This whitepaper describes how stakeholders in the travel retail industry – airports, airlines, brands and duty-free operators – can benefit from digitalization and how they can begin their journey on the way to a digital airport commerce ecosystem.
Let’s face it: The days when duty-free alcohol and perfumes were offered to all passengers at unbeatable prices are over. Passengers today have different expectations of travel retail shops and, above all, they are interested in other goods, especially electronics and premium products. Nowadays, researching, shopping and paying online 24/7 is standard for passengers. To meet their expectations, tailor-made product promotions must be offered on a smart platform that enables cross-selling and upselling of products and services of all integrated shops and service providers.
It’s becoming increasingly important to know your customers and their needs, and to present suitable offers. Business travelers and frequent flyers have different needs than tourists; travelers from Asia or the Middle East have different requirements than travelers from Europe or the Americas. The acquisition and evaluation of customer data only works via digital platforms, especially in connection with a loyalty program. Providers can offer loyalty members special conditions and services such as one-click fast-track booking or lounge access via loyalty points. Prequalified personalized marketing to existing loyalty members is convenient for passengers and has high conversion rates. In addition, non-loyalty customers can be shown suitable offers based on demographic data such as age, gender, country of origin, etc.
A key aspect for the development of a digital airport marketplace is the consolidation of all digital products and services on one platform. When all stakeholders such as airports, airlines, retailers and brands offer their own digital solutions, customers face a wide variety of E-Commerce platforms. Only very few platforms are noticed by passengers, and even less are actively used. The redundant costs for operating and marketing these digital solutions are not even considered. A shared digital marketplace has the advantage that passengers only have to register once and then have access to all products and services from all providers.
An important factor for successful digital commerce is a suitable and attractive product range. Passengers use airport E-Commerce platforms primarily to gain access to the entire range of luxury and high-end products such as jewelry, handbags, leather accessories, watches, laptops, cameras and noise-cancelling headphones. One reason for this is that these are the categories where scarcity is a real concern for global shoppers. Accordingly, an attractive product range with a focus on electronics, luxury- and premium articles is highly effective in meeting passenger needs. This approach is also ideal for targeting advertising and marketing efforts. Sophisticated digital platforms enable brands and retailers to offer targeted products and convenient cross- and upselling.
In addition, the premium products and tailor-made promotions must be offered to passengers at relevant touch points. In order to generate sufficient traffic and meet passengers at the right time at the point of sale, the relevant sales channels need to be utilized more efficiently. For airports, for example, partnerships with airlines and booking portals such as booking.com or C-Trip make sense when offering travelers airport services such as Fast Track or VIP services during flight booking or in an aircraft – via API commerce in the partners’ channel – without acting directly as the airport.
It is therefore obvious that a more holistic, end-to-end solution is necessary if airlines, airports and retailers want to engage travelers digitally and convert them into shoppers directly at the airport. A seamless retail experience within the entire travel ecosystem (from airline to brand to airport) needs to be digitally facilitated if the true retail value of a customer’s journey is going to be unlocked. Benefits for the Stakeholders include:
The range of use cases and corresponding benefits is virtually unlimited, especially if the solution is based on an API-commerce platform that allows easy implementation of new services. It is advisable to implement an integrated, scalable and easily adaptable solution in order to be able to take future needs and short- and medium-term challenges into consideration.
If all stakeholders collaborate and contribute their strengths, a world-class digital airport commerce ecosystem with outstanding customer experience can be created, benefitting all stakeholders. These benefits are greater than those that would be possible with individual solutions, since various synergy effects can be achieved. For example, products and services of all stakeholders are no longer scattered across various apps and websites; instead, passengers can find and buy all services and products through one solution. Savings on websites, logistics, payment and fulfillment reduce costs. Moreover, total revenue can be increased through cross- and upselling and by linking commerce with loyalty programs and airport services.
In Chapter III: Key elements of a digital airport commerce ecosystem we talk about the key success factors for an Omnichannel Commerce platform in Travel Retail, why Airports have some competitive advantages in E-Commerce and how to create a beneficial win-win-collaboration for all key players of Travel Retail.
AOE’s award-winning OM³ platform is a digital marketplace, consisting of a unique and modular set of pre-integrated omnichannel functionalities, services and infrastructure. It enables customized selection of functionalities according to airport-specific business requirements. OM³ was successfully implemented at Frankfurt Airport, Heathrow Airport, Auckland Airport and Singapore Airlines, many other airports and airlines are on their way to digitalizing their non-aviation revenue streams.