end. And thus started the advent of aggregator websites like the ones mentioned earlier and they started giving pricing of the various airlines on a real time basis on their website. Your friendly neighborhood travel agent was replaced by a user-friendly web application.

Add to this another entity called the payment gateway. This entity again uses Web 2.0 front end technologies to run on their complex database heavy back end engines and process payments through the internet. So once you as a customer discovered the price at which you will buy a product / service, you have these payment gateways which will help transfer funds from your bank / credit card to the vendor and your transaction is complete.

This poses a great challenge for the airlines. Especially the budget kind. They now have to track the pricing of their competition from all these sites and ensure that their pricing is at least a Rupee less. Thus price wars have acquired a new dimension. And basking in all this is the customer. He surely is the king.

This now is true of many other industries. Some examples:

  • Rural India now uses Web 2.0 technologies sponsored by corporates like ITC (ITC e-choupal) to trade on their produce. The produce includes agricultural produce like Potatoes, Sugarcane, wheat etc.
  • If you have ever used the internet to trade on stocks and shares, you have been touched by Web 2.0. These technologies help you in identifying the latest price of a particular share in the market and help you complete a purchase or sell transaction.
  • Amazon, eBay, Flipkart etc are more examples of Web 2.0 helping in identifying the price and giving you the ‘best’ deal.

So the next time you get a quote for a stock, air ticket or a quintal of sugarcane over the internet, remember that pricing of the offering has been reached to you using Web 2.0 technologies. In the fond hope that the price that is being quoted is dynamic enough to appeal to your sensibilities and aid your purchase. Price Discovery has acquired a new meaning with the advent of Web 2.0.

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One Response to “Price Discovery And Web 2.0”

  1. That was quick, Nanda!

    I answered the questions in this interview at like 2AM and it shows! Tons of grammatical errors and typos! My English teacher would murder me if he ever got to see this!

    Nice to hear about Gul’s comment.

    Rock on, Nanda. Good luck with the blogothon! Some say its even harder than running a marathon!! 🙂

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