Differentiation Advantages in the On-line Brokerage Industry

Jennifer M. Oetzel
International Journal of Electronic Commerce,
Volume 9, Number 1, Fall 2004, pp. 105.

Abstract: Research across a variety of industries shows that the lowest-priced on-line sellers do not have the highest market share. This makes it important to identify the sources of differentiation advantage that can result in higher market share. Insights from the resource-based view are utilized to identify on-line brokerage services that may create value for consumers and result in higher market share for on-line brokerage firms. Ownership of process patents for on-line brokerage activities is positively correlated with differentiation advantage. Direct access to the trading floor, unlimited free real-time quotes, and 24/7 live customer service are also correlated with differentiation advantages. The identification of specific services associated with higher market share sheds light on how on-line firms differentiate themselves from their competitors.

Key Words and Phrases: Business differentiation, on-line brokerage, resource-based view.