Wednesday 28 November 2012

Fighting for inventory – It’s not only your customers that need to trust you but suppliers


To run a successful online travel marketplace you need two skills. On top of the obvious - knowing how to sell to the consumer, you also need to be even better at fighting for inventory.

To get an idea of how difficult sourcing the right inventory has been for major established online travel companies, type in Expedia to the www.eyefortravel.com search bar. We have been covering the battle for travel inventory for years now. You will see almost a decade’s worth of stories looking at how Expedia, one the world’s largest online travel distributors has fought an on-going battle to control inventory with their suppliers, hotels, airlines and other travel suppliers.

As collaborative marketplaces such as Whipcar, AirBnB , Wimdu to AiXunQi (a start-up aiming at linking Chinese travellers to Chinese speaking experience providers) continue to proliferate in our industry, I predict an ever fiercer battle for inventory.

None fiercer will be the battle for the inventory of suppliers of ‘on-trip’ experiences.  Tours and activity suppliers are happy to give you their inventory in order to sell pre-trip. However as an ex Zambezi river guide I know first-hand they won’t be keen to hand over inventory on the day, the time when people are most likely to decide whether or not to do a bungee jump, eat sushi or have a facial. Why should they?  - It’s a closed off market where the distribution system of flyers, signs, pretty young things and concierges already works really well.

Of course, what’s going to drive all this mobile commerce? Until now, online savvy travel suppliers and intermediaries have strived to sell at point of sale; now, we can do it on trip. It’s a huge amount of cash up for grabs and it’s going to go to the travel organisations that travellers trust, like and enjoy doing business with.

It’s going to be fascinating to discover how this battle for supply develops, especially when its independent entrepreneurs -who are often not big corporates - need to be courted.  Below are a few of the issues I feel the providers of marketplaces need to plan for:

Trust is Key: Right now the movement is going through what could be described as a global education program. Uneducated often means distrustful.  As suppliers and customers learn to provide and buy through marketplaces, you can become more closed.  Openness now however is key to finding inventory.

Money Counts: In the long term your suppliers will become more sophisticated. If you are not delivering them customers or are charging too high a rate for the service, you will lose inventory to your competition.

Ancillary Revenues Work! Ryan Air one of the biggest and most profitable European Airlines does not make money from flying people around. In fact, if it relied on that service it would be going bust. They stay incredibly profitable and continue to grow through the advertising of non-core products on their website. If you have a focussed bunch of people looking for a service or a product it means you have a targeted a crucially profitable market. This could allow you to subsidise the other side of your market ensuring your supply is good.

Adding Value: To be of value, every marketplace has to add value, be it through cheaper deals, safety through insurance or ease in language translation.

As a result, whilst making sure your customers hold a healthy business relationship with you, investing in maintaining a good relationship with the suppliers of your inventory is paramount. Whilst it may be painful spending time and money to allow people to make money through your market, if you don’t own the inventory, you are in a vulnerable position. 

Wednesday 7 November 2012

Becoming a Customer-Centric Travel Company – The Key to Success in 2013?


Yesterday I went along to WTM and attended the opening presentation from Barry Gibbons, CEO, Burger King.   Barry was responsible for rescuing the ailing burger chain and did so by putting the consumer back at the heart of the business.

He mentioned the importance, (although he loathes the term,) of being a ‘customer-centric’ company.    In his view ‘only those who truly know how to make a connection with their customers will succeed in this hugely competitive space’.

So how can we apply this to the travel space?  Economic turmoil combined with new communication devices and social influence mean that customers are now spending more time in the research phase of the path to purchase.  If you can impress customers at this stage then it goes without saying that you will be more likely to win new business.

As customers become more and more tech savvy they can be harder to impress but according to EyeforTravel’s Travel Consumer Report 2012-13, 54% of intermediaries and 50% of suppliers do not even have a mobile version of their website.  With few brands having such basics, does impressing the travel consumer need to be so hard?

Whilst mobile bookings remain low, it is becoming more and more apparent that the customer is accessing travel sites via mobile and tablet devices at the research phase (and then purchasing via a desktop).   

The fact is if you’re not there then your competitor will be.  If you have a mobile and tablet friendly version of our website (note that these are 2 different things!) then you are half way to wowing your customer.

Then there’s the issue of social media, not only does user generated content influence the consumer’s decision to purchase, it can also provide you with a wealth of data on what your customer really wants from your brand.

Take the example of KLM’s surprise, using social data to wow your customer is simple to do and definitely pays off.   With so much data available to travel brands there really is no excuse for not understanding your customers’ wants and needs.

Whilst you’re planning your strategy and budgets for 2013, have a think about whether what you’re planning will wow your customer.   For some free information on smartphone, tablet and social media consumer behaviour simply follow this link.