Might Amazon branch out into the travel business?
An analyst with Morgan Stanley has speculated that Amazon should be considering a new vertical by getting involved in the travel business and using its particular talents to get its share of revenues. He points that Amazon also has deep enough pockets to make the investments necessary to get involved.
Online travel has proven to be immune to Amazon disruption so far. But as we have seen with other categories, that doesn’t mean Amazon won’t try again, and they should. Amazon’s focus on selection/service, pricing, and frictionless payments that drive conversion and stronger user economics also translate directly to travel. Our rough ad efficiency analysis (ad spend/transaction) speaks to Amazon’s ability to drive repeat/direct traffic as its estimated $0.75 ad spend/transaction is a fraction of what Booking/Expedia spend.
– Brian Nowak, Morgan Stanley analyst
And when one considers the possibilities, it is perhaps surprising that Amazon hasn’t before entered the travel arena and offered holidays, rooms and travel services to its existing customer base of 300 million customers. And a foray into the travel business would also give the company scope to offer more deals and perks to the all important Amazon Prime cohort of shoppers. And for small travel businesses, perhaps people running small B&Bs or holiday homes, it could be an excellent opportunity to market their premises or make offers on surplus room inventory.
Of course, Amazon does already sell event tickets and that’s an analogous business to travel. It seems unlikely that Amazon would establish its own travel operations and, say, run its own airline or hotel brand (although that’s a possibility), but rather act as a booking and marketing partner for existing travel firms in a model similar to booking.com or Expedia. But it is already a crowded business area and it is also specialist and highly regulated. So the question has to be whether the revenues and profits would be desirable enough for Amazon, which is already operating in numerous different market areas. We’ll keep you posted.
Does this mean that you might arrive next day, when guaranteed same day delivery to destination and just get chucked over a fence for arrival?
Jet2 started by using convertible aircraft running passenger flights during the day and Royal Mail flights overnight (the seats were removable). Since then they have purchased passenger only aircraft.