About the whitepaper

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.

Whitepaper_The-Digital-Airport-Commerce-Ecosystem_AOE.pdf Download Whitepaper

Key elements of a digital airport commerce ecosystem

Success factors of Omnichannel Commerce in Travel Retail

In summary, the following are the most important factors for successful Omnichannel Commerce: 

  • Multiple touchpoints before, during and after the trip
  • Sufficient free traffic in relevant channels
  • An attractive premium product range
  • Targeted personalized marketing promotions at the right time and in the right channel
  • Features supporting planned shopping, cross- and upselling
  • Convenient service offers
  • Infrastructure, logistics, payment and fulfillment

The Travel Retail “Quaternity”: Collaboration of all key players

To achieve a holistic digital end-to-end solution with an omnichannel experience, the key players of the aviation industry need to redefine their business model along the lines of what we call “The new Quaternity of Travel Retail”, which includes the four major groups of stakeholders: Airports, Airlines, (Duty Free) Retailers and Brands.

Airports, airlines, brands and retailers pursue different, and sometimes competing, interests – this makes it seem difficult at first glance to find a solution that is equally beneficial for all parties. However, if one considers the overall benefits that can be created with appropriate cooperation and which takes all major concerns of each individual stakeholder into consideration – and factoring in the risks of major E-Commerce competitors such as Amazon or Alibaba – then the question can really only be “How can such a joint solution be achieved?” In addition, as proof that it is possible: There are already airports today offering such integrated digital solutions. 

Airports, airlines, brands and retailers all have some advantages and disadvantages in terms of E-Commerce, but none of the stakeholders can fully meet all requirements. Everyone is dependent on partners in certain areas or has to build up capacities at great expense.

Airport Supply:

  • Infrastructure
  • Logistics / Fulfillment
  • Touchpoints at the airport
  • Airport Services

Airport Demand

  • Customer data
  • Sales Channels
  • Suitable product offers
  • Airport Service Sales

Airlines Supply:

  • Passenger- / customer data
  • Sales channels
  • Traffic
  • Touchpoints before / during flight

Airlines Demand

  • Product variety
  • Premium products
  • Sales / Cross- & Up-Selling
  • Logistics / Fulfillment

Retailer / Brands Supply:

  • (Premium-) Products
  • Personalized marketing
  • ERP / CRM
  • Shops and POS Consultation

Retailer / Brands Demand

  • Customer data
  • Sales Channels and Touchpoints
  • Logistics / Fulfillment
  • Traffic

How to create a Quaternity collaboration

The overall goal for all players is to create a truly seamless customer experience in a digital airport commerce ecosystem. This is where a mutual collaboration between all stakeholders must start. Each key player can contribute his or her core strengths to this joint proposal. In this model, the airport evolves into the (digital) marketplace provider, bringing all key players together and providing the required services such as logistics, wayfinding, real-time delivery, real-time flight information, etc. – services that only airports have the facilities to provide. The retailers and brands can provide a fitting and compelling product offering, both digital and physical. Collaborating with airlines, retailers and brands allows airports to engage with the passenger from the very beginning, even before the passenger starts his or her journey.

The crucial role of the airlines

Airlines play a crucial role in this Quaternity. Many airlines realize that pure inflight shopping from the cart is no longer a viable or interesting business as it relies almost 100% on impulse purchasing. Cost of transport here is extremely high, while range is extremely limited. In addition, luxury products often remove themselves from this equation, as they fear damaging the premium image of the brand. Therefore, it comes as no surprise that there are virtually no airlines left that manage to get more than two percent of their passengers to purchase in-flight. Nevertheless, the airlines, if managed properly, possess a treasure trove of passenger data that in theory could enable stakeholders to sell products and services of the airport with a high degree of personalization, engagement and accuracy. Unfortunately, in today’s industry, the airports and airlines still tend to work against each other rather than cooperate in this regard; it will require a significant change of perspective to realize that, together, stakeholders can increase the size of the pie – and corresponding revenues and customer loyalty – significantly. Obviously, this is far more preferable than each side continuing to cannibalize the other stakeholders’ shrinking piece of the total, smaller, pie.

Competitive advantages for E-Commerce at Airports

However, what competitive edge do airports have when implementing E-Commerce? Is an airport competition for Amazon or Alibaba or is it a completely different value proposition? The airport is a unique environment where service and product tend to blend seamlessly, unwittingly into each other. During the past five years of helping airports to realize their digital potential, we have come to realize that airports have several unique competitive advantages:

Competitive advantages for Consumers

  • Immediate product availability: No waiting time for passengers, immediate access to purchased products
  • Product look & feel: Passengers can look at and check out real products in the store, before taking them with them
  • Omnichannel experience: The combination of online and offline contributes to a higher conversion rate and creates a more satisfying customer experience

Competitive advantages for Retailers

  • Low cost of returns: Roughly 30% of costs for E-Commerce are for shipping and return. For airports, return costs are very low, as most people either return the product directly or don’t return it because they are already abroad
  • Low traffic acquisition costs: Traffic acquisition is the second major cost driver in E-Commerce. But for airports, traffic acquisition comes almost for free, as potential customers are already at the airport and/or checking out the airport’s website

So, even if the current situation for travel retail is being challenged by the big players, there are a lot of opportunities waiting to be exploited. Moreover, there is one more very impactful opportunity for airports that is already in place, but has not yet been capitalized on – the potential of WiFi.

Airport’s opportunity to capitalize on WiFi

Most airports already offer free WiFi for travelers. A study commissioned by TFWA in 2016 and researched by M1nd-set indicates that over 80% of all passengers use WiFi at the airport. This is obviously free additional traffic for the airports, which could easily be converted. However, in most cases the airports neither capitalize on the opt-in functionality of their WiFi, nor use the landing page for commercial purposes. As an example, airports could use their WiFi policies to get approvals by the travelers to use their personal data, which most airports do not possess. Being able to use this data creates opportunities for personalized offers based on the passengers’ behavior and needs. In combination with coupons and special offers presented on the landing page, or through offers based on the current location of each passenger (e.g., located through iBeacons), capitalizing on WiFi is a big opportunity, a competitive advantage and represents low-hanging fruit for airports. 

Integrated digital marketplace solution combines shopping and airport services

As the first and only player in the field of fully integrated airport non-aviation digitalization, AOE has managed to build on solutions and experiences it has garnered in airport digitalization rollouts for a number of major clients, including Frankfurt Airport, Heathrow and Auckland. We have combined four years of this expertise and tens of thousands of days of development work into a single one-stop solution for airports and airlines, which completely changes the way they generate non-aviation revenues digitally: The OM³ Suite. The “Omnichannel Multi-Merchant Marketplace” digital commerce solution is now live at three airports and is being rolled out continuously throughout the industry at both airports and airlines. The video below shows some exciting use cases, illustrating how airports can engage with passengers and how they can create real benefits for customers:

Link to video: l.aoe.com/om3video

The case shows: It is possible to create an exciting customer experience and real benefits through digitalization of the traditional travel retail business model.

Personalized information and connected services in real time to create real benefits

Key for any type of digital solution is the ability to provide relevant and accurate, real-time information that makes a difference in the passenger’s journey – at any time, for any channel or device. Product availability, pricing, payment, logistics, fulfilment. Everything needs to be 100% real-time to drive a truly seamless customer experience. It is important to provide meaningful information to each target group, by personalization and profiling. This can be based on either loyalty programs, the actions performed by the channel visitor or data provided by the airlines’ partners. The marketplace should be able to adapt to the passengers’ needs at any time and always enable their desired shopping experience when it comes to delivery methods, payment and product range, because disappointed shoppers never come back, neither in retail nor in E-Commerce.

New Use Cases for High Street Shopping: Shop downtown, have your purchase delivered at the airport – Tax Free

Yet another way to benefit from such a digital solution is the integration of downtown shopping into the aviation retail marketplace – which offers an excellent service either for passengers shopping downtown or for extending product catalogs and making them more compelling with regional products. Passengers can purchase tax-free products downtown and the retailer can send the products to the airport, ready for pickup after clearing security. This service is already in place in Auckland, New Zealand, and adds a significant portion to non-aviation revenues.

In Chapter IV: Roadmap to establish a digital commerce marketplace at your airport we explain how to achieve a digital airport platform, what organizational changes are required and we provide an overview about a recommended roadmap to achieve this goal.

OM³: The airport digitalization platform

AOEs 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.


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