American Express Interactive

Christine Cox

 

History

 

In 1997, American Express (AXI) introduced its first Internet business, AXI Travel.  AXI Travel led the way for online corporate travel services by providing one-stop shopping for corporate business travel.  Customers were able to make all their reservations—airline, hotel, restaurant, cars—in one place.  It changed AXI’s business model from their traditional “brick and mortar” approach to a new “click and order” approach.  AXI also changed their pricing strategy on corporate travel with AXI Travel as they wanted to motivate customers to change from the tradition agent-based service.  The pricing model for AXI Travel to a fee-based approached, consisting of three components—implementation fees, transaction fees and maintenance fees.  AXI Travel was a success and proved to be beneficial for all parties involved, including corporate travel managers, business travelers and arrangers, CIOs and travel agents.

 

In order to develop AXI Travel, American Express established the Corporate Services Interactive (CSI) business unit.  CSI focused on developing new ventures utilizing the Internet and other related technologies.  Because they did not have the experience in developing e-businesses, CSI teamed with Microsoft to create the products.  Working with Microsoft gave them an opportunity to learn more about and capitalize on the emerging Internet market.  With the success of AXI Travel, CSI developed 3 other e-business products by 1999, including AXI Expense, AXI Purchasing Solutions, American Express@Work.  AXI Expense automated the expense management process, enabling an efficient and accurate reimbursement process.  It integrated the AXI Corporate Card and the customer’s expense management and general ledger, reducing corporate client’s administrative costs.  AXI Purchasing Solutions enhanced the AXI Corporate Purchasing Card and eased the process of order management, fulfillment, reconciliation, data management and program maintenance.  American Express@Work created a portal for corporate customers to access their corporate card database, enabling them to make routine changes to their card programs.

 

In addition, AXI partnered with TRADEX Technologies, a provider of digital marketplace platforms, and developed their B2B Commerce Network, an online marketplace simplifying corporate purchasing and payment services.  As the pilot for the B2B took off, AXI realized they needed more than just a technology partner and therefore teamed up with Ventro, a B2B e-commerce service provider, to create MarketMile.  MarketMile is, “an open digital marketplace solution for purchasing and catalog management designed to transform the way businesses and suppliers conduct e-commerce.

 

As previously stated, when they launched AXI Travel, they got away from their traditional “brick and mortal” business model and adopted a new “click and order” model.  With the ever changing environment of the Internet, they had to adapt if they wanted their ventures to be a success.   Over the past couple years, American Express has shown it can be very successful in the realm of e-business.  Getting into this marketplace has however, created some challenges for the management team. Now decisions had to be made on the future of AXI’s e-businesses.  AXI is looking at the possibility of integrating the e-businesses back with their traditional businesses.

 

Problems/Opportunities

 

Problem:  Lull in Online Business

The online services, such as AXI Travel, have proven to be successful ventures for American Express.  They are still making progress and market penetration; however it appears that progress and penetration are slowing as we enter the 21st century. 

 

Opportunity:  B2B Trading Marketplace

Obviously, the Internet has changed the way people do business.  It has a vast and volatile environment, making some industry boundaries virtually disappear.  The B2B marketplace looks to be experiencing tremendous growth in the next few years.  Recent reports by Forrester analysts are predicting the B2B marketplace to exceed $2.7 trillion worldwide, with the e-marketplaces, including MarketMile, contributing about 53% of it.

 

Recommendations

 

When American Express entered into e-business with AXI Travel, it was done very efficiently and effectively.  The corporate customers have seen great benefits from the programs and systems and expect that in the future from the company.  The Internet is ever-changing, however, and AXI needs to change with it.  As the online businesses do continue to grow, the pace is slowing.  My recommendation for this is to integrate these services back in with the traditional business units of AXI.  The online businesses, AXI Travel, AXI Expense and AXI Purchasing Solutions fit neatly in with the existing business units at American Express and could easily be integrated back in.  American Express@Work does not fit as neatly as the other three, however the business does complement many of the companies other services.  Corporate clients do appreciate the online access and reports available from @Work.  Therefore, I do not think it should be spun-off.  The company has shown great ability to adjust and adapt their businesses and I believe they would be able to integrate @Work in with the other business units.

 

As American Express has proven their ability to enter into the world of e-business, I think it is important for the company to continue developing new e-businesses, such as MarketMile, especially with the high expectations for e-marketplaces in the near future.  Over the past couple years, the Corporate Services Interactive unit has grown and gained experience in the e-business industry.  Their partnerships with other companies, such as Microsoft and TRADEX, have been quite beneficial as CSI has learned a lot on developing the e-businesses and marketplaces.  The Internet has provided numerous opportunities for even the most traditional businesses.  With such businesses as AXI Travel and AXI Expense, AXI has shown their ability to successfully change and adapt their business models to new ideas.  As stated previously, the B2B marketplace is expected to exceed $2.7 trillion in 2004 with e-businesses contributing about 53% of that amount.  American Express already has their foot in the door with MarketMile.  I think it is important for the company to continue their exploration into this type of realm to stay competitive with the rest of the industry.