Amazon, which boasted record sales at its Prime Day event this week, made waves with travel-related products, something of a novelty for the company.
It’s unclear how travel sales affected Prime Day’s results, but the few sales from major brands like Carnival Cruise Line, TripAdvisor’s Viator and Southwest Airlines raise a lot of questions.
What does the future of travel hold in relation to Amazon? Will the platform become a major player in the industry, and if so, what shape will it take?
“Amazon knows our shopping habits so well, and they have great recommendation technology, so there’s a lot of speculation about what they could do,” said Lorraine Sileo, senior analyst and founder of Focusright Research.
These ideas are not new: There has been speculation for years about when and how Amazon would enter the travel industry, and whether it would be successful.
But this week’s highly publicized Prime Day sales have shed new light on the issue, with industry opinions varying on how things will progress going forward.
Because Amazon knows so much about our buying habits and has such impressive recommendation technology, there’s a lot of speculation about what Amazon could do.
Lorraine Sileo – Focuswright
Industry veterans wary of Amazon’s future in travel
Travel industry veterans aren’t convinced Amazon will be the next great travel search or sales tool.
“I think it’s a little bit static and random at the moment,” Sileo said.
“Travel is so complicated, and Amazon… isn’t really interested in owning the products they sell, you know?… It’s a marketplace. So I think it’s going to become a bigger marketplace and offer a lot more,” Sileo said. “Will it be like a metasearch? It’s really hard to imagine exactly what they’re thinking…. I don’t think this is a glimpse into much of what’s to come when it comes to travel.”
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Sileo doesn’t think Amazon’s deals with a wide range of companies will give it an edge in travel retail unless it can create a sense of personalization around its offerings.
“Until they can really do personalization, you’re not going to get much more than what you’re getting at a place like Costco Travel,” Sileo said, noting that you can still get great deals there.
Hospitality and travel technology consultant Max Starkhoff reflected on Amazon’s work in the travel sector so far.
He cited two points: In the 2010s, Amazon tried to get into the travel industry with what Starkoff called “short-thought” Amazon Local and Amazon Destinations, both of which are now defunct, and then in 2019, Amazon began partnering with Cleartrip to offer a flight search and booking service in India.
“Amazon seriously underestimated the complexity of the online commerce market, especially in its first two attempts,” Starkoff said.
He pointed to inventory management as a bottleneck.
“Amazon underestimated the complexity of travel and hospitality tech, which consists of many moving parts, including old, dysfunctional legacy systems, coexisting with next-gen apps, and promising AI and blockchain implementations,” Starkov said.
He continued: “Despite its retail savvy and innovation, Amazon has no idea how to manage highly perishable inventory like travel stock. Unlike books or socks, travel stock cannot be stored in highly efficient automated warehouses.”
Starkoff believes Amazon missed its “only opportunity” to enter the travel industry by opting not to acquire Orbitz or Travelocity, both of which were acquired by Expedia Group in 2015.
“Unless Amazon acquires Expedia, which has a market cap of $18.5 billion, I don’t see Amazon entering the travel industry organically, but many hoteliers would like to see a new player join the current duopoly,” Starkov said.
Brands participating in our partnership with Amazon
Selling on Amazon seems attractive to brands because it has an existing customer base and allows travel brands to meet consumers where they are.
“Consumers are interested in unique experiences, and this Prime Day offer puts cruise travel in the eyes of the target demographic we want to reach,” Amy Martin Ziegenfuss, chief marketing officer for Carnival Cruise Line, told PhocusWire ahead of the Prime Day event.
She called Amazon a “great partner” and noted that the cruise line has worked with the company on other activities, and that working together on Prime Day marks a step forward in their collaboration.
Viator, which has partnered with Amazon to sell through Alexa, had a similar view.
Laurel Greatrix, vice president of brand and communications at Viator, told PhocusWire that the partnership with Amazon is one of “thousands” of steps Viator is taking to bolster its distribution and reach places where travelers may already be shopping.
Ahead of Prime Day, Southwest Airlines also expressed a positive attitude towards becoming Amazon’s “first airline partner.”
“Amazon’s Prime Day event draws consumers looking for travel deals and inspiration, and we invite Prime members to enjoy Southwest’s discounted service on our already low fares as a way to reach more customers and drive bookings,” said Jennifer Bridie, vice president of marketing communications and strategy for Southwest Airlines.
Participating companies did not immediately comment after the Prime Day sale ended.
Amazon’s move into the travel industry was much talked about this week, but the company has been exploring opportunities to get into the industry for some time.
For example, the company launched virtual tours in 2020. Amazon also partnered with India-based flight booking platform MakeMyTrip in 2021. MakeMyTrip did not comment on its experience when asked.
While experts aren’t sold on the idea of Amazon becoming a regular player in the space, they aren’t completely ruling out the possibility.
Despite his misgivings, Sileo said it’s important to keep an open mind about Amazon’s potential as a travel seller.
“it is [the] “This is the start of something interesting,” Sileo said.
