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What is the advantage of being a referral service? What is the disadvantage?

Recreational fishing in Australia is popular both for residents and for international visitors. Over 700,000 Australians regularly fish. The Australian Fishing Shop (AFS) ( is a small e-tailer, founded in 1994, initially as a hobby site carrying information about recreational fishing. During the last few years the site has evolved into a fishing portal, and it has created a devoted community behind it.

A visit to the site will immediately show that the site is not a regular storefront, but that it actually provides considerable information to the recreational fishing community. In addition to sale of products (rods, reels, clothing, boats, and fishing-related books, software, and CDROMs) and services (fishing charters and holiday packages), the site provides the following information:

● Hints and tips for fishing

● What’s new

● A photo gallery of people’s catches

● Chat boards—general and specialized

● Directions of boat builders, tackle manufacturing, etc.

● Recipes for cooking fish

● Information about newsgroups and a mailing list

● Free giveaways, competitions

● Links to fishing-related government bodies, other fishing organizations (around the globe and in Australia), and daily weather maps and tides reports

● General information site and FAQs

● List of fishing sites around the globe

● Contact details by phone, post, and e-mail

● Free e-mail Web page hosting

In addition there is an auction mechanism for fishing equipment, and answers are provided to inquiries.

The company is fairly small (gross income of about AU$500,000 a year). How can such a small company survive? The answer can be found in its strategy of providing value-added services to the recreational fishing community. These services attract over 1.6 million visitors each month, from all over the world, of which about 1 percent make a purchase. Also, several advertisers sponsor the site.

This is sufficient to survive. Another interesting strategy is to aim at the global market. Most of the profit is derived from customers in the United States and Canada who buy holiday and fishing packages. In terms of products, the company acts basically as a referral service to vendors, so it does not have to carry an inventory. When AFS receives an order, it orders the products from its suppliers. It then manually aggregates the orders from the suppliers and packs and sends them via a service delivery to customers. Some orders are shipped directly from vendors to the customers.

Questions for Minicase 1

1. Why is this considered an Internet communit

2. How does the community aspect facilitate revenue?

3. What is the survival CSF (critical success factor) of this company?

4. What is the advantage of being a referral service? What is the disadvantage?

5. Compare the services offered at the AFS Web site with services offered by companies in other countries such as:,, online, and

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