CASE STUDY

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Prepared by: Ahlam Ansari

E-Trade and Wells Fargo: The

Business Case for Clicks and

Bricks e-Commerce

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• E-Trade is not only a mere online brokerage.

• The nation’s 62nd largest bank, with $17 billion in assets and more than 500,000 accounts.

• E-Trade started its diversification campaign in 1999.

• It gobbled up Telebanc Financial, a branchless bank, for $1.8 billion in stock.

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• The move was widely criticized as a costly distraction from its core trading business.

• The move allowed offering its customers and investors risk-free alternatives.

• Acquisitions brought E-Trade the nation’s second-largest ATM network .

• In February 2001 got entry into the mortgage origination business.

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• Offered savings yields more than twice the national average.

• Offered loan rates that match or beat those of its brick-and-mortar competitors.

•E-Trade has deliberately shed its free-spending dotcom ways and implemented a rigorous cost reduction program to squeeze the operating cost up to $250 million.

• The new E-Trade is in much better shape to expand on its present diversified business success.

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Wells Fargo

• At a 1999 meeting of Wells Fargo employee proposed to reinvent itself online.

• Make life far easier for the clients.

• To allow wholesale banking reps to spend less time on routine services and more time selling new ones.

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• The Commercial Electronic Office (C.E.O.) launched in July 2000.

• The C.E.O. turned profitable in April 2002.

• Today most consider Wells Fargo their main bank.

• The Web is just one of the doors the bank opens to customers.

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Q1. What lessons in business strategy can be applied to development of the e-commerce channels of other companies from the experience of E-Trade?

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Answer : Lessons that could be applied would include: 1.Diversification through selective acquisitions.2.Implementation of cost reduction programs.3.Viewed itself as a business and not an Internet-based business that was exempt from all the rules of business.

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Q2. What is the business value of the C.E.O. online wholesale banking portal to Wells Fargo?

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Answer : Discussion points would include:

1. In a recession Wells Fargo’s Internet-based revenues grew 25 percent.

2. The C.E.O. banking portal improved and enhanced the client relationships.

3. The more that clients are exposed to all of Wells Fargo’s banking products when they log on, the more likely the customer is to sign up for additional services.

4. Wells Fargo focused on what the customers wanted – convenience, instantaneous account information, and most of all, industrial-strength security and access controls.

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Q3. What can other companies learn from the successes and mistakes of the Wells Fargo e-commerce system?

Answer : What lessons could be learned would include:1.An e-commerce system is not cheap.2.Maintaining an Internet system for customers allows cross selling other services which improves customer relationships.3.Learn what the customers want and do not want from the e-commerce site and meet their needs.4.Users of a successful e-commerce site will become dependent upon it.

THANK YOU

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