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.
To be clear from the outset: You can’t just buy software off the shelf and assume everything will work perfectly. To have an integrated digital solution, you need to develop an API-based platform that:
To integrate a large number of different systems and services is neither trivial nor possible out-of-the-box. For instance, at Frankfurt Airport, AOE had to integrate more than 30 systems into the OM³ suite, including airport systems, Shop- and ERP interfaces, as well as PIM-, logistics-, payment- and fulfillment systems. These facts make it clear that digital platforms need to be scalable, flexible and services-based to create a future-proof platform. You also need a lot of expertise to create valuable business cases, efficient processes and a high-performance software architecture.
In addition to all the technical issues, there is one major factor necessary for the success of digital projects: a digital-ready organization!
Many organizations are willing to implement digital transformation solutions, but are not yet ready when it comes to their corporate structure and culture. Digital transformation not only affects IT – the transformation process concerns the entire organization. Traditionally organized companies can benefit immensely from seeking outside advice as to how to digitally transform the organization. Sensitive issues that need to be addressed for successful digital transformation of organizations include, among others:
Digital transformation will change the way an organization does business. It affects all processes and the entire organizational architecture. As change management is not an easy task, difficult situations within the organization may occur. Therefore, executives and digital leaders must be completely convinced of the digital transformation process. It is important to educate the organizational leaders about the benefits the digitalization process brings and the risks they incur if they choose not to invest in digitalization. Moreover, it is necessary to clarify the urgency of digitalization by comparing what competitors are already able to do with their digital platforms. Educating management about a company’s chances and risks and showing them what the competition is capable of will help secure long-term executive support.
Airports, Airlines, Brands and Travel Retailers are experts in their segments and usually have highly skilled teams that do a great job in their current environment. For many organizations, however, a shift to digital thinking is difficult because they often focus on optimizing their performance rather than completely redefining their business model. In the digital transformation of the business model, E-Commerce should not merely be seen as just another sales channel, but as a game changer:
The business model and processes must be completely redesigned and adapted to E-Commerce. Accordingly, it requires a team with the appropriate qualifications and skills. The team therefore must be comprised of employees with the following skills:
In addition to the right skills, an appropriate team setup is necessary. The team structure must provide the necessary roles in the team and ensure interfaces between the airport- and the service provider teams. We strongly recommend the use of agile project management methods, as agile methods are verifiably more successful, ensure transparency, reduce project complexity and have a shorter time-to-market. Here, too, the help of outside experts will help accelerate the process and make the move to a (more) agile organization more efficient.
Help your organization to design and enable new digital products and business models. A key component of digital platforms is the ability to create a seamless customer experience. The digital ecosystem includes sales and marketing, ERP, CRM, supply chain, payment, operations and logistics. Hence, dealing with a variety of partners such as suppliers, distributors as well as technology- and service providers is necessary. This requires collaboration of all parties, but also leads to new opportunities for all stakeholders.
Creating digital business models requires an appropriate legal foundation that enables partnerships and services across corporate boundaries. Airports and airlines must enter into (new) contracts with retailers and, if required, form joint ventures. These must regulate the exchange of customer data in strict compliance with data protection laws (GDPR data protection). Concession Fees and contracts need to be renegotiated, as products are no longer sold offline only in the store, but online via E-Commerce as well. In addition, payment contracts must be created and the contractual situation between the customer and the retailer must be clarified/legalized. Standardized point-of-sale cash register systems are highly recommended.
IT has to support collaborations and joint ventures with partners such as airlines and retailers, to allow the legal exchange of customer data. Digital transformation has certain IT requirements that enable digital processes and data exchange in real time. The first step, therefore, is to analyze the current state of the IT: Which systems already exist? What does the company operate in terms of shop system, applications, databases, CRM, BI, etc.? In the second step, existing systems need to be evaluated: What can be (or must be) adapted? Which systems need to be updated or upgraded? Does the organization require additional software solutions, and if so, which ones?
An important requirement for IT is the connectivity of systems, as well as real-time data processing. The business cases in the travel retail industry require the exchange of passenger data as well as the connection with the retailers’ CRM systems and the loyalty program of the airport. Many different systems of different organizations need to be connected, which re-defines the roles of different organizational units.
Many organizations start their digitalization process by optimizing their commerce performance with digital technologies, testing new ways and gaining incremental benefits over time. This is perfectly fine, as it is a great way to gain experience in digital business. This approach provides great value with minimal risk for the company.
However, digitalization will continue to gain momentum and the expectations of customers and partners towards the company will increase. Accordingly, it is important to have a vision for the digital future of the organization for the next five to ten years. Airports, Airlines, Brands and Travel Retail should build a roadmap for digital platform business that guides them through the journey from optimization to transformation into a digital airport commerce ecosystem.
We recommend the following steps:
AOE has created a digital airport platform that we call OM³, which has already been implemented in several airports and airlines. OM³ is a state-of-the-art platform solution that can be customized to the individual needs of each client. See all benefits and find out how OM³ works in the OM³ Factsheet. Find more information on aoe.com/om3.
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.