E*Trade Securities, Inc., Pioneer Online Trader, Struggles to Stay on Top

E*Trade Securities, Inc., Pioneer Online Trader, Struggles to Stay on Top

Adam T. Elegant (University of Colorado-Boulder, USA) and Ramiro Montealegre (University of Colorado-Boulder, USA)
Copyright: © 2002 |Pages: 29
DOI: 10.4018/978-1-930708-27-3.ch012
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Abstract

E*Trade revolutionized the securities brokerage industry by “creating” Internet trading. E*Trade’s original strategy was to deliver cost savings to customers while amortizing fixed costs over a greater number of accounts. In 1997, several competitors established Internet sites and E*Trade was dethroned as the price leader. Its management team introduced a strategic initiative to transform the company into a financial, one-stop shop for investors. The initiative included expanding its information technology, improving its marketing and advertising program, and developing new strategic alliances. By early 1999, E*Trade had established a popular Web site offering the convenience and control of automated stock, options, and mutual fund order placement at low commission rates. E*Trade’s success pleased management but was challenged by fierce competition and emerging ethical and operational problems.

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