Is distance education another form of e-commerce?


Introduction

The rise of the Internet and the development of e-commerce has begun to raise issues for all forms of commerce, including retailers, manufacturers, service providers and consumers. Many of these issues arise from several factors the Internet offers, which can be summarised as: Many of these factors apply equally to education, and in particular distance education. In this paper some of the common challenges facing commerce will be examined, and their relevance to distance education discussed. If the distance education course is viewed as a product, then this raises several questions with relation to the impact of the Internet on the delivery of that product, the type of product offered and the institutions which offer them. To what extent are the issues faced by conventional commerce applicable to distance education? Are there factors which make education a special case, immune from the changes occurring in other sectors? Can education be treated as a product and therefore subject to the same forces as other products?

Suitability for the Net

The first question one should ask regarding e-commerce, is "Does it affect my business?". The degree to which any business is liable to be affected by the Internet depends upon how transferable its products are to that medium. Information goods are the most easily transferable, whereas those which rely largely on taste, touch or smell are less transferable. De Kare Silver (1998) suggests three characteristics which determine a products suitability for the Net. These are:
  1. Product Characteristics: products that rely on smell, taste and touch to inform the purchase may not be suitable for selling via the Internet. Sight and sound are stronger attributes for web delivery, although some items which rely on senses such as smell can be sold effectively if they are strong in the remaining two characteristics (some fresh produce or well known perfumes would be examples of such goods).
  2. Familiarity and confidence: the consumer is very familiar with many products they purchase, for example it is estimated that 80% of groceries are replenishment items. Confident in buying these, and brand familiarity is a strong factor, so for example Kelloggs Cornflakes would be strong on both product familiarity and brand name confidence.
  3. Consumer attributes: some categories of consumers are more likely to buy online. A. C. Nielson has suggested 6 consumer categories - Habit die-hards, Ethical, Value shoppers, Convenience, Experimenters and Social shoppers. It thus becomes important for an industry to know where its key target audience is. Even if the product is easily transferable to sell online, if the main consumer group is unlikely to shop in this way then it is not an effective use of the medium. For example CDs generally have consumers who are likely to buy online, which is why they became one of the first products offered this way.
If we examine these characteristics with respect to distance education, we find that it is a likely candidate for Internet transfer. The product is largely an information one, which can be delivered easily via the Internet, and even enhanced via this medium. It is true that familiarity and confidence with the 'product' (distance education courses in this respect) may be an issue for some students, particularly if they have not studied before. Many students however, will be building on an existing education, and will have some familiarity with the product, and perhaps with the university offering it. Consumer attributes may vary depending on the subject area, for instance technology or computer science undergraduates may be more inclined to use the technology than arts or social sciences, although this is not as great a distinction as it might once have been. In general the student wishing to take a further education course represents a consumer who is likely to be well disposed to this mode of delivery.

Thus the product characteristics of distance education suggest it is a prime candidate for Internet delivery.

Richness and Reach

Evans and Wurster (1999) claim that in conventional business models there is always a trade-off between richness and reach:
"To the extent that information is embedded in physical modes of delivery, a basic law governs its economics: there is a universal trade-off between richness and reach...
Richness means the quality of information, as defined by the user...
Reach means the number of people who participate in the sharing of that information."
Blown to Bits pg. 23
So a large retailer of electrical goods, say, would have a large reach, because the chain of stores would ensure a large customer base. This would be at the expense of richness however, since the consumer would be less likely to speak to knowledgeable staff, or build a relationship with the store in the way they might with an independent local retailer.

The Internet shifts the trade off since it now becomes possible to offer consumers a rich experience and also have great reach. So, for instance, an online bookshop such as Amazon has several million book titles on offer and a near global market, and thus a large reach. They also can provide personalised pages for their customers with regularly updated recommendations, book reviews, comments from other readers, e-mailed updates and so forth, hence providing an information rich experience. Similarly on line stock traders such as e-trade offer personalised portfolios, recommended stocks, up to the minute information, advice on a broad range of stocks, and thus provide a rich environment, whilst being available to anyone with an Internet connection.

In the distance education environment the addition of computer mediated communication (CMC) has begun to add richness to the student experience, decreasing feelings of isolation and increasing contact with other students and tutors. The ability to mix media within the web environment so students can have audio, video, interactive animations, as well as interaction with others can again increase the richness of the learning material. The information available on the Net means courses can offer a far wider range of material than was practical when articles needed to be reproduced and sent to students. Thus the reach of the information can be increased. Access for many students who could not attend face to face tutorials is improved, meaning the reach of courses to students in geographically isolated areas for example can be greatly improved.

At present most web based distance education courses do not offer much in terms of personalised material. The degree to which web based courses, or third generation courses according to Nipper's (1989) classification, begin to offer both increased richness and reach over the traditional, or second generation courses will be a key factor in determining their success. Initially students may sign up for web based courses out of interest but if they offer less than the traditional text based courses (often with additional video, CD-ROMs, etc.) then the demand for such courses will decline.

Deconstruction

Evans and Wurster (1999) claim that many businesses can in effect be seen as several businesses bundled together, which offer a convenience value for the consumer. For example a new car dealer sells cars, but also sells services, finances, second hand car sales, etc. Easy access to vast amounts of information on the Internet makes each of these constituent elements susceptible to attack from other specialised businesses. The bundling of services made economic sense when geographical constraints were a priority, because it would take the consumer time and effort to satisfy each individual component. However, the lowering of geographical barriers can remove the convenience of bundling the services for the consumer. For example, a buyer may find a local garage to do their servicing, arrange finance via the web and order the new car direct from the manufacturer. Many businesses can be viewed as a bundle of services - for instance banks offer a range of products including current and saving accounts, mortgages, loans, insurance, credit cards, etc. Each of the products can be obtained independently from the best provider over the Internet.

So, do parallels exist in education? Universities offer a range of related services, including the education material, degree programmes, tuition, accreditation, general support, social focus and so forth. One immediate area which wide availability of courses on the Internet will affect is the cohesive degree programme. With a multiplicity of courses to choose from the distance education student can be selective not as to where they study their degree, but where they take each course. They can then construct their own degree profile. For example if one university has a good reputation for a course in object-oriented programming then a student may select this, and go to another university for their course in software engineering principles, and so on, constructing their own Computer Science degree. In such an environment there may be a market for people who offer advice on courses, and for meta-universities who offer accreditation for the disparate courses.

In addition the wide availability of material on the Internet means that a distance education course can be constructed using external material only. The university in this case offers tuition, guidance and the assessment framework. Tuition could also be an area which consultants may offer independently.

Universities are protected from some of the immediate deconstruction issues affecting other businesses because government bodies usually control accreditation powers. However, these are increasingly given to institutions other than established universities, as the rise of virtual universities indicates. The global market means a university could base itself in one country where it could gain such powers, and operate in other markets.

Disintermediation

Many businesses operate by performing the function of an intermediary between two parties. Estate agents are an obvious example, but in some respects most retailers are in effect intermediaries between the consumer and the manufacturer. The possibility of direct sales that the Internet offers means many of these intermediary roles are now subject to change. The car dealer is again a good example, as the consumer can now choose the model they want direct from the manufacturer. Similarly the computer manufacturer Dell now sell a significant proportion of their computers direct to customers through their web site, which allows the buyer to give the exact specification they require. This ability to sell direct to customers can lead to "channel conflict", where the manufacturer attempts not to affect the intermediary route, whilst establishing a direct route.

This is less of an issue for most universities, who are in an analogous position to a manufacturer. However, some universities offer courses or degrees which are produced elsewhere, and they act as the local deliverer of the course. Such a role could be redundant if the student can go direct to the original supplier.

Cost of entry

There is a low cost of entry in setting up a web business. A well produced web site can make your product available to a wide audience, without the need for numerous physical outlets, each furnished, staffed, and so forth. If the product itself is delivered in terms of bits then the reproducibility costs are almost zero. However, given the vast array of businesses and general information sites any one company may be competing with on the web, it is increasingly the case that a large proportion of finance needs to be allocated to marketing. This is particularly true for companies wishing to establish a global presence, such as Amazon, Yahoo, etc., but less so for niche companies, for instance a hotel in a specific location.

The web has certainly made the possibility of distance education a feasible project for many conventional universities. Previously the cost of producing print materials, CD-ROMS, video, etc. was prohibitive for many universities, unless distance education was their prime focus. The web changes all this, and in the past few years education conferences and journals have been dominated by papers on web based courses. This ranges from a single academic modifying their own course for web delivery to University, or country wide programmes to adapt existing courses and became distance deliverers. In addition there have been a number of new 'virtual universities' dedicated to offering web based courses. The distance education market has now changed irrevocably. It is now both a larger market and a more competitive one, and so the attributes which distinguish between universities or courses will become increasingly significant.

Brand familiarity

The rise of the web has seen a number of companies become household names in very short timescales, such as Amazon and Yahoo. Such companies have usually been the first to identify a potential in the market and exploit it. It is one of the paradoxes of the Net that new companies can arise overnight, but that it also favours existing corporations. Given the plethora of companies on the web, different information sources, individual interest pages and so forth, the user is easily overwhelmed. In such an information overloaded state a significant brand name becomes a valuable commodity. This operates on two levels: firstly, if you wish to find a product instead of searching for the generic term, and then going through search results many users will try URLs of companies they know already; secondly the issue of trust is a vital one on the web, and users are more likely to trust brand names they are familiar with than ones that are unknown.

This is pertinent for the distance education market as many universities are trying to provide online courses. The student looking for such a course is more likely to either search for, or trust, an offering from a known institution, such as MIT, Harvard, Cambridge, Oxford, etc. It is also the case that at this moment there is still no established market leader in web based courses, and the arrival of such a dominant market force could change the market considerably.

Consumer power

The wide availability of information afforded by the Internet means consumers can be better informed and hence more selective about their purchases. Factors which can affect purchase include price, trust, familiarity, quality, additional information, etc. For instance a number of web sites will offer comparisons of products so the buyer can choose the cheapest supplier. With a wide variety of retailers offering the same products for the same price, the consumer can choose according to other criteria. This can be trust or familiarity, so either a familiar brand or a company the consumer has successfully dealt with in the past. It could be ethics, so the consumer may decide to purchase their mortgage from a bank that has a strong ethical policy. It can be the quality of the information given at the site. For instance if an online bookseller has good software that makes recommendations of other books, then this may be a deciding factor, or if a wine retailer has recommendations you have enjoyed in the past. Increasingly, the addition of information to the product will become a discriminating factor.

Consumers who shop regularly on the web will come to expect certain features, such as personalised information, quick service, availability of information, etc.

This has important implications for providers of distance education, and their institutional behaviour. The importance of maintaining a relationship with students, even if they have finished studying will be significant, as such relationships will make the provider the first option if the student decides to return to study later. The quality of information offered will need to be much more personalised than simply providing course notes on the web. Such students will expect individual pages, with access to their records, even individualised material according to their needs. In such an environment students will also be unwilling to wait months until the start of the next course, they will expect to be able to sign up immediately. Such demands may lead to the abolition of terms and semesters and also an increase in shorter courses.

Such demands may mean universities adapt their practice to suit market demand to a far greater extent than they have done in the past. This will undoubtedly raise issues concerning academic credibility and quality.

Conclusions

We have examined a number of issues which those businesses who are aware of e-commerce are now facing. Many of these are equally applicable to the distance education environment. The 'product' of distance education is one which is easily transferrable to the Net, and a good proportion of the audience are likely to be amenable to this mode of delivery. In order to produce courses which offer distinct advantages over second generation distance education courses providers will need to meet the demands of this audience. Doing so will involve changes to the way many institutions operate and the type of teaching material they deliver.

Distance education is susceptible to many of the market forces which will affect other industries. It also has some significant differences. For example, the 'product' has some unique characteristics. Quality is a significant issue in education, and one that is not easily traded-off against price. The cultural differences in education also mean that one significant global market leader may be unlikely to emerge.

Bibliography

De Kare Silver, M. (1998) E-Shock. MacMillan Press.

Evans, P. & Wurster, T. S. (1999) Blown to Bits : How the New Economics of Information Transforms Strategy HBS Press.

Nipper, S. (1989) "Third generation distance learning and computer conferencing" in Mason, R. and Kaye, A. Mindweave: Communication, Computers and Distance Education, Oxford: Pergamon.

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